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Axle load regime to require $15b investment: Report

Axle load regime to require $15b investment: Report

KARACHI: The country will need to invest around $15 billion in a short period for inducting an additional 0.2 million trucks to fill the gap being created by implementation of axle load regime.

A number of trade and industry bodies have asked the government to stop arbitrary implementation of axle load regime which could turn out to be disastrous as it would raise freight costs by up to 100 per cent.

In a briefing to Prime Minister Imran Khan, trade bodies including shipping agents, stevedores, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Sarhad Chamber of Commerce and Industry drew his attention towards the magnitude of the crisis.

These bodies alleged that the arbitrary decision to implement axle load regime had been taken without due thought and consideration of ground realities and without taking on board the stakeholders.

Present road and rail network, trucks and rolling stocks are completely inadequate to handle the current volume of cargo movement and situation would worsen substantially if the axle load policy was allowed to work, the trade bodies cautioned.

In a comprehensive presentation to PM Khan, they pointed out that presently about 0.3m trucks move about 300m tonnes of cargo annually. In order to meet the new axle load requirement, an additional 0.2m trucks costing around $15 billion would be needed.

These representative bodies fear that if the axle load regime is implemented as per the Safety Ordinance 2000, it would increase cost of transportation and create a demand and supply crisis of trucks

This would result in delays in the supply of raw materials to the manufacturers as well as in the supply of finished goods to customers in both domestic and export market, they warned. According to them, the new load regime is likely to push the country’s import bill by to $5 billion per annum due greater fuel demand.

Elaborating on the impact of higher cost of transportation, they said major cargoes with annual consumption of up to 142.05m tonnes such as cement, fertiliser, coal, steel and scrap, edible oil, rice, sugar, molasses, ethanol etc, will have to bear an extra cost of up to Rs154.1 billion per annum.

Due to tough competition in the world market, rice exports for the last seven years have been stagnant at $2 billion. In 2012, they hit a record $2bn-mark on exports of 3.6m tonnes but seven years down the line, the proceeds have been the same even after selling 4.1m tonnes.

The representative bodies argue that this axle load regime would further hamper the country’s exports, as is with the exports of fruit and vegetables because exporters fear a loss of up to Rs88bn ($0.6bn) per annum.

They fear that agriculture business would suffer the most because of this regime as it will reduce the supply of DAP and fertiliser by up to 40-50pc.