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Importance and future prospects of Gwadar port

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Importance and future prospects of Gwadar port 

The pragmatic facets like geography and history have always imprinted the demographic mosaic and development of a civilisation. The civilisations have always developed along the waters. The waters have been used as trade route since long, and the modern trade has further enhanced the need of trade through waters. Pakistan being a gateway to the strategically important ‘Strait of Hormuz’ in the Indian Ocean has always been a centrepiece for regional politics. The emergence of Gwadar Port as a vibrant regional economic hub has caused the regional and extra-regional powers to develop strategic and infrastructural development with Gwadar Port to reach the energy-rich Central Asian Republics (CARs).

A Pakistani Naval personnel stands guard beside a ship carrying containers during the opening of a trade project in Gwadar port, some 700 kms west of Karachi on November 13, 2016. Pakistan's Prime Minister Nawaz Sharif on November 13 opened a trade route linking the southwestern post of Gwadar to the Chinese city of Kashgar as part of a joint multi-billion-dollar project to jumpstart economic growth in the South Asian country.  / AFP PHOTO / AAMIR QURESHI

Sea ports provide a vital link to a country with the outside world. These ports can become a main hub of commercial activity and can give a substantial rise to the economy of the country. With an area of 12,637 sq kms, Gwadar Port yields of its vitality for regional and extraregional key players. This port has the potential to acquire the status of a centrepiece as a gate to Strait of Hormuz.

Importance

Located at the entrance of the Persian Gulf, about 460 kilometres from Karachi, Gwadar has immense geo-strategic significance on many accounts. It has the potential to be developed into a full-fledged regional hub and a trans-shipment port. Considering the geo-economic imperative of the regional changes, the Asian Development Bank’s (ADB) Ports Master Plan studies considered an alternate to the Persian Gulf Ports to capture the transit trade of the CARs, as well as the trans-shipment trade of the region. Both Karachi Port and Port Bin Qasim were found unattractive to major shipping lines due to the lesser depth and being away from the main shipping routes, the limitations of draft for mother ships and large bulk oil carriers and the comparative long turnaround times. The ADB studies, however, considered Gwadar to have the most advantageous location for such an alternative port in the region, which could handle mother ships and large oil tankers in due course owing to its specific depth.

  1. Geopolitical Importance

In Indian Subcontinent, India was the world’s first dry dock through which trade and culture was carried across the sea. The seafarers took Indian silk, spices and artefacts to East Africa, the Gulf and even beyond. But with the arrival of Mughals, India rapidly began to limit its contact with sea. This was to have tragic consequences, which ultimately led to the conquest of the Subcontinent by the British. But once again the old desire of Central Asian Republics and that of China of having “access to warm waters” is soon going to materialize through the China-Pakistan Economic Corridor (CPEC) and by construction of Gwadar Port.

Geographically, the CPEC connects through the 3000-km road and rail link including the Kashghar in western China to Pakistan’s southwestern part of Gwadar (Balochistan). This is a multifaceted deal which involves the following areas of cooperation.

  • Coal-fired power plants.
  • Hydroelectric and wind-generated power.
  • Solar power stations.
  • Coal supplies.

This corridor is also expected to help some of the most underdeveloped areas of Pakistan by reducing poverty and generating job opportunities while, on the other hand, it would also considerably reduce the transportation time of goods and energy for Chinese products. Currently, export of goods from China to the Middle East and Africa via Strait of Malacca takes about 45 days that could be reduced to fewer than 10 days if transported through Gwadar Port.

In a broader view, the CPEC will closely connect Central Asia, West Asia and Gulf states through energy and economic cooperation. China has been showing the signs to emerge as a super economic power of the world in the recent years. Goods sent by sea have to travel more than 10,000 miles to reach Chinese ports on the country’s eastern seaboard and then have to be transported 3,000 miles overland across China to reach markets in western China. As compared to this, Gwadar port is located on a distance of only 2500 km from China, and the port is operational for the whole year because of the hot waters here.

Therefore, the interest of China in the development of Gwadar port is, in fact, in terms of its economic value. More so, Gwadar being near to Iranian border will provide port facilities to Central Asia as well.

Presently, Dubai is the hub of business not only for Gulf but also for rest of the region including South Asia, Central Asian States, Africa and China, simultaneously.  Dubai, therefore, acts as role model port for the countries in the region, to follow the suit in harnessing the gains of international sea bound traffic to traverse through oil-rich region, thus inevitably bring prosperity to the people of the neighbouring states. Fortunately, Gwadar proves to be the nearest and, in fact, more cost-effective port from many aspects. Thus, one can conclude, Gwadar port will grow beyond the economic glory not only for Pakistan but for the region as well.

  1. Geostrategic Importance

Gwadar is the closest port to southern Afghanistan, a region that includes the country’s second largest city Kandahar. A highway linking Gwadar to Chaman on the Pak-Afghan border may help facilitate the flow of imports into southern and central Afghanistan by cutting road transport costs. Xingjian lies 4,500 km from China’s east coast but just 2,500 km from Gwadar. This will make it possible for China to route some of its external trade through Gwadar port.

It was evident that countries having apprehensions about the strategic co-operation between Pakistan and China would be unhappy over the development of Gwadar port.  Many analysts have been placing more emphasis on Gwadar’s strategic importance, especially in the Chinese future energy security strategy, and consider it a threat to their interests.

IDL TIFF file

Construction of Gwadar has ringed a bell about China’s maritime aspirations. China’s growing interest and influence from the South China Sea through the Indian Ocean and onto the Arabian Gulf has been described as a “String of Pearls” approach that potentially could present the United States with complex regional challenges. In such assessments, loaded with strategic connotations, the commercial aspect of these facilities and expanding Chinese global economic interests are deliberately underplayed to portray an alarming situation. There are, however, some scholars, who have justified Chinese cooperation with Pakistan in the development of Gwadar port, while recognizing both countries’ legitimate economic interests, also suggest that it should not be used by the Chinese for military purposes for the sake of regional stability.

While focussing on the strategic importance of Gwadar, most analysts tend to ignore the fact that Gwadar is a Pakistani port, though built with Chinese assistance and loans, and that Pakistan is a sovereign state which takes decisions according to its national interests. For Pakistan, Gwadar is indeed an addition to the Karachi Port Complex, as it has created yet another commercial hub on the country’s west coast.

iii. Geoeconomic Importance

With the inauguration of first phase of the Gwadar deep sea port on 20 March 2007, another milestone was added to the emerging economic relations between Pakistan and China. Pakistan conceived Gwadar Port, while realizing the potential of its strategic geographic location at the crossroads of three sub-regional systems—Souths Asia, West Asia and Central Asia—all envisioned creating a trade corridor for China, Central Asia and Afghanistan.

Net assessments of the growing energy requirements of the rapidly developing economies of China and India have further strengthened Pakistan’s concept of serving not only as a trade corridor but also as an energy corridor.

To realize the potential of becoming a “Trade and Energy Corridor” (TEC), Pakistan’s leadership in the past few years has primarily focussed on China and also other neighbouring countries to join Pakistan’s endeavours for creating a “trade and energy corridor”. Saudi Arabia is also looking into the possibilities of using this corridor for energy supplies to China. While the importance and usefulness of Pakistan’s TEC is valid for many countries.  Moreover, the infrastructure for TEC requires multi-billion dollar financial commitments, for which China has the interest as well as the capacity.

Future Prospects of Gwadar Port

  1. Gwadar as a Transit Port

One major objective of realizing Gwadar Port is to facilitate and attract transit trade of Central Asian Republics by providing dedicated, efficient and cost- effective port facilities. The myth of expected high volume transit traffic from CARs and Afghanistan is considered a driving force to develop Gwadar as a deep sea port. With this perspective, the construction of Gwadar port has been justified and merits following:

  1. The transit trade of CARs at present is partly handled at UAE ports from where it is trans-shipped to Bunder Abbas and onward by land/rail route to CARs. This involves double handling at UAE and Iranian ports. A hub port at Gwadar will offer direct shipment to and from CARs through land route.
  2. The transit sea trade of Afghanistan is presently handled at Karachi Port, which shall be diverted to Gwadar, when the land route is developed.
  3. The landlocked countries of Central Asia located in the north of Pakistan constitute a large potential market for Gwadar Port for handling their maritime import and export trade.
  4. Serve as a gateway to the cargo destined for landlocked countries such as Central Asian Republics and Afghanistan.
  5. Traffic Assessment

The volume of traffic for containers and general cargo has been assessed through the following two studies.

  1. M/S Giffords & Partners of UK carried out in 1993.
  2. National Ports Master Plan study by Posford Duviviers UK in 1996. Figures of both the above studies have been averaged in the PC-1 for arriving at the final figures shown in Table 1. Chinese Consultants did a fresh study in year 2002. However, the results of their study did not change the above forecast figures as mentioned in this table.

iii. Gwadar as Trans-shipment Port

Yet another objective of Gwadar Port is to serve as mother port for the neighbouring ports, which are not capable to receive mother ships. This is all about trans-shipment traffic. Gwadar is located strategically close to main shipping routes and is planned to handle mother ships and larger oil tankers in due course. However, competition is likely from Salalah Port (Oman) for the trans-shipment trade. The Chinese designers Fourth Harbour Engineering Investigation and Design Institute in the basic design report of 2003 have proposed that Gwadar, when fully developed as a port, has the potential to attract a minimum of 100,000 TEUs for trans-shipment through feeder services. The conservative figure of 165,000 TEUs will gradually increase to the limiting value of 275,000 TEUS by the year 2025.

Gwadar is likely to emerge as a regional hub of economic activities due to its ideal location at the tip of the Strait of Hormuz/Persian Gulf. It has the capability to be a vital link to China, Afghanistan and CARs, thus attracting trans-shipment trade with over 20 countries including Sri Lanka, Bangladesh, Oman, UAE, Saudi Arabia, Qatar, Iraq and Iran. These countries may open their warehouses in Gwadar for the export of goods. The port complex will provide facilities of warehouses, trans-shipment, transit and coastal trade, commercial and industrial openings for international import-export trade.

It is worth mentioning that Dubai, Fujairah and Khorfakhan are thriving on trans-shipment business. The factual position is that the ports of UAE, referred to above, faced similar circumstances as Gwadar is facing today. It was the aggressive approach of UAE authorities to capture the market with which the said ports managed to offset their geographical weakness. Dubai had an added advantage of having its own base cargo which helped it to develop the trans-shipment trade in its waters, but ports like Fujairah and Khorfakhan generally relied on trans-shipment business only. In fact, these ports could overcome their weaknesses with careful planning and taking care of other aspects of the port business. In the light of above discussion, it is safe to forecast that Gwadar port can be a viable option in the long run. In the absence of communication infrastructure, Gwadar can be used as trans-shipment port by careful planning and aggressive marketing. In the meantime, the efforts to provide road and rail links to CARs should continue.

  1. Gateway to Central Asian States

Gwadar port has substantial trade prospects which will be multiple after linkages with Central Asian Region are developed. The total population of this region is around 65 million, which is distributed amongst 6 states, of which Uzbekistan, Tajikistan and Turkmenistan, have close geographical proximity with Pakistan, and they will be the potential users of Gwadar port. The present total foreign trade of the area is estimated to be US$20 billion with US$12 billion of exports. The total international trade in terms of weight and volume is approximately 80 million freight tons. The main items and commodities of trade brought in from various ports are all kinds of consumer goods, electronic items and garments. Export, our main focus of attention, includes cotton, metal ores, machinery, gas and oil.

The road distance from Kushka in Turkmenistan to Gwadar is 1200 km whereas the nearest Black Sea port of Odessa in Ukraine is approximately 3400 km away from Central Asian states. Thus, Gwadar obviously becomes the most viable option available with the CARs.

A 500-km-long highway connecting Gwadar with CARs via Panjgur, Chagai and Rabat, up to Herat is, therefore, being planned.

  1. Trade and Energy Corridor (TEC)

10-5-18-Gwadar

The new leadership of Pakistan has primarily focused on China and also other neighbouring countries to join Pakistan’s endeavours for creating a “Trade and Energy Corridor” (TEC). Moreover, the infrastructure for TEC requires multi-billion dollar financial commitments for which Saudi Arabia, UAE and China have the interest as well as the capacity. Feasibility studies are being carried out for laying a railway track and a pipeline along the KKH up to the Chinese border. Saudi Arabia, reportedly, is also looking into the possibilities of using this corridor for energy supplies to China.

Pakistan, with the strong conviction that it can exploit its geographic advantage, has begun to take initial steps in the direction of creating the relevant infrastructure for the TEC. The entire concept of the TEC revolves around the successful operation of Gwadar port and timely construction of the affiliated infrastructural facilities for trade and energy supplies. It is pertinent to mention that Iranian port Chabahar offers comparatively equal transit route and commercial interest to capitalize on the opportunity that may generate a commercial rivalry. In fact, some road network in Afghanistan has recently been developed with Indian funding, which may lead to providing access to Chabahar. It is likely to attract CARs towards gaining access to warm waters through Iran. Such a scenario would lead to commercial competition with port offering better international standards and efficient cargo handling. But keeping in view the depth issue in Gwadar, there is a big advantage to Gwadar port which no other port in the region enjoys.

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