Can Gwadar Port handle half of Pakistan’s cargo shipments?

At a recent high-level meeting, Pakistani Prime Minister Shehbaz Sharif discussed ambitious plans for the southwestern port of Gwadar, including a directive to 50 percent of all public sector freight currently handled through Karachi will be routed through Gwadar.

Nearly a decade ago, when Pakistan and China launched the multibillion-dollar China-Pakistan Economic Corridor (CPEC) as the flagship project of China’s ambitious Belt and Road Initiative (BRI), Gwadar was envisioned as a key port in the network and an economic and transshipment hub.

What attracted China was Gwadar’s unique geopolitical location – at the entrance to the Strait of Hormuz, a major waterway through which more than a sixth of global oil production and a third of the world’s liquefied natural gas (LNG). Like of course deep sea port, Gwadar has the potential to receive large cargo shipments.

But despite these promising features, the port remains underutilized a decade later, with minimal revenue-generating shipments. Only in 2023 17 ships docked in Gwadar, a stark contrast to the 441 at Hambantota port in Sri Lanka, which is also operated by a Chinese port operator.

Meanwhile, Karachi, Pakistan’s largest port and one of the country’s three seaports, was handled 1,767 ships during the 2023-2024 financial year.

Currently, 95 percent of the country’s imports and exports are managed through the ports of Karachi and Bin Qasim, with Karachi alone handling three-quarters of the total cargo. But despite serving as the country’s trade lifeline, these ports are increasingly strained by congestion, mainly due to insufficient infrastructure development and ever-increasing cargo volumes that are gradually exceeding the ports’ capacity.

While this situation underlines Gwadar’s potential as an alternative trade hub, it also highlights the urgent need to expand the port’s capacity and develop a robust transportation network capable of efficiently handling large-scale cargo operations.

Currently, Gwadar has only three mooring facilities and is completely dependent on trucks for transport. Major ports worldwide benefit from it track freight transport networks, which are more fuel-efficient and cost-effective and can transport larger bulk goods without disrupting traffic. Although there has been some speculation about plans for a railway line between Pakistan and China, no progress has been made, partly due to the enormous costs involved.

On the other hand, the ongoing security challenges in Balochistan and the complexities surrounding who manages the port are just two of the many reasons why Gwadar has remained underutilized nearly two decades after its construction and a decade after its integration into CPEC.

Prime Minister Sharif’s recent directive may seem to be part of a strategy to reaffirm the importance of Gwadar Port and CPEC, or a possible response to the Busy from Beijing. After that, the ‘all-weather friendship’ seemed to falter constant delays in CPEC projects and the deteriorating security situation in Balochistan, with a number of attacks in the past and more recently in the context of a series of attacks on August 26 throughout the province.

Initially, China is said to have overlooked or deliberately downplayed Balochistan’s long-standing tensions with Islamabad when the strategic benefits outweighed the challenges. The continued attacks on Chinese nationals in Pakistan, the increase in attacks across the province, the mass protests by citizens in Gwadar and the project development delays have put bilateral relations at a crossroads.

Sharif has pushed for the accelerated implementation of previously agreed projects, including the functionality of Gwadar Port and promoting Memorandums of Understanding with China, are largest foreign investor. But his reassurances to China appear inadequate if the underlying problems are not addressed.

Pakistan’s security challenges and delays are not the only issues worrying China. In recent years, Beijing has considered reducing the scope of the BRI under its new “Small and beautiful” strategy, aimed at scaling back the extensive BRI projects in favor of more manageable ones. This recalibration also reflects the current problems of the Chinese economy, including underperformance compared to the pre-COVID era, and the ongoing real estate crisis at home.

But despite Pakistan’s political and security crisis and China’s economic challenges, Beijing is unwilling to let go of Gwadar. The recent one visit to Gwadar by a Chinese delegation led by Wang Fukang of the Chinese Ministry of Foreign Affairs, took place amid mass rallies, protests and at least two weeks of sit-ins by the Baloch Yakjehti Committee, a rights movement from Balochistan. The meeting at Gwadar port was discussed Phase 2 of CPEC projects.

Currently, the Gwadar port (if functional) can only get by 11 million tons of bulk cargo per year, which is about 17 percent of what Pakistan’s largest port, Karachi, can handle. This stark difference once again casts doubt on the feasibility of the Prime Minister’s directive to shift 50 percent of public freight to Gwadar.

Looking ahead, the China Overseas Port Holding Company (COPHC), which operates the Gwadar port, has outlined an ambitious expansion plan. The company wants to achieve this by 2045 increase the port’s capacity to handle 400 million tons of cargo per year, by adding another 100 berths.

Gwadar undoubtedly has the potential to develop into a major regional trade hub, but current infrastructure and security problems can barely support 20 percent of the country’s freight, let alone 50 percent. As the government presses ahead, questions arise as to whether realistic steps are being taken to realize Gwadar’s immense potential, or whether the critical gaps will continue to be overlooked.