BMI View: We expect growth in both major container ports of Pakistan ( the port s of Karachi and Q asim), to be driven by favourable market conditions. Pakistan is enjoying steady economic growth due to lower oil prices and the successful implementation of reform programs. The country also shows an increased focus on improving relations and shipping connectivity with trading partners that further boosts trade volumes. Therefore in 2015 and over the medium term through to 2019, the growing economy and improved trading relations will increase throughput capacity volumes at both Pakistani ports.
Good Port Growth Expected
The two major container ports of Pakistan, of Karachi and Qasim, will both record their highest throughput capacity to date this year. Year on year (y-o-y) container throughput capacity growth rates will be 4.14% and 7.18% for port of Karachi and Qasim respectively. Combined capacity will reach 2.57mn twenty-foot equivalent units (TEUs), compared to 2.45mn in 2014. The start up of a re-gasification unit at the port of Qasim and a new direct service between the port of Karachi and the Khalifa port terminal have increased port activities in 2015.
We forecast real GDP growth rates to be higher than 4% between 2015 and 2019. Pakistan's economic growth is a prime driver of increasing throughput capacity volumes in the country's port. Being an economy that heavily relies on oil imports, it has benefited from lower oil prices that stimulate economic growth. Despite a degree of political turmoil the economy has remained firm. Pakistan is focusing on taking advantage of its favourable location for shipping trade and is developing infrastructure and relations that will support growth in port activity. Y-o-y growth rates will remain positive to 2019 and average 6.04% between the two ports. In 2019 the ports will handle a combined total of 3.23mn TEUs. Port infrastructure developments, stronger trading relations and economic growth will drive the forecasted positive growth rates.
Headline Industry Data
2015-tonnage throughput at the port of Karachi is forecast by BMI to grow by 4.3% to 43.140mn tonnes.
2015-container throughput growth at the port of Karachi foreca st to increase by 4.14% to 1.657mn twenty-foot equivalent units (TEUs).
2015-tonnage throughput at the port of Muhammad Bin Qasim forecast to grow by 3.64% to 26.713mn tonnes.
2015-container throughput at the port of Muhammad Bin Qasim forecast to grow by 7.2% to 915,317TEUs.
Pakistan's total trade forecast to see real growth cooling to reach 4.0% in 2015, down from 8.0% in the preceding year.
Key Industry Trends
Karachi Expressway: An elevated expressway to reduce road traffic congestion around the port is under construction and expected to be completed by year end. An eight-lane expressway of 16.5km will to connect to the Pakistan Deep Water Container Port (PDWCP).
LNG Unit Set to Increase Port Activities: The port of Qasim received the floating, storage and regasification (FSRU) unit, Exquisite, in March 2015 while in July 2015 the first transfer of LNG from an LNG carrier to the unit was completed. Operations are executed at the Engro Elengy Terminal within the port of Qasim. A deal to import LNG from Qatar for 15 years is expected to be reached in the upcoming months, meaning that the port will receive regular visits from LNG carriers. LNG trade is increasing globally and this development makes Pakistan part of this growth. It also opens the opportunity for future LNG bunkering services. LNG is increasing in popularity as a ship fuel and such services will further improve the attractiveness of the port.
Pakistan Focuses on Improving Trading Relations: A number of recent initiatives indicate that Pakistan recognises the strategic importance of strengthening its external position. In July 2015 Pakistan National Shipping Corporation (PNSC) hosted a group of governmental representatives from South Korea to discuss business opportunities including port infrastructure development. Additionally in the preceding month a memorandum of understanding, signed between the port of Karachi and the Chinese Seaport of Guangdong Province aims to improve shipping connectivity and efficiency in port operations. Trade relationship enhancement also featured in the recent cooperation agreements between Pakistan and Sri Lanka. Such initiatives will drive throughput capacity in Pakistani ports by improving trade volumes through stronger relations with trading partners.
Key Risks to Outlook
High political risk is the major threat to our forecasts. Three militant groups in Pakistan have recently announced that they have joined forces in their campaign against the government, and the ongoing fight against terrorism shows no sign of abating. This will necessitate a high level of military spending, to the detriment of development spending, and will also keep the security situation tense for the foreseeable future, to the detriment of foreign investment. The risk is that any intensification of the security threat will lead to lower-than expected GDP growth, lower trade and ultimately lower port and shipping activity levels.