About Tarzi Research Foundation

Tarzi Research Foundation is an independent research and dialogue based in Kabul. TRF is working to identify
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Cover Photo: Wadsam, 2013

TRF Publication Code: Code of Publication (2021-05 EN)

© 2021 TRF. All rights reserved, published in Afghanistan. This publication may be quoted, cited, or reproduced only for
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ISBN 978-9936-8086-1-4
Contents
Acknowledgments ............................................................................................................................... i

About the Author ............................................................................................................................... ii

Executive Summary ............................................................................................................................ 1

1. Introduction ............................................................................................................................... 7

2. Methodology .............................................................................................................................. 8

2.1. Research Objectives and Approach ........................................................................................ 8

2.2. Research Design and Implementation ..................................................................................... 9

3. What Actually Happened: Manufacture of Delay & Exploitation ..................................................... 11

3.1. Excessive Scanning............................................................................................................. 12

3.2. Supply of Bonded Carriers .................................................................................................. 13

3.3. Supply of Tracking Devices ................................................................................................. 15

3.4. Demurrage Charges ........................................................................................................... 16

3.5. Stoppage en Route ............................................................................................................. 19

3.6. Disruption at Crossing Point ............................................................................................... 23

3.7. Container Detention Charges .............................................................................................. 25

4. Response of the Government of Pakistan ...................................................................................... 27

5. Response of the Government of Afghanistan ................................................................................ 33

6. A Comparative Analysis of Transit Trade via Iran & Pakistan during COVID-19 ............................... 36

7. Lessons Learned........................................................................................................................ 40

8. Recommendations ..................................................................................................................... 42

9. Annex: Chronology of Events ..................................................................................................... 44

 Acknowledgments

The author extends a heartfelt gratitude to Dr. Sibghatullah Ghaznawi (Director of TRF), who showed great
interest and support for this paper. During the writing of this paper, useful comments were received from Mr.
Dawood Mohammadi (Deputy Director TRF) and Mohib Iqbal (Institute of Economics and Peace). Their
valuable inputs contributed to the improvement of this paper. The author is greatly indebted to Mr. Naqibullah
Safi (CEO Pakistan Afghanistan Joint Chamber of Commerce – Afghanistan) and Dr. Nayab (Commercial
Attaché in Karachi), who shared valuable sets of data and information. Finally, the author would like to extend
gratitude to TRF Data – Survey Network, Alternative Spectrum Consulting and Majeed Zabuli Center for
Economic Research and Policy Analysis, whose logistic support and facilitation played an important role in
data collection and analysis.
 About the Author
Shoaib A. Rahim is a development practitioner, university lecturer, and founder of Majeed Zabuli
Center for Economic Research and Policy Analysis. His area of expertise covers various aspects of
regional integration, trade and macroeconomic policies with a special focus on Afghan economy
(private sector development, transit trade, and fiscal policy), Central Asia – South Asia connectivity,
and economic cooperation. He is the author of numerous research reports, journal articles, newspaper
op-eds, and policy briefs. His work has been published in English, Pashto, Hindi, Dari, and Russian
languages.
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Executive Summary
The arrival of the COVID- 19 pandemic was an unprecedented event, and not many governments knew how to
respond. The implementation of lockdown and social distancing was considered as an immediate and the only
available response. The decision not only affected the economic activities nationally but also disrupted the
international supply chains. This, unarguably, had severe economic repercussions for all the countries, but the
intensity was even more for vulnerable and least developed landlocked countries.

Afghanistan also bore the brunt of the economic repercussions of the pandemic as lockdowns and supply chain
disruption transpired into an economic debacle. The trade balance of the country with imports of more than
seven billion dollars and exports of less than one billion dollars reveals the dependence of the landlocked
economy on the uninterrupted and smooth transit trade. Moreover, the country is mainly dependent on its
neighboring country Pakistan for transit trade as around 90,000 to 100,000 transit containers pass through it
annually, mainly via Torkham and Chaman-Spin Boldak crossing points. As such, the disruption of transit trade
meant almost the collapse of the Afghan economy.

The arrival of pandemic and the decision of Pakistan to close border crossing points for its neighbors had the
biggest impact on Afghanistan, its only landlocked neighbor. The country announced the closure of the
Chaman-Spin Boldak Crossing point in early March, and that of all other crossing points in mid-March left
thousands of Afghanistan-bound containers stranded at the port, en route, and at the crossing points. The
government of Pakistan promised to help Afghanistan in terms of trade facilitation during the hard times. In
mid-March, Pakistan’s Prime Minister Imran Khan announced re-opening the Chaman-Spin Boldak crossing
point, and assurance to support Afghanistan through smooth transit services during the global pandemic
extended a sigh of relief. However, this relief did not last long as it took weeks before the crossing points were
opened and months before the transit trade normalized.

This paper aims to provide an overview of the disruption of transit trade due to the pandemic. Further, it
analyses the approaches and decisions of the government of Pakistan, the port authorities, and other relevant
entities, including suppliers of bonded carriers and tracking devices. It also analyses the diplomatic efforts
made by governments of both countries to address the underlying crisis. Most importantly, the research aims
to estimate the extent of losses that the Afghan traders had to bear due to extensive delays. To achieve these
objectives, primary and secondary sources of data were used. This included official letters and notifications,
1
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

news reports from reliable prominent media outlets, surveys of transporters and traders, and collection of data
from relevant entities, including the customs department and Pakistan Afghanistan Joint Chamber of
Commerce and Industry (PAJCCI). Multiple sources were used to verify facts and figures to ensure that valid
pieces of information could be considered for analysis.

The findings of this paper reveal that the Afghan transit trade was not mainly affected by the disruption of
global supply chains but rather the decisions and approaches of relevant government departments, port
authorities, and unauthorized individuals in Pakistan. The Afghanistan-bound transit containers were reaching
ports of Pakistan from different parts of the world but were not cleared efficiently, resulting in a pile-up of
containers. On the other hand, hundreds of vehicles remained stranded at the crossing points and en route due
to the closure of crossing points. The number of stranded containers reached close to 8000 on March 22 and then
14,000 on March 28 despite the assurance of support from the Pakistani side at senior-most levels. In the
meantime, two dozen vehicles loaded with export goods from Pakistan were allowed to enter Afghanistan on
March 21, while the fate of and plan for Afghan transit cargo was yet to be developed.

The situation needed efficient mechanisms to clear the transit cargo at the port and crossing points so that
congestion could be reduced and space could be creating for the oncoming cargo. However, the decision to
open the crossing points on April 10, 2020, came together with unanticipated and unprecedented stringent
Standard Operating Procedures (SOP’s). For instance, the scanning of transit containers was increased from the
prevailing threshold of 20% to 200%, i.e., 100% scanning of cargo at the port, and again 100% scanning of sealed
containers at the crossing points before the goods could cross over to Afghanistan. To make things worse, even
the cargo that had cleared the scanning stage before the notification of SOP’s were re-sent for scanning.

The requirement for excessive scanning can be interpreted as the first step in the manufacture of delay, which
the interest group exploited to receive financial gains. Scanning of each container costs around $50. As such, a
hundred percent scanning of 40,000 containers only at the port meant a financial gain of two million dollars.
The terminals at Karachi port provide some free days for the goods within which they should be removed from
the port. After which, the trader has to pay demurrage charges between PKR. 2000 – 6000 (~$12.5 - $37) daily.
The Afghan traders use Karachi International Container Terminal (KICT), which provides only five demurrage
free days after which payment must be made for each day of delay. The officials of government of Pakistan
accepted that Afghan traders paid around PKR. 400 million ($2.5 million) in demurrage charges between
March to July 2020. The findings of the survey based on the minimum amount of average daily demurrage

2
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

charges paid by a an Afghan trader reveal that the amount of demurrage charges was three times more than
the figure officially accepted by Pakistani officials i.e. PKR. 1.2 billion (~$7.5 million).

On the other hand, the containers in which the goods are transported belong to the shipping lines, which
provide three to four-week time to return empty containers. After the free period, the shipping lines apply a
progressive detention rate between $80 to $240 for every single day of delay. Given that the containers remained
stranded for weeks at the port, another few weeks en route, and an equivalent amount of time before they could
return to the port and be handed over to the shipping lines, colossal amounts were to be paid in the form of
detention charges. The findings of the paper show that Afghan traders paid a minimum estimated amount of
$40 million in terms of detentions charges to shipping lines between March to August 2020.

The findings of this paper show that excessive scanning was only a source of delay. The Afghan transit
containers need to be tagged with tracking devices and transported in the sealed containers through Customs
Licensed Bonded Carriers (CLBC) as per routine procedures. As the transit trade resumed, thousands of transit
containers were already piled up. There is only one company TPL Trakker Ltd that provides tracking devices,
and it could hardly arrange 250 to 300 devices per day. On the other hand, there are Customs Licensed Bonded
Carriers (CLBC) companies that went through a severe shortage of vehicles. Therefore, as tracking devices were
a compulsory requirement as per the SOP’s, the containers had to wait for weeks before they could be picked
up by a carrier tagged with tracking devices.

The issue of tracking devices was so painful and serious that letters were sent to the Prime Minister’s office in
which the customs clearance agents association complained about the incompetence of the TPL Trakker Ltd.
The issue of the mentioned company was at the heart of news stories and open letters written to the Chief of
Army Staff and Prime Minister of Pakistan. However, the situation did not improve for Afghan transit
containers. To address the issue of tracking devices, the Afghan traders proposed transporting the goods in the
form of a convoy under the security of customs officials (escort en route) and paying for the associated charges,
but it was declined. It is interesting to note that while the government of Pakistan allowed people to attend
congregational prayers during Ramadhan despite a surge in COVID-19 cases nationwide in April 2020, no
flexibility was showed in the stringent SOPs for the Afghan transit trade. It is further important to mention that
the traders have to pay around $50 for each device. As such, the company collected the due amount of two
million dollars for a minimum of 40,000 containers despite all the losses it extended to the traders.

The shortage of vehicles in the market means an increase in freight rates. The data based on the invoices of
clearing agents showed that the freight rates increased by as much as 100% compared with the freight rates just

3
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

before March when the border crossing points were closed. The estimates revealed a minimum loss to the
traders and gains to the Pakistani transport companies close to PKR.3.2 billion (~$20 million) between March
to August 2020.

The paper's findings further reveal that after all the delays, when the containers somehow managed to leave the
port, more delays awaited them. The customs officials issued a notification that the vehicles had to stop at four
different locations and report to customs officials en route to Torkham and Chaman-Spin Boldak crossing
points. In addition, the local transport union established illegal parking areas, which were referred to as mafia
in the official letters. The evidence revealed that they stopped the vehicles and charged around PKR 1000 per
vehicle. While stationed in parking, the vehicles were allowed to skip the queue in return for bribes ranging
between PKR. 10,000 to 35,000. Frequent complaints were made, protests were done, and official notifications
were issued about the union leader named Shakirullah Afridi. However, no action was taken against him, while
the queue of vehicles stretched to a length of 46 kilometers. At the same time, as the news about his arrest was
making rounds in the media, he was spotted in a news report cutting the cake with the federal minister for
Religious Affairs on Independence Day of Pakistan.

The clearance at the crossing point was another source of delay. As per SOP’s, the sealed containers, tagged
with a tracking device and transported in the licensed bonded carriers, were required to be scanned regardless
of any irregularity. In addition, the transit trade was resumed for only three days in a week with a reduced
number of hours. As such, only around thirty vehicles could cross over to Afghanistan. A month later, the
number of days increased to five while the number of vehicles was increased to 100, including 50 Afghan transit
vehicles and 50 export vehicles of Pakistan. While Pakistan’s exports continued to enter Afghanistan since
March, the Afghan exports to Pakistan resumed in June 2020. After the goods were offloaded, the containers
had to be returned to the shipping lines at the earliest to avoid any additional detention charges. It is interesting
to note that even the empty containers returning from Afghanistan were scanned, which only added to the
delay and, in this way, to detention charges.

The situation remained grim as the traders suffered heavy losses. The response of the government of Pakistan
appeared to aim putting Afghan stakeholders through a hoax only. The trade diplomacy of the government of
Pakistan surfaced with the appointment of Sadiq Khan as a Special Envoy for Afghanistan in June 2020. During
the engagements between the Afghan and Pakistani delegations in different events, commitments were
repeatedly made about waiver of exorbitant demurrage and detentions charges. However, after months of
discussions, it was announced in January 2021 that demurrage and detention charges could not be waived

4
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

because port authorities and the shipping lines are private entities. The findings of the paper show that this was
not the first-time commitments about waiver of demurrage and detention charges were made and then not
fulfilled by Pakistani officials. There are more instances of similar promises about waiver of demurrage and
detention charges due to delays caused by force majeure reasons were repeatedly made in the past too, but they
were never fulfilled.

The findings further reveal that commitments about waiver of demurrage and detention charges were the
answer of Pakistani officials every time the traders complained about the underlying transit trade issues during
pandemic at any platform. In addition, while thousands of containers were stuck at the port, en route, and at
the crossing point, causing heavy charges on a daily basis, opening of new crossing points including Ghulam
Khan, Kharlachi, and Angoor Adda were presented as a solution to the underlying problems by Pakistani
officials. Both these approaches were used to handle the complaints, pressure and anger of the Afghan
government, international community as well as traders.

On the other hand, the response of Afghan institutions lacked the needed clout to address the situation. One of
the major reasons was the make shift set up at the key entities, including the Ministry of Finance, Minister of
Industry and Commerce, and Ministry of Foreign Affairs, which were led by acting ministers. Similarly, the
embassy of Afghanistan in Islamabad failed to engage effectively with relevant entities particularly Federal
Bureau of Revenue (FBR) and senior officials to present the case of Afghan transit trade disruption. It even
failed to arrange a meeting of Afghan traders with senior Pakistani officials, and so they may discuss and find
the solutions to the underlying disruption despite repeated requests.

In order to evaluate the nature of transit trade via Iran and Pakistan from March to November 2020, a
comparative analysis was conducted based on the number of Afghan transit trucks through each country. The
data revealed that the duration of disruption of transit trade via Iran was much shorter than that of Pakistan.
Similarly, the import and export transit via Iran witnessed an overall positive trend compared to that with
Pakistan. Overall, the transit trade via Pakistan showed a decrease of 23%, while that via Iran showed an
increase of 6%.

The study identifies some important lessons that Afghanistan needs to learn from the experience of disruption
of transit trade during the pandemic. Some of the key lessons include blatant violation of bilateral trade
agreement by Pakistan, and a repeated pattern of disruption of transit trade followed by commitments to
compensate or recover the losses are a common practice. Further, it was learned that strong institutional support

5
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

and timely engagement at the senior level play a vital role in resolving such disruptions. The transit trade data
revealed that Iran is much more reliable than Pakistan even during a crisis, like a global pandemic.

The paper recommends that to come in a stronger bargaining position and be able to act reciprocally to influence
Pakistan in such events of the violation; it is crucial to create interdependence by allowing Pakistan access to
Central Asia on the one hand. On the other hand, reduce overreliance on Pakistan by diversifying transit routes
by building stronger transit trade relations with Iran. Similarly, as APTTA would expire in February 2021, it is
important to align the new transit trade agreement with Pakistan strictly under the WTO principles and
international best practices.

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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

1. Introduction
The outbreak of the COVID-19 Pandemic is an unprecedented event in recent times. The pandemic that
originated in China reached the rest of the world in no time. Therefore, social distancing and lockdowns are
considering important tools to control the spread. The pandemic had not only health aspects but also economic
aspects. The global supply chains were disrupted, and economies were hit hard by the ceasing of economic
activities.

While the pandemic hit different economies terribly, the vulnerable least developed landlocked countries were
affected even more given the dependence on the neighboring coastal countries. Afghanistan falls within the
same group of countries as it has mainly remained dependent on Pakistan for transit trade. Each year, around
90,000 to 100,000 transit trade containers have been coming to Afghanistan via Pakistan under Afghanistan
Pakistan Transit Trade Agreement (APTTA) signed in 2010.

After Pakistan decided to close all its borders in mid-March, the economy came to a standstill as Pakistan
remains a major transit route for Afghanistan. Based on the ten-year figures since enforcement of APTTA about
Afghan transit trade from the Federal Board of Revenue (FBR) of Pakistan, around 90,000 to 100,000 containers
of Afghan transit goods pass through Pakistan.1 This makes it an average of 7500-8000 containers a month. As
such, it was not surprising to see the severe ramifications that the Afghan economy was exposed to after the
crossing points were closed.

Apparently, the Prime Minister of Pakistan committed to open the border crossing points for Afghan transit
immediately. However, the crossing points were opened after weeks under stringent Standard Operating
Procedures (SOP’s), inefficient mechanisms, and unfriendly approaches. As such, while the global supply

1
Transit Trade Deal Favours Afghanistan, Express Tribune (February 20, 2021)
https://tribune.com.pk/story/2285082/transit-trade-deal-favours-afghanistan
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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

chains were disrupted, the Afghanistan-bound cargo continued to reach the ports of Pakistan. It was mainly
disruption in Pakistan that left the Afghan transit trade in shambles as thousands of Afghanistan-bound
containers remained stranded at the port, en-route, and the crossing points on the Pakistani side for months.

As a result of these disruptions, the Afghan transit trade bore terrible losses. The quality of goods, both
perishable and unperishable, was affected due to months of delays. The Afghan traders had to bear the brunt
of tens of millions of dollars in the form of officially paid demurrage and detention charges and unofficial
payments to unauthorized individuals who exploited this as an opportunity. Considering the need to
understand the severity of the losses caused due to underlying situations, the research aimed to answer the
following questions:

 How Pakistan violated the trade and transit agreement during COVID- 19?
 How different interest groups exploited the situation?
 The extent of losses that Afghan traders bore in the form of demurrage and detention charges, hike in
freight rates, and extortion money?
 Did the Pakistani government and port authorities take timely and sincere actions to resolve the issue?
 Did the Afghan government play an effective role in resolving the transit issue during COVID-19?

While attempting to answer the above questions, the paper provides a chronology of important events, an
analysis of critical decisions, and the effectiveness of the response to the situation. In addition, it provides an
account of similar disruption of transit trade in the recent past.

2. Methodology
2.1. Research Objectives and Approach
The paper aims to document the incidents, facts, figures, and extent to which traders bore the brunt of a sudden
disruption of transit trade as the arrival of COVID- 19 pandemic and the consequent lockdown in Pakistan
transpired into a nightmare for the Afghan transit trade. It provides an overview of the major challenges that
Afghan traders, transporters, and the government faced during the pandemic starting in March 2020. In general,
the paper aims to provide:

 An analysis of key decisions, policies, and actions of private sector actors and relevant departments of
the government of Pakistan

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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

 An analysis of the response of different departments of the Afghan government to address the
underlying challenges
 An estimate of financial losses at different stages, including the arrival of goods at the port, en route,
at the crossing point

As observed commonly, different stakeholders make political or generalized statements to either defend their
position or to highlight their problems in such a crisis. Therefore, the focus of the research is to segregate the
process of Afghan transit trade via Pakistan into different stages and study from different aspects at each stage
during the pandemic.

2.2. Research Design and Implementation

To ensure that the major objectives of the research are achieved, it was made sure that facts and figures from
reliable sources serve as a basis for the analysis. Therefore, multiple primary and secondary sources were used
to ensure a realistic, rational, and verifiable analysis. Recognizing that the nature of problems and the extent of
losses caused at each stage of transit of Afghan goods is different, it was necessary to break down problems at
different stages. For simplicity, it was planned that the process of Afghan transit trade was broken into different
stages, and problems, pain points, and financial costs or losses in each stage are analyzed. Therefore, the
problems at key stages in three locations were studied, which broadly included:

 Challenges at the port of entry (Scanning, supply of tracking devices, supply of carriers, etc.)
 Challenges en route (stoppage of vehicles and associated illegal activities)
 Challenges at the crossing point (scanning, procedures, and clearance)

Once the stages and the pain points in each stage were identified, the next important step was to collect relevant
facts, figures, and information about each stage. In order to collect data and get a better understanding of the
situation, the following sources and techniques were used as part of the study:

 Official Letters and Notifications: Several official letters and notifications were issued by relevant
departments of Afghanistan and Pakistan, including instructions, complaints, concerns, and notes for
different stakeholders. These letters served as a source of providing important information about a
number of containers stranded at different locations, the concerns and complains of Afghan traders,
the decisions and instructions of different officials, and other relevant facts and figures.

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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

 Surveys: A team of surveyors conducted a survey of more than one driver and traders. The survey had
two sections. The first section was for transporters in which the information about the stoppage at
different locations and the amount of extortion money paid at each location were collected. The second
section was for the traders, and it collected information about the number of days and amount of
demurrage and detention charges paid. In addition, it asked about the number of days they had to wait
for the tracking devices and the hike in the freight rates compared with those before the arrival of the
pandemic.

The paper also used survey data collected by the Afghanistan chapter of Pakistan Afghanistan Joint
Chamber of Commerce and Industry (PAJCCI). This survey collected data about detention payments
based on bills of lading for more than two thousand transit consignments. The amount of detention
charges was analyzed through the percentiles approach. Percentiles indicate the percentage of scores
(in our case, detention charges) that fall below a particular value. For instance, the number of
consignments or containers for which the detentions charges were $5000 or below. The same approach
was used to analyze other variables like extortion payments, stoppage at different locations, or wait for
the tracking devices.

 Data from Customs Department: The data from the customs department was collected to understand
the flow of goods at the crossing points. The customs department shared an important set of data
related to the number of transit trucks/ vehicles that crossed the crossing points along with Pakistan
and Iran between March to November in 2019 (before the pandemic) and 2020. The data for the
mentioned period was used to conduct a comparative analysis of transit of containers via Iran and
Pakistani during and before the pandemic and understand the extent of disruption in both countries.
 News Reports and Media Interviews: The paper collected and analyzed facts, figures, and other
information from the news reports of prominent media outlets. In addition, interviews and video
reports were considered to collect data for analysis.

In order to ensure the reliability of data, multiple sources were used to verify the data from one source. For
instance, the traders claimed to have paid a much higher amount of freight charges during the pandemic. In
order to understand the validity of these claims, a number of invoices of clearing agents were collected from
other traders and the freight rates in the invoice were compared with those claimed by the traders in the
survey. A similar approach was used to estimate other variables like demurrage and detentions charges.

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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

3. What Actually Happened: Manufacture of Delay & Exploitation

The shipping lines usually deliver Afghan transit goods in sealed containers. Each consignment reaches in one
or multiple sealed containers to the port. As the goods reach the port, they go through customs clearance
procedures. Before leaving the port, the customs officials put their own seal on the containers and allow the
consignment to leave the port in a bonded carrier tagged with tracking devices.

The containers in which the goods are delivered belong to shipping lines. The shipping lines allow a specific
number of days, usually 15- 30 days, to return the container to the shipping line after the goods have been
offloaded at the destination. The time needed for clearance of goods at the port, transporting goods to the
destination after crossing over to Afghanistan, offloading the goods, and returning the empty container back to
the company is unpredictable and usually takes more time than the allotted days to return the container.
Therefore, the Afghan traders make an extra payment to the shipping lines and buy additional free days. If the
container is not returned to the port within the allotted free days, the company charges progressive per-day
container detention charges. The rate roughly ranges between $ 80 - $ 240 per day and the daily rate increases
progressively after given time slabs.

On the other hand, the port authorities provide a number of days for the goods to be cleared from the port. If
the goods do not leave the port within the allotted time, the traders have to pay per day demurrage charges for
the number of days the goods stay at the port.

Therefore, the Afghan traders would ideally prefer immediate clearance at the port and return the container on
time to avoid demurrage and detention charges as well as avoid damage to goods caused by delays. The time
pressure on the Afghan trader usually creates incentives for the interest groups to delay the consignments and
exploit the Afghan transit trade as a milking cow. The Afghan transit trade faced a similar situation in which
delays were manufactured and heavy costs were exerted to traders during the COVID- 19 pandemic. The
headings below provide an overview of how a sequence of events and different tactics put in place to
manufacture delay and allowed the interest groups to benefit financially.

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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

3.1. Excessive Scanning

As per normal procedure, a specific percentage of containers arriving at the port of entry is sent for scanning
based on the Risk Management System for customs control purposes. The international standards proposed by
the Revised Kyoto Convention insist on simple, efficient, and effective control procedures. As such, the two
countries agree on a specific percentage of scanning to be carried out. From 2017 onwards, the Customs Rules
of Pakistan required 20% of Afghan transit goods to be scanned at the port.2 The decision to re- open the crossing
points for Afghan transit came up with stringent conditions of the Federal of Revenue (FBR) with the following
scanning requirements:3

- 100% scanning of Afghan Transit cargo at the port of entry, including the already cleared containers and
lying at the port and waiting for the gate out.
- 100% scanning of transit cargo at Torkham/ Chaman

As such, a 200% scanning of transit goods and re-sending the goods that had already cleared the scanning stage
back to the scanning machine meant more delays. This is why the Commercial Attaché officially complained to
Customs House Karachi about re- scanning of goods that have already been cleared and are waiting for the
vehicle to leave the port. He further requested that 100% scanning of goods at the port only one time should be
enough.4 However, these requests did not help in the resolution of the process.

The reports revealed that the customs officials cleared around 600 import containers of Pakistani officials while
only around 150 transit containers were cleared on a daily basis.5 Given that an average of 7500- 8000 transit
containers passes through Pakistan and that a backlog of 9000 containers was reported even in September 2020,
the estimated number of containers scanned can easily reach 40,000 between March and August 2020 if we
assume an average of 7000 containers per month.6 The excessive and compulsory 100% scanning at the port
meant that the port authorities could easily mint around $2 million by scanning at least 40,000 containers only

2
Customs Rules of Pakistan, S.R.O.564(I)/2017
3
Letter from FBR to DG Transit Trade Customs House Karachi and other relevant directorates (No. C.No.1(13)T&BT/2013-64606R;
Dated: April 07, 2020)
4
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to DG transit Trade
Custom House Karachi (Ref # AF/CA/129 April 15, 2020).
5
Open letter to PM, COAS: FBR and police running down Pakistan, Global Village (July 17, 2020)
https://www.globalvillagespace.com/afghan-transit-trade-the-plight-of-traders/
6
Border Delays Risk Pakistan’s Trade Surplus, The Bloomberg (September 07, 2020)
https://www.bloombergquint.com/onweb/border-delays-risk-pakistan-s-trade-surplus-with-afghanistan
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 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

at the port—the scanning of each container costs around $50. The delays further add to the financial gains of
other stakeholders who claim fees and fines due to the delay of the Afghan cargo.

3.2. Supply of Bonded Carriers

The Afghan transit cargo is transported in the Customs Licensed Bonded Carriers (CLBC) in the sealed
containers. One of the major requirements for the issues of license for the companies to carry Afghan transit
goods is owning a fleet of at least 25 trucks along with other requirements like security deposits. As the
companies must have a fleet of only 25 trucks, the additional trucks are picked from the open market. Therefore,
a limited number of companies have the license and meet the additional demand by outsourcing the additional
trucks from the open market. They normally charge 30%-50% more than market prices, including payment to
the transporter and their own mark-up.

One of the important requirements for the bonded carriers is that the truck must cross over to Afghanistan
within 14 days. If the truck fails to do so, the National Tax Number (NTN) of the company is automatically
blocked by Web Based One Customs (WeBOC), and the process to unblock it takes a significant amount of time.

The requirement created a major challenge for Afghan transit as the Afghan-bound trucks could not manage to
cross over to Afghanistan within the required number of days due to the closure of crossing points. Therefore,
the NTN of almost all bonded carriers was blocked by WeBOC by March 22.7

 The shortage of bonded carriers increased the market prices, which rose by more than 100%.
 Therefore, after going through the scanning process and completing the clearance process, the Afghan
transit containers waited for the supply of trucks by the CLBC to leave the port
In order to understand the fluctuation in the freight further, a survey of transporters was conducted in which
they were asked about the freight they paid just before the pandemic and then during the pandemic for the
same size containers. The comparative analysis of data reveals that freight rates were significantly higher during
April and May when the traders had to pay 70% to 80% more than the normal freight rates. Notably, an increase
in the freight rates ranged between PKR. 40,000 to 150,000. If we assume an average increase of roughly PKR.
80,000 per vehicle, the total losses to the traders and gains to the transporters would amount to an estimated
PKR. 3.2 billion (~$20 million) for a minimum of 40,000 containers.

7
ibid
13
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

In order to understand and validate the fluctuation in the freight rates due to shortage of vehicles as revealed
by the survey of transporters, invoices of clearing agents were collected for a number of consignments between
December 2019 and November 2020.
The data shows a clear increase in freight during the pandemic. This implies that the cartel of bonded carriers
made a considerable amount of profit. However, the problem with the invoices was that they are prepared after
the consignment is delivered, which took at least a month on average. There, the freights are for the
consignments that arrived a month or forty days ahead of the mentioned date. The data shows a significant
increase in freight during the pandemic.

14
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

3.3. Supply of Tracking Devices

In the letter from FBR to customs officials in April, another important requirement for re-activating the Afghan
transit trade was the compulsory use of tracking devices. It is important to mention that by March 22, around
6000 containers were already stuck at the port following the closure of crossing points. In the meantime, more
transit consignments were reaching the port. In the following week, the figures reached close to 10,000.8 This
implies that figures for the stranded containers had easily crossed the figures of March by the time the letter
from FBR reached the customs and transit officials in the first week of April 2020.

The supply of tracking devices for Afghan transit consignments is the monopoly of a single company named
TPL Trakker Ltd. The company uses the devices on a re-use basis, and as soon as any empty container reaches
the port, the device is removed and made available for the next container. The company charges around $50
per device, which sums up to around $50 million a year for an average of 100,000 transit containers. Now that
a backlog of more than 10,000 containers was created, the company failed to supply the needed number of
tracking devices. The company could only manage to provide 4100 devices during 19 days between June 15 and
July 7, 2020, after several complaints were made against the company.9 The impact of a shortage of supply of
tracking devices was so severe that the association of customs agents officially sent complain directly to the
Prime Minister's Office and proposed that TPL be held responsible for paying the Afghan traders' exorbitant
charges have had to bear due to delay.10

As tracking devices was a compulsory requirement for the transit containers, while the company could manage
devices for only half of the pending consignments, the transit goods remained at the port waiting for the devices
to leave the port.

In order to understand the severity of the wait for the tracking device, a survey was conducted in which the
transporters were asked about the number of days they had to wait for tracker devices. As the tracking devices
and the vehicle were interdependent, the containers either had to wait for the tracking devices or the vehicle.

8
Letter of Commercial Attaché to multiple government departments, PM Office and Chambers of Commerce (Ref No. AFG/CA/125
Dated: March 29, 2020)
9
A Company Destroying Pakistani Interests?, Matrix Magazine, (July 29, 2020)
https://www.matrixmag.com/5000-containers-a-company-destroying-pakistani-interests/
10
Letter from Karachi Customs Agents Association to Prime Minister Imran Khan (Ref NO: KCAA-449-/2019-2020 Dated: July 02,
2020)
15
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Even if the vehicles were available without a tracking device, they could not pick the container from the port
and depart. Therefore, the survey asked the transporters about the number of days they had to wait either for
the tracking device or the vehicle. Surprisingly, the containers had to wait for one month on average, while
some had to wait for around two months for the tracking devices. Despite being one of the major reasons for
disruption of transit trade and consequent financial losses, the company received around $2 million for an
estimated 40,000 transit containers.

3.4. Demurrage Charges

As per normal procedure, the port authorities provide a number of free days for the goods to leave the port. If
the goods stay at the port after the free days, the traders have to pay demurrage charges every day. The number
of free days at different terminals of Karachi varies.
 Pakistan International Container Terminal (PICT) and Qasim International Container Terminal (QICT)
allow 15 demurrage free days
 Karachi International Container Terminal (KICT) and South Asia Pakistan Terminal (SAPT) allow only
five demurrage free days
Most of the Afghan transit cargo is channeled through KICT. The clearance process at the port is not completed
within the allotted time during the normal days given the scanning process, breakdown of scanners,
complicated customs procedures, and heavy cargo traffic. The Afghan traders have repeatedly raised the issue
at Afghanistan Pakistan Transit Trade Coordination Authority (APTTCA) platform and request an increase of

16
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

demurrage-free days.11 However, the situation remained unchanged and Afghan traders have had to pay the
demurrage charges.

The arrival of pandemic and resulting situation transpired into a heavy situation for the Afghan transit goods
as the goods could not be cleared within the allotted number of free days due to:
 100% scanning of goods at the port
 Re- sending the goods that were already cleared to the scanning machines
 Delay in the supply of tracking devices
 Delay in Supply of vehicles

The demurrage charges for the consignments are around PKR. 5000 to 10,000 normally. However, prolonged
delays caused by multiple reasons meant exorbitant demurrage charges that Afghan traders had to pay for their
consignments. According to the Ministry of Maritime Affairs of Pakistan, the number of demurrage charges
levied on Afghan transit cargo was around PKR. 400 (~$2.5) million between March 24 to July 21, 2020.12
In order to understand the amount of demurrage charges paid individually, questions were asked about the
amount of demurrage charges paid by each trader for a given consignment between March and August 2020 in
the survey. In order to ensure reliable data can be considered for analysis, the only verifiable amount reflected
in the invoices were considered. The amounts reflected in the invoices revealed that the traders had paid a
minimum PKR. 30,000 (~$180) and as much as PKR. 323, 000 (~2000) in terms of demurrage charges as revealed
in figure 4 below.

11
Pakistan- Afghanistan Bilateral and Transit Trade Issues & Proposed Resolutions, (April 2018)
12
ECC Allows TCP To Import 200,000 Tons of Wheat, Profit News (August 21, 2020)
https://profit.pakistantoday.com.pk/2020/08/21/ecc-allows-tcp-to-import-200000-tonnes-of-wheat/
17
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

The heavy demurrage charges were levied because the goods remained at the port for a longer time than the
allotted free days due to multiple reasons mentioned above. The major terminal which handles more than 80%
of Afghan transit cargo i.e. Karachi International Container Terminal (KICT) provides on 5 demurrage free
days. The most serious problem was that goods could not leave the port within allotted free days either due to
the supply of tracking devices or vehicles. Therefore, the traders who had paid heavy demurrage charges were
asked a follow-up question about the number of days for which demurrage was paid and the number of days
they had to wait for the tracking device or vehicle. The data reveals that the delay in the supply of vehicles or
tracking devices was the major reason behind the superfluous demurrage charges.

A comparison of amount of demurrage charges in figure 4 with the number of days with the number of days
for which demurrage was paid in figure 5 was done to calculate the average amount of demurrage charged paid
per day. If we take the minim average daily demurrage charges paid for a container i.e. the consignment that
arrived on April 28 which paid PKR. 1500 demurrage charges per day for 20 days for a 20ft container and
estimate demurrage charges for 40,000 containers that arrived between March and August 2020, the estimated
amount of total demurrage charges during the period appears to be PKR. 1.2 billion (~$7.5 million), three times
more than the amount acknowledged by Pakistani officials. It is important to mention the amount of demurrage
charges increase depending on factors like the size of container, nature of goods, duration of stay on the port
etc.

18
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

3.5. Stoppage en Route

The departure from the port after weeks of wait for the supply of bonded carriers and tracking devices did not
mean the end of miseries for the Afghan transit trade. The vehicles carrying transit goods were required to stop
at different locations. The transporters moving towards the Torkham crossing point were stopped at different
locations.

The customs officials issued a notification in early May which pointed out a list of locations where the
transporters carrying transit cargo to Afghanistan were required to stop at each location and report to relevant
customs officials.13 As per the notification, the transporters going to Torkham were required to stop at four
different locations in Hyderabad, Multan, and Peshawar. Those going to Chaman- Spin Boldak were required
to stop at four different locations in Gwadar and Quetta and report to relevant customs officials.

The most extended stoppage was notable at Bara road, where the local transport union led by Shakirullah Afridi
had established its own illegal parking lot or staging point and asked the transporters to stop until permission
was granted. They ran the parking lot through their fifty-people group, charged PKR 1000, and hardly provided
any other services to the transporters in the hot summer. At the mentioned check point, the excessive stoppage
resulted in a 46KM long queue of trucks waiting to reach Torkham and cross over to Afghanistan.14

13
Customs Order No. 22/2020- Estt- DTT letter No. SI.Misc/07/2013-Estt –( DTT) dated (May 29, 2020)
14
Sadiq Khan, PM’s Special Representative for Afghanistan, on Hum News Program Bari Baat, Youtube, (September 24, 2020)
https://youtu.be/6-LDx05O9vA
19
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

The real business at the mentioned location started at night. The transporters who paid bribes could skip the
queue and move towards the crossing point. The transporters who could not pay the bribe had to wait under
the sun in the long queue. Local journalists covered the ongoing appalling situation and conducted interviews
with the union head, the local authorities, and the transporters. The transport union denied any charges of
exploitation or corruption. On the 05th of July, 2020, one of the transporters named Haji Sada Khan led a protest
against the transport union and complained that the union charged PKR 1000 for no service and allowed the
transporters who paid PKR 50,000 to skip the queue. On the following day, a local journalist reported that the
union dragged Mr. Haji Sada Khan into a fight and killed him.15 16 In the protest against the killing of Sada Khan
Mohmand, his brother claimed that the illegal parking lot of Bara Road is led by a local mafia. However,
government officials who are sitting in the air-conditioned room are giving them full backup and support.17 He
further added that up to PKR 50,000 is illegally collected from the transporters to skip the queue.

The issue of Shakirullah Afridi was repeatedly raised at different platforms as well as formally reported by
Afghan and Pakistani officials in which the parking lot was declared as illegal and legal action was requested
against the mafia head who charged an illegal amount of PKR. 20,000-50,000 from each container. The notable
communication of the issue includes:

 Notification and complain about Shakirullah Afridi by Afghan Consulate to the Office of Chief
Minister of Khyber Pakhtunkhwa18
 A detailed account of illegal activities was reported by Customs House Peshawar Director General
Transit Trade Custom House Karachi and requested strict legal action against him.19

In order to verify the extent to which bribe was collected at the illegal parking area and the number of days each
truck had to wait, a survey of 100 transporters was conducted at Torkham about stoppage at different locations
and the amount of money that was taken from them. The survey findings revealed that most of the trucks were
stopped at Karak for two to three days, but the real challenge was the illegal parking lot or staging point at Bara
Road led by Shakirullah Afridi. At the mentioned location, the survey findings reveal that the trucks were

15
Journalist Abdul Azam Shinwari, (July 6, 2020) https://tinyurl.com/yf4d9r8x
16
Shinwari Media, July 6, 2020 https://tinyurl.com/3zxb6j67
17
Kyber Maraka, July 27, 2020 https://www.youtube.com/watch?v=zMITsYjDHVk
18
Letter from Office of Commercial Attaché Peshawar to Office of Special Assistant to Chief Minister KP on Industry and Commerce
(Ref. No: 257 Dated: July 08, 2020)
19
Letter from Director Transit Trade Customs House Peshawar to Director General Transit Trade Customs House Karachi (No:
C.No.05-01/DTP/2013/Pt-II/16 Dated: July 13, 2020)
20
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

stopped for at least 7 days and up to 26 days. The number of days stoppage percentiles reveals that 50% of the
vehicles were stopped for up to 16 days.

The pandemic was a critical time, and it was important to ensure on-time delivery of food items, including
medicines. The tweet of PM Imran Khan had assured people that his country would stand with the Afghan
nation during a hard time. However, the ground realities state a different story. The survey segregated the
extortion money collected from trucks loaded with food items and those without food items.

It is important to note that hardly any priority was given to the food items which were at high risk of damage
as we compare the number of days for which food and non- food items were stopped at the illegal check point.
The percentiles of the number of days each transporter was held at the check point reveal that there was hardly
any difference between the duration for which the truck had waited. In fact, the trucks loaded with food items
waited for slightly more number of days than the non- food items, as revealed in the figure below:

In order to verify the extortion money, the survey collected data from the transporters about the amount of
money that each transporter had to pay at the illegal parking lot. The survey revealed that they had paid at least
PKR. 6000 and at most PKR. 35,000 at the illegal check point. The percentiles of extortion amount paid by each
transporter show that 80% of the transporters had paid up to PKR. 21,000 before they were allowed to move
towards the Torkham crossing point.

21
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

The data further revealed that no special provisions or priority was given to the food items when it came to
extortion money. The percentiles of data collected from the transporters reveal that the trucks loaded with food
items paid more extortions money. This finding falls in line with the fact that the food items are perishable and
more vulnerable to the risk of damage. Therefore, as the transporters cannot afford delays compared to the non-
food items, it creates an incentive to exploit the trucks loaded with food items to allow them early.

The situation was getting worse day by day due to extensive stoppage at the illegal checkpoints and protests of
transporters. However, while the news of the arrest of Shakirullah Afridi was making rounds among the

22
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

transporters, he was seen cutting the cake with Minister of Religious Affairs Mr. Noorulhaq Qaderi on the
Independence Day of Pakistan.20

The clearance from the illegal parking lot in Bara and permission to move towards Torkham was not the end of
miseries. The video evidence shows that the transporters had to pay around PKR 200 at each Khasadar Check
point up to Torkham totaling around PKR.1500.21

3.6. Disruption at Crossing Point

The departure from the illegal parking in Bara and reaching the Torkham crossing point after extortion
payments at different locations was not the end of the miseries of the transporters. The bigger problem was that
while the Torkham crossing point was opened, more complexity was added to the problem. The trucks were
allowed for only three days in a week, i.e., Monday, Wednesday, and Friday, as thousands of transporters
waited at the port, en route, and exit to reach Afghanistan when the transit resumed on April 10, 2020.22 In
addition, the customs officials were instructed to ensure 100% scanning containers before they crossed over to
Afghanistan.23

The scanning of a single container takes around 5-7 minutes. There is only one scanner at the Torkham crossing
point, and selective scanning of containers was not much of a problem. However, a 100% scanning of transit as
well as bilateral trade cargo while a backlog of thousands of containers awaited to cross over only added to
further congestion and slowdown of the process. The issue was so serious that even the customs officials in
Peshawar had to report to the senior officials about the problem.24

The question is, why would there be a need for a 100% scanning of transit cargo transported in a sealed
container, tagged with a tracking device and supported by relevant documentation just before it crossed over

20
Khyber Maraka, Independence Day Celebrations, YouTube, (August 14, 2020) https://www.youtube.com/watch?v=Jz4JIEDJbtw
21
Khyber Maraka, Extortion at Torkham, YouTube, (December 30, 2020)
https://www.youtube.com/watch?v=i7lV8CXnoGA
22
Transit Trade Resumes at Torkham Border, Daily Times, (April 11, 2020)
https://dailytimes.com.pk/593462/transit-trade-resumes-at-torkham-border/https://dailytimes.com.pk/593462/transit-trade-
resumes-at-torkham-border/
23
Letter from FBR to DG Transit Trade Customs House Karachi and other relevant directorates (No. C.No.1(13)T&BT/2013-64606R;
Dated: April 07, 2020)
24
Letter from Director Transit Trade Customs House Peshawar to Director General Transit Trade Customs House Karachi (No:
C.No.05-01/DTP/2013/Pt-II/16 Dated: July 13, 2020)
23
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

to the destination? It was not surprising that only 30 vehicles could cross over to Afghanistan in such an
arrangement in a day.25 The decision was revised in early May. According to new arrangements, 100 vehicles
could enter Afghanistan, which included 50 Afghan transit vehicles and 50 export trade vehicles of Pakistan,
with the justification that the measures were put in place to curb the spread of the virus.26 It is interesting to
note that while the Pakistani government allowed large gatherings at the mosques during Ramadhan despite
the surge in COVID- 19 cases in the country, strict measures were still maintained for the Afghan transit trade.27
The exports of Afghanistan to Pakistan finally resumed in the third week of June after three months.28 The
restriction of Afghanistan’s imports to Pakistan had created another backlog of export goods in addition to
empty containers waiting to cross over to Pakistan.

The closure of crossing points and the resulting situation had led to a backlog of consignments and containers
waiting to move in the opposite directions. There were two types of vehicles that had to cross over to Pakistan.
The export consignments mainly fresh fruits and vegetables meant for Pakistan and the empty containers to be
returned to the shipping lines at the port.

Therefore, after the transit containers were offloaded on the Afghanistan side, they returned to the port.
However, the long queue of both types of vehicles meant each truck had to wait for weeks to cross over to
Pakistan. In the light of instructions of FBR, a 100% scanning of even the empty containers was ensured. The
clearance of returning empty vehicles created another headache for the traders.29 As a result, while around 400-
500 containers could enter Afghanistan, only around half of this number could return on a daily basis, creating
a backlog of empty containers on the Afghanistan side. This further slowed down the process and contributed
to more congestion and extension of the queue of vehicles.

25
See 22
26
KP traders demand complete opening of Torkham border, Profit News, (May 04, 2020)
https://profit.pakistantoday.com.pk/2020/05/04/kp-traders-demand-complete-opening-of-torkham-border/
27
Mosques to Remain Open in Pakistan Despite Surging Virus Threat, Times of India, (April 19, 2020)
https://timesofindia.indiatimes.com/world/pakistan/mosques-to-remain-open-in-pakistan-despite-surging-virus-
threat/articleshow/75229027.cms
28
Pak-Afghan trade: 500 truckloads of goods to cross Torkham border on Monday, Daily Times, (June 18, 2020)
https://dailytimes.com.pk/628390/pak-afghan-trade-500-truckloads-of-goods-to-cross-torkham-border-on-monday/
29
Torkham border: Afghan traders seek resolution of empty vehicles’ issue, Business Recorder, (Jan. 11, 2021)
24
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

3.7. Container Detention Charges

The shipping lines provide the traders a specific number of free days, usually around three to four weeks, after
which detention charges are applied daily on each container. As per normal practice, the Afghan traders pay
an additional amount to buy more free days from the shipping lines to avoid heavy detention charges. The
analysis of the number of days a consignment spent at the port, en route, at the crossing point, and way back
reveals that the free days for most of the containers had already expired before leaving the port. The exorbitant
costs were already a mounting financial burden on the traders. Therefore, the traders started demanding a
waiver of demurrage and detention charges as they were not responsible for the force majeure causes of delay
and other issues due to which the containers could not be returned on time. Despite such Force Majeure, the
daily detention rate between $80 to $240 was levied on them for the number of days the container could not be
returned after the free period expired.

The Afghanistan chapter of Afghanistan Pakistan Joint Chamber of Commerce and Industry (PAJCCI) asked
the traders to provide data on the amount of detention that each trader had to pay for a given consignment
based on the bill of lading. They were asked to provide data including the name of the company, serial number
of bill of lading, name of shipping line, the arrival date of consignment, and the detention amount paid against
each bill.30 In response, data from around 2200 bills was shared. The data was cleaned, sorted, and then analyzed
for this paper. The percentiles of the amount of detention charges that each trader had paid in a single bill of
lading ranged between $500 and $10,000. If we consider only the median, 50% of traders had paid more than
$2000 while the figures are even more exorbitant at higher percentiles.

30
Torkham border: Afghan traders seek resolution of empty vehicles’ issue, Business Recorder, (11 Jan 2021).
https://www.brecorder.com/news/40049691
25
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

In order to verify the collected data, the official bills of lading were collected from a number of traders. The data
revealed that, on average, the traders had paid around PKR. 500,000 (~$3125) for a single container. There were
some containers for which the detention amount paid by the trader was around PKR. 1.5 million (~$9375) for
a period of 83 days. Even if we consider only $1000 detention charges on average for a container, the estimated
figures would easily reach $40 million for an estimated 40,000 containers.

26
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

4. Response of the Government of Pakistan

In February 2020, the United States and the Taliban signed the “Agreement for Bringing Peace to Afghanistan”
of Afghanistan. The agreement between the two parties implied a new and active role for Pakistan in the
forthcoming set up in Afghanistan. As such, the Pakistani government had to launch a renewed engagement in
Afghanistan. As part of the importance of the new engagement activities, prominent senior diplomat Mr.
Mohammad Sadiq Khan was appointed as a special envoy for Afghanistan in June 2020.31 Mr. Sadiq Khan
adopted trade diplomacy as a new approach for engaging with Afghanistan and focused on bilateral as well as
regional trade and transit. In a meeting with PAJCCI in the third week of June, he discussed the issues of
exorbitant demurrage charges, excessive scanning, and shortage of tracking devices with the traders and
assured that the issues would be addressed soon.32

A month after the appointment of Mr. Sadiq Khan, the Pakistan-Afghanistan Parliamentary Friendship Group
(PFG) held its first Executive Committee Meeting.33 The meeting's primary focus was improving bilateral trader
relationships that had slumped to less than one billion dollars from $5 billion a few years back. The National
Assembly speaker, Mr. Assad Qaiser, who had chaired the meeting, established six task forces to work on
different issues related to bilateral relations, particularly trade and transit. Two important committees that were
given 15 days to consider the matters and present their report were:

 Task Force of PFG on Tracking & Scanning of Containers

 Task Force of PFG in Customs Related Issues

As per the plan, a follow-up meeting was held in the third week of July.34 The first task force discussed the issue
of high rate of scanning and the use of tracking devices and proposed that the scanning should be simplified
and brought down to the internally accepted principles. On the other hand, the second task force discussed
customs relations issues under the agenda “discussion with institutional stakeholders on waiving off high port

31
Mohammad Sadiq appointed as special envoy to Afghanistan, The News International (June 7, 2020)
https://www.thenews.com.pk/print/669221-mohammad-sadiq-appointed-as-special-envoy-to-afghanistan
32
Parliamentary Friendship Group Recommends Measures to Facilitate Pak-Afghan Bilateral and Transit Trade, Afghan Study
Center, (July 22, 2020)
https://afghanstudiescenter.org/parliamentary-friendship-group-recommends-measures-to-facilitate-pak-afghan-bilateral-and-
transit-trade/
33
The 1st Executive Committee Meeting of Pakistan-Afghanistan Parliamentary Friendship Group, National Assembly of Pakistan
(July 08, 2020)
http://na.gov.pk/en/pressrelease_detail.php?id=4071
34
Trade Facilitation and Ease of Doing Business at Chaman Border Is the Priority of The Government, National Assembly of
Pakistan, (July 22, 2020) http://na.gov.pk/en/pressrelease_detail.php?id=4081
27
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

demurrage for Afghan bound containers stuck at Pakistani ports.” It proposed that demurrage charges should
be waived for Afghan consignments, which are stranded in Pakistan due to the pandemic. In the meeting, it
was revealed that the estimated amount of demurrage charged on Afghan transit cargo was around PKR. Four
Hundred million and the Ministry of Maritime Affairs would move a summary for the Economic Coordination
Committee (ECC) for waiver of charges from March 24, 2020, to July 21, 2020, on the grounds of force majeure
and that three precedents for grant of waiver existed in the past.

The Ministry of Maritime Affairs moved the summary for the ECC and proposed a waiver of PKR.397 million
demurrage charges, and it was discussed in the meeting held in August.35 The committee asked the ministry to
discuss the issue with port authorities and terminal operators and find a solution to the problem.

In the last week of October, Pakistan Afghanistan Trade and Investment Forum 2020 was held in Islamabad, in
which traders, parliamentarians, and civil society organizations from both countries participated. Once again,
trade-related problems were discussed in detail exclusive session titled “Reducing the Cost of Pakistan-
Afghanistan Transit Trade,” and resolution about waiver of demurrage and detention charges were mutually
agreed on, which said:

“(4) Demurrage and containers detentions charges should be waived off on containers that were
being stranded due to the ongoing Covid-19 pandemic.”36

In December 2020, the 8th Afghanistan Pakistan Transit Trade Coordination Authority (APTTCA) meeting was
held in Islamabad. Once again, the transit trade challenges during the COVID- 19 were on the agenda as they
still required attention and solution.37 The Afghan side insisted on the outstanding issues, including the waiver
of around PKR. 500 million demurrage and PKR. 7 billion detention charges during COVID- 19, aligning the
100% scanning with the international standards, eliminating the monopoly of TPL for the supply of tracking
devices and cartel of Customs Licensed Bonded Carrier (CLBC) for the supply of vehicles. It is important to
mention that the APTTCA meeting had ended on a negative note due to the refusal of Pakistan to accept the
proposal of Afghanistan to draft the new agreement in accordance with WTO agreements and principles.
Afghan delegation had returned without signing the minutes of the meeting.

The drop scene of the quest for and promises about waiver of demurrage and detention charges ended up on a
frustrating note for the Afghan traders. The Pakistani side stated that no agreement was reached on the waiver

35
ECC Allows TCP To Import 200,000 Tons of Wheat, Profit News (August 21, 2020)
https://profit.pakistantoday.com.pk/2020/08/21/ecc-allows-tcp-to-import-200000-tonnes-of-wheat/
36
Pak-Afghan Trade, Investment Forum Ends with Inclusive Recommendations, Business Record Newspaper, (October 28, 2020)
https://www.brecorder.com/news/40029205
37
Pak-Afghan Trade Talks Go Nowhere, Business Record, (January 1, 2021) https://www.brecorder.com/news/40046486
28
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

of demurrage and detention charges because the charges were private party transactions between private port
terminal operators, shipping lines, and Afghan importers and terminal operators.

It is important to mention that this was not the first time that the issue of waiver of demurrage and / or detention
charges was raised. Similarly, this is not the first time since the signing of APTTA in 2010 when Afghan cargo
has been subjected to mass demurrage and detention charges. More interestingly, there have been other two
instances of commitment from the Pakistani side about waiver of demurrage charges due to force majeure and
two instances of heavy demurrage and detention charges that Afghan traders have had to pay:

 2002: The international community's engagement and the launch of reconstruction work in
Afghanistan post 9/11 caused an unprecedented and sudden rise in the imports of the country.
However, the railway system- the mode of transit of goods from Karachi port to Peshawar- was not
prepared for this change. This resulted in congestion at the port leading to demurrage charges of
around PKR. 1.3 billion. However, the Chief Executive of Pakistan, Mr. Parvez Musharraf, granted a
waiver to 371 transit consignments of Afghanistan.38
 2010: In mid- 2010, Pakistan was hit by the worst floods in around 80 years.39 While the disaster
affected people and infrastructure, it also interrupted the transportation networks. As a result, the
Afghan transit cargo had to remain at the port waiting for the vehicles and clearance of the roads
leading to heavy demurrage charges. In October of the same year, Pakistan’s Prime Minister, Mr.
Yousaf Raza Gillani, visited Kabul, where demurrage charges were discussed with him, and he
committed to waiving the charges. As a follow-up, the Pakistani delegation confirmed in the
APTTTCA meeting that the government had decided to waive the demurrage charges.40 The details
revealed that the Economic Coordination Committee (ECC) had not only approved the waiver of
demurrage charges for the 2010 consignments but also the consignments that are lying at the Karachi
port since 1971, both totaling around PKR. 1.13 billion.41
 2012/13: APTTA 2010 required multiple guarantees from Afghan traders and transporters. The newly
signed agreement had ambiguities, leading to confusion resulting in a halt of around 3700 Afghan
transit containers at the port. The containers were stopped for around three months and resulted in
demurrage and detention charges close to $50 million.42 The losses were so severe that the

38
ECC Grants One-Time Waiver of Demurrage on Afghan Cargo, Business Record (May 10,2011)
https://www.brecorder.com/news/3872254/ecc-grants-one-time-waiver-of-demurrage-on-afghan-cargo-201105101186647
39
Pakistan: Floods – Relief Web, (July 2010) https://reliefweb.int/disaster/fl-2010-000141-pak
40
Minutes of Afghanistan Pakistan Transit Trade Coordination Authority (APTTCA) meeting held May 31- June 1, 2011 in Kabul.
41
See37
42
Pakistan Fines Afghan Traders for Stalled Containers, The Nation, (Feb. 04, 2013)
https://nation.com.pk/04-Feb-2013/pakistan-fines-afghan-traders-for-stalled-containers
29
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Afghanistan Chamber of Commerce and Industry (ACCI) threatened to appeal to United Nations as
Pakistani officials refused to release the containers. The containers were finally released after three
months.43 The statements of officials reveal three reasons for the release of containers:
o A reciprocal action by the Afghan government to stop 600 Pakistani vehicles44
o A high-level meeting between Afghanistan, Pakistan, and United Kingdom hosted by British Prime
Minister45
o A senior-level engagement, i.e., Ministry of Commerce with his counterpart in Pakistan46

It is interesting to note that while the containers were stranded at the port and the issue was on the agenda in
the meeting between officials of both countries, Pakistan announced the opening of two new crossing points,
i.e., Angoor Adda and Ghulam Khan, to boost trade and transit ties while Afghanistan’s Ministry of Defense
was on an official visit to Pakistan.47

However, these commitments about waiver of demurrage and detention charges were never fulfilled in any of
the above cases as no refund or waiver of demurrage took place despite high-level commitments.48 This
statement leads to three basic questions:
 Were the Pakistani officials unaware of the legal aspects of the decision to waive demurrage charges
before they committed the waiver during COVID-19?
 Between July 2020 (when the task force proposed waiver of demurrage charges) and January
2021(when the final decision about waiver of demurrage charges was reported), was there no
consultation on the legal status of the waiver?
 If there are no legal provisions for the waiver of the demurrage charges, what was the basis for granting
waivers of demurrage charges in 2002 and 2010?
While the Task Force of Parliamentary Friendship Group, the Ministry of Commerce, the Ministry of Maritimes
Affairs could not manage to find a way for waiver of demurrage and detention charges for Afghan transit cargo,
the Cabinet and the FBR were simply issuing notifications to the shipping lines, and port authorities to waive

43
PM Orders Release of 3,000 Afghan Containers, Dawn, (Jan. 01, 2013)
https://www.dawn.com/news/775664/newspaper/column
44
Pakistan ends blockage for 3,700 Afghan Containers, Khaama Press, (Feb 05, 2013)
https://www.khaama.com/pakistan-ends-blockage-for-3700-afghan-containers-2165/
45
Pakistan Declares Afghan Containers Released from Karachi, Tolo News, (Feb. 03, 2013
https://tolonews.com/afghanistan/pakistan-declares-afghan-containers-released-karachi
46
Afghan Traders Struggling to Pay Karachi Port Demurrage, Tolo News, (Feb 18, 2013)
https://tolonews.com/business/afghan-traders-struggling-pay-karachi-port-demurrage
47
Pak-Afghan talks for new trade corridor get boost, Dawn, (Feb. 01, 2013)
https://www.dawn.com/news/782829/pak-afghan-talks-for-new-trade-corridor-get-boost
48
Interview with Naqibullah Safi, Executive Director PJCCI Afghanistan Chapter
30
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

the demurrage and detention charges and provide more free days to support the traders and economy at the
time of crisis. Apart from this, the port authorities were being generous and pro-active in providing relief to the
Pakistani traders. Some of the examples are given as below:
 March 31, 2020: FBR sends a letter to different stakeholders that demurrage and detention charges
may not be charged for 15 days in addition to free days already granted by port authorities as the free
time is exceeding the normal free days.49
 April 02, 2020: Pakistan International Container Terminal (PICT) extends demurrage free period from
five days to ten days for containers arriving between March 20 and April 06, 2020, with the spirit to
respond to a national crisis and sustain the logistic and trade cycle of the country. It further announced
to waive all its charges on import containers of hand sanitizers, surgical gloves, masks, and COVID
testing kits.50
 April 03, 2020: All Pakistan Customs Agents Association (APCAA) requested the FBR to direct
shipping lines for waiver of detention charges to prevent and clear the backlog of containers at the
port.51 As a follow-up, Model Customs Collectorate (Enforcement and Compliance) refers to letter of
the 31st of March from FBR and asks all Pakistan Shipping Line Association and Pakistan Ship Agents
Association not to charge any demurrage and detention charges for the period from the 25th of March,
2020 to April 16, 2020, in addition to free days already allowed by shipping lines.52
 April 22, 2020: Karachi Port Trust makes reference to the letter of Ministry of Maritime Affairs notifies
different stakeholders about approval of Cabinet for extension in the existing free period from five
working days to 15 working days for cargo/ containers landing with effect from the 25th of March to
the 04th of April, 2020.53

On the other hand, the Afghan traders were desperately appealing for relief and waiver. It is even more painful
to see that the consignments of the humanitarian NGOs remained stranded and had to bear the brunt of
demurrage and dentition charges. For instance, the Commercial Attaché requested a D.G. Transit Trade
Custom House Karachi to issue tracking devices to the consignee, supplying 18 containers of noncommercial

49
Letter from FBR to different stakeholders (Ref No. C. No.3(1)E&C/2017; Dated: March 31, 2020)
50
Pakistan International Container Terminal circular to chambers of commerce, custom agents associations, and maritime affairs
directorate (Ref # CCD0001/04/2020 dated April 02, 2020)
51
FBR Tells Shipping Lines to Withdraw Charges, The News International, (April 04, 2020)
https://www.thenews.com.pk/print/639056-fbr-tells-shipping-lines-to-withdraw-charges
52
Letter from Model customs collectorate to Shipping Lines Associations and Ship Agents Association (No. SI/Misc-01/2020-Lic(P)
53
Letter from Karachi Port Trust (Traffic Deportment) to different stakeholders (Ref # TR/ADMN/WVR/COM/04/2020/021 April 22,
2020).
31
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

relief goods for NGOs, namely Human Resources Development Agency (HRDA) needy people before Eid ul
Adha.54
One more relevant issue casts doubts over seriousness of Pakistani officials in addressing the disruption of the
Afghan transit trade. In the middle of the ongoing crisis, there was an important announcement about re-
opening the Ghulam Khan crossing point to clear the backlog of thousands of containers. 55 The important
question is, while thousands of containers waited for carriers, tracking devices, and scanning at the port and
another few thousands were stuck on en-route and at the two crossing points at the mercy of local mafia, how
would re-opening a crossing point at a different location address the underlying challenges. It is important to
mention that the Ghulam Khan crossing point had remained closed after the Pakistani military launched an
operation in Waziristan in 2014. Re-opening a dormant crossing point with poor infrastructure did make some
headlines, but it hardly did any favor to solve the underlying transit trade problem.

The news headlines about the opening of Chaman-Spin Boldak and Torkham crossing points, opening of new
crossing points, and allowing Afghanistan’s exports were needed to serve the purpose of mounting pressure
on the country to normalize the transit and bilateral trade given the appalling situation of Afghan traders. China
asked Pakistani to open Torkham and Chaman-Spin Boldak as well as additional three crossing points,
including Ghulam Khan, Angoor Addar, and Kharlachi crossing points and resumption of Afghanistan’s
exports to India via Wagah border.56 Similarly, on a visit to Pakistan, the United States special representative
for Afghanistan, Zalmay Khalilzad, asked the country to open the two major crossing points.57 The issue of
crossing points had also come under discussion in the third China- Afghanistan- Pakistan trilateral dialogue in
the first week of July.58 The dynamics of easing the stringent conditions on transit as well as bilateral trade reveal
the role of international pressure to normalize the movement of goods across the crossing points. This further
coincides with the event of 2012/13 when Pakistan announced the release of 3700 containers; it had stopped just
before a trilateral meeting between Afghanistan, Pakistan, and United Kingdom hosted by British Prime
Minister.59

54
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/264, July 23, 2020).
55
Pakistan to open Ghulam Khan Point for Afghan trade, The Nation (June 21, 2020)
https://nation.com.pk/21-Jun-2020/pakistan-to-open-ghulam-khan-point-for-afghan-trade
56
China pushes Pakistan to open trade routes with Afghanistan, Nikkei Asia (August 24, 2020)
https://asia.nikkei.com/Spotlight/Belt-and-Road/China-pushes-Pakistan-to-open-trade-routes-with-Afghanistan
57
ibid
58
Joint Press Release of the 3rd Round China -Afghanistan-Pakistan Trilateral Vice Foreign Ministers' Strategic Dialogue, Ministry of
Foreign Affairs of China, (July 07, 2020) https://www.fmprc.gov.cn/mfa_eng/wjb_663304/zygy_663314/gyhd_663338/t1795712.shtml
59
Pakistan Declares Afghan Containers Released from Karachi, Tolo News, (Feb 03, 2013)
https://tolonews.com/afghanistan/pakistan-declares-afghan-containers-released-karachi
32
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

5. Response of the Government of Afghanistan

The closure of crossing points and disruption of the transit trade was a big blow to the Afghan economy, which
was struggling even before the arrival of the COVID- 19 pandemic. The macroeconomic indicators presented
a gloomy picture, and the arrival of pandemics made the situation even worse.60 The disruption of transit trade
took place at a time when the bilateral trade ties were already affected by tense political relations. The last
APTTCA meeting was held around four years back in February 2016, and further meetings were suspended at
the instructions of the Afghan government on the grounds that the platform had failed to address the
underlying transit trade challenges of the country.

The disruption of transit trade and the subsequent pile up of thousands of containers had led the Afghan
economy to the verge of disaster. The situation required unconventional and meaningful efforts from key
relevant institutions, mainly including:

 Ministry of Industry and Commerce (MoIC)

 Ministry of Finance (MoF)
 Ministry of Foreign Affairs and Embassy of Afghanistan in Islamabad

However, the concerning aspect was that all these ministers were led through makeshift set up. The MoIC was
led by an acting minister and an acting deputy minister. In June 2020, the acting Deputy Minister MoIC was
promoted to replace the sitting acting minister after the latter moved on to serve as acting governor of Da
Afghanistan Bank (Central Bank).61 Similarly, the ambassador to Islamabad was experiencing his first
assignment in the diplomatic realm and had previously served as Chairman of the Afghanistan Cricket Board.
To make things worse, the ambassador resigned amidst the crisis in July 2020, citing his plans for higher
education as the reason.62

60
What the COVID-19 Outbreak Means for Afghanistan’s Troubled Economy, The Diplomat (April 11, 2020)
https://thediplomat.com/2020/04/what-the-covid-19-outbreak-means-for-afghanistans-troubled-economy/
61
Ajmal Ahmadi, Acting Governor and Acting Chairman of Supreme Council, Da Afghanistan Bank,
https://www.dab.gov.af/supreme-council2
62
Afghan Ambassador to Pakistan Says Resigning to ‘Pursue Higher Education’, Arab News (July 29, 2020)
https://www.arabnews.pk/node/1711681/pakistan
33
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

The Office of Commercial Attaché in Karachi remained engaged with Afghanistan’s embassy in Islamabad and
relevant Pakistani officials and ensured that the Afghan transit trade problems are duly communicated and
solutions are sought. However, his letters to embassy of Afghanistan in Islamabad, Pakistani customs officials
and other relevant entities hardly sparked effective actions from Pakistani officials or MoIC and Afghan
embassy in Islamabad to improve the situation. There was a need for active and timely senior-level engagement
with Pakistani officials for an immediate solution to the problem. However, it is noted that after the closure of
crossing points in March, the first senior-level meeting happened in June when the Afghan Ambassador held a
meeting with Advisor to Prime Minister Razzaq Dawood, who informed him that the country was opening a
third crossing point at Ghulam Khan to clear the backlog of containers.63 In addition, the visit of the ambassador
to Torkham crossing point to assess the situation and meet relevant authorities happened in the third week of
August.64

In the meantime, Afghan traders were requesting a meeting with key relevant institutions, including FBR,
Ministry of Commerce, and Ministry of Maritime Affairs. In the presence of Commercial Attachés of MoIC
based in Karachi and Islamabad and ambassador at the embassy in Islamabad, there should not be the need for
traders to meet senior Pakistani officials. However, when the acting Minster of Commerce and Industry leaves
the ministry to recently appointed acting deputy minister to serve as acting Minister of Commerce and Industry
in June while Ambassador does not hold any senior-level meeting with Pakistani officials for more than three
months, the traders had to find a solution to the problem on their own.

The Office of Commercial Attaché officially communicated the request of traders for meeting with relevant
senior officials of Pakistan particularly Chairman Federal Board of Revenue with the embassy in Islamabad.65
However, not action was taken and no response was provided. Therefore, considering the gravity of situation
and disappointment from the embassy, the Commercial Attaché in Karachi directly wrote a detailed letter to
the Office of Pakistan’s Prime Minister and requested attention and action to address the underlying transit
trade issues.66 Both these requests of Commercial Attaché to the embassy of Afghanistan and office of Prime

63
Pakistan to Open Ghulam Khan Point for Afghan Trade, The Nation, (June 21, 2020)
https://nation.com.pk/21-Jun-2020/pakistan-to-open-ghulam-khan-point-for-afghan-trade
64
Afghan Envoy Visits Torkham Border, Dawn, (August 22, 2019) https://www.dawn.com/news/1500933
65
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Ambassador of the
Islamic Republic of Afghanistan, Islamabad (Ref # AFG/CA/154 July 07, 2020).
66
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Standing Committee
of H.E. Prime Minister of the Islamic Republic of Pakistan, Delegation of Afghan Transit Issues National Assembly of Islamabad
(Ref # AFG/CA.174, August 23, 2020)
34
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Minister were not addressed. Instead, he received a notice from the Ministry of Foreign Affairs of Pakistan for
violation of the communication channel.67 The request to the Prime Minister's office should have been made
through the embassy of Afghanistan via the Ministry of Foreign Affairs of Pakistan.

In the light of facts discussed above, it can be stated that while Afghan transit trade was held hostage by
Pakistani officials during COVID- 19 pandemic, the lack of needed, timely and coordinated actions from Afghan
institutions, particularly Ministry of Commerce and Industry and Embassy of Afghanistan in Islamabad was
clearly notable. A lack of grit and clout in response of relevant Afghan entities did play a role in exacerbating
the underlying grim transit trade situation.

67
Letter from Ministry of Foreign Affairs of Pakistan, Islamabad to the Embassy of the Islamic Republic of Afghanistan Islamabad
(Ref # Afg(II)-4/1/1010, August 27, 2020).
35
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

6. A Comparative Analysis of Transit Trade via Iran & Pakistan

during COVID-19
Pakistan has remained a major transit trade route for Afghanistan. On the other hand, Iran remains a secondary
option for Afghan transit trade to constraints emanating from international sanctions on the country. The
decisions of the Pak government to close its borders to control the spread of pandemic and the follow-up actions
of relevant authorities and entities transpired into appalling consequences for Afghan transit trade, disrupting
both import and export transit of the country. In the meantime, transit trade via Iran was also affected.

In order to understand the extent of disruption in both countries, data about the number of trucks that carried
transit goods to and from Afghanistan via Iran and Pakistan for 2019 (before pandemic) and 2020 was collected
from Afghanistan Customs Department. A month-on-month comparison of March- November 2019 and a
similar period of 2010 reveals that at the start of the period, the import transit of Afghanistan via Pakistan was
almost at par with a figure from 2019. The figures for the month of March look normal, although Pakistan closed
its Chaman crossing point on the second day while the Torkham crossing point remained open until the 16th
day of the month. This is mainly because the customs department releases monthly data based on the Afghan
calendar, which usually has a ten-day difference with months in the Gregorian calendar.68 Hence the figure
covers the period from February 20 to March 20. As such, a marginal difference between the import transits
figures for March despite the closure of crossing points imply that the figures could have been well below the
previous year if the interruption had not taken place.

In mid-March, Pakistan’s Prime Minister expressed his commitment to extend support to Afghanistan amidst
global pandemic and asked to open Chaman- Spin Boldak crossing point so that trucks could cross over to
Afghanistan. However, the announcement did not improve the situation. On March 22, the figures had
nosedived following the closure of crossing points, leaving 1600 containers at Chaman, 400 at Torkham, and
another 6000 Afghan bound trucks loaded with food, medicines, and non- food transit goods. By March 29, the
number of stranded containers had reached 9500-10000, while additional 2000 export containers joined the
already stranded 2000 containers at the at Chaman- Spin Boldak and Torkham Crossing points. This implies
that immediate shock to the Afghan economy during the pandemic was not caused by disruption of global
supply chains but rather closure of crossing points for the containers that could have easily crossed over into
Afghanistan.

1 day of Hoot month of Afghan calendar coincides with 20th of February, 2020.
68 st

36
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

The figures surged in the second half of April after the crossing points were opened on the 9th day of the month.
However, the figures remained well below the same period than last year and flat due to strings associated with
the decision to re-open the crossing points. The most important ones being 200% scanning of transit cargo, i.e.,
100% scanning at the port of entry (mainly Karachi) and 100% scanning at Torkham and Chaman crossing
points. It is important to note that according to the customs rules of Pakistan, only 20% of transit goods are
required as well as international practice.69 The officials have further instructed to re-scan the goods that have
already cleared the scanning stage and lying at the port and waiting to leave the port. In addition, the use of
tracking devices was re-iterated as a compulsory requirement for transit consignments.

A similar trend was visible in the case of export transit of Afghanistan. The month-on-month export transit
figures for 2020 and 2021 reveal that the export transit remained almost nil from April to June 2020 before it
accelerated in July. The figures for the coming months were much higher than the previous year, most probably
due to the backlog of goods that could not be exported via Pakistan in previous months.

69
Pakistan Customs Rules, Chapter XXV, Rule No. 475 (Physical Customs inspection at Office of Departure.)
37
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

In recent years, the transit trade via Iran has remained under discussion as Afghan traders shift towards it
whenever the transit via Pakistan became cumbersome. The data reveals a similar situation. The month-on-
month comparison of data reveals that after the arrival of the pandemic, the import transit via Iran figures
dropped. However, the recovery of figures was much quicker than in the case of transit via Pakistan. In the case
of Pakistan, the figures remained low until August, before the figure rose in September, while in the case of
Iran, the figures rose in July. Moreover, while import transit figures maintained the higher momentum after
July, they soon dropped in November via Pakistan.

38
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

A comparative analysis of month-on-month fluctuation in import transit figures via Iran and Pakistan reveals
that while import transit dropped by more than five hundred percent in Pakistan's case, it decreased by slightly
more than 200% via Iran. Over the following months, while Pakistan showed a negative change, import transit
via Iran showed a positive outlook. This reveals the extent of reliability and trust of Afghan traders on transit
trade via Iran to a great extent. From March to November, while the total transit imports via Pakistan showed
a 23% decrease, that via Iran showed an increase of 6%.

A similar trend is notable in the case of export transit via Iran. The export transit via Iran showed an overall
positive trend starting in May and staying positive till November. It reveals that Iran remained a preferred
option not only for import transit but also for export transit.

39
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

7. Lessons Learned
The Afghan government and the trader community can learn many important lessons from the experience of
transit trade disruption during COVID- 19 pandemic. Some of the important lessons are outlined under the
following headings.

 Violation of the Agreement: The treatment of and attitude towards the Afghan transit trade reveals
that no matter what is written in the agreement, it can be easily violated through a unilateral decision.
The increase of scanning to 200% against the agreed 20% and the international standards and
conventions like the Revised Kyoto Convention at a time when smooth and straightforward procedures
were required to clear the backlog of the containers is beyond understanding.
 Afghan Transit as a Milking Cow: The pattern of events reveals that the Afghan transit trade has been
used as a milking cow whenever there was an opportunity. Even the force majeure reasons like floods
of 2010 or COVID- 19 pandemic hardly make any difference when it came to levying exorbitant charges
on transit goods. It further reveals how easily the vulnerability of the Afghan transit trade can be
exploited not only by the official circles but also the unofficial set ups as the traders and transporters
whine about their appalling circumstances.
 Hollow Commitments: There is a pattern of response by the Pakistani government whenever the
Afghan transit trade has been disrupted. There is political and diplomatic engagement, and many
promises are made about the immediate solution to the problem as requested by the Afghan side. The
commitment to waive the demurrage charges is a good example. The time passes by, commitments are
reaffirmed, and discussions continue, but the Afghan traders end up paying all the superfluous charges
at the drop scene.
 Trade via Iran: The analysis of data reveals that transit trade via Iran is much more reliable than that
via Pakistan. In spite of the pandemic and disruption of global supply chains, the fluctuation in transit
trade via Iran is much less than that via Pakistan. Similarly, a shift of transit trade via Iran was clearly
notable and implied the priority of Afghan traders.

40
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

 Institutional Support: The focus of both the Afghan and Pakistani governments has been political ties,
while trade and economic ties have not been treated equally. The Afghan traders could not receive
timely support during pandemic due to a weak institutional setup at key relevant entities. This delay
in support to the traders and business community and prevented timely resolution of problems and
challenges. Therefore, strong institutional support should be ensure to support and facilitate trade of
the country.
 Role of International Partners: The engagement of international partners can play an essential role in
addressing trade and transit issues. The release of 3700 containers just before the trilateral meeting
hosted by the British Prime Minister in 2013, the ease of stringent processes at the crossing points after
the trilateral meeting hosted by China in 2020, and follow up of the transit issues during COVID-19 by
U.S. special representative reveal that the engagement of international partners can play a decisive role
in addressing transit trade issues of the country.
 Media Coverage: Afghan economy was the victim of appalling transit trade disruption during the
COVID- 19, and it should have gained needed attention on the print and electronic media. However,
the number of news stories about the transit trade crisis published by Pakistani media outlets is much
more than that of Afghan media houses. The weak coverage of trade and transit-related issues in
general and the COVID-19 crisis, in particular, implies that the voices of Afghan traders were not
amplified properly by Afghan media, which delays the timely delivery of justice.
On the other hand, it is important to note that creating positive news during a crisis is a common tactic
that has been repeatedly used at the time of crisis. The news headlines and can cause a diversion of
focus from the core issue. Therefore, while Afghan officials acknowledge and appreciate the big
announcements, it is important to ensure strict follow-up of the core causes and timely solutions to the
problems.

41
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

8. Recommendations

 Ensure Timely Support: The focus of both the Afghan and Pakistani governments has been political

ties while trade and economic ties have not been treated equally. The vulnerable trade and transit of

Afghanistan via Pakistan require political and diplomatic support and should get equal attention

whenever it comes to problems and challenges of traders. Given that Afghanistan has to adopt a market

economy, in which the support to the private sector and traders means supporting the economy,

ultimately benefiting the consumers. Therefore, trade and transit-related issues should receive the

needed institutional support on a timely basis. In this regard, Afghan institutions need to ensure close

communication and coordination with traders.

 Create Interdependence: A reciprocal action is an effective way to counter the other party's actions in

trade and transit relations. Unfortunately, Afghanistan has not been in a strong position due to over-

dependence on Pakistan for international trade. Therefore, it would be helpful if Afghanistan could

create interdependence by allowing Pakistan access to Central Asia. If any unfair stringent restrictions

are applied or exploitation is practiced, Afghanistan could reciprocate with similar action to exert the

needed pressure.

 Diversification of Trade Routes: It is important to reduce overreliance on Pakistan as a transit route

by diversifying trader routes. This could be effectively achieved through improved trade and transit

relations with Iran, whose Bandar e Abbas is already in use and acquiring better facilitation and access

to the sea through improved terms and conditions in the agreement could enable the country to reduce

overreliance on Karachi port of Pakistan. In addition, Chabahar, which has been exempted from U.S.

42
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

sanctions, could be another attractive option. Further development of the port, followed by increased

traffic of shipping lines, could ensure the port's economic viability. Therefore, as soon as any problems

are created for transit via Pakistan, the traffic could be easily diverted to Iran.

 Revision of the Transit Agreement: The current Afghanistan Pakistan Transit Trade Agreement

(APTTA) has been open to exploitation with very weak dispute resolution mechanisms. The

Afghanistan Pakistan Transit Trade Coordination Authority (APTTCA) has hardly played an effective

role in finding timely solutions to the problems and complains of Afghan traders that have been on the

agenda ever since the agreement was signed. Similarly, the text of the agreement has flaws and is

vulnerable to violation. As the revision of the agreement is under discussion, it is important to strictly

sign the new agreement according to WTO principles, agreements, and international best practices.

The text of the new agreement must kill the incentives for the exploitation of the Afghan transit trade.

 Senior Level Engagement: At the time of such disruptions or serious violations, it is important to

engage with key counterparts to build the needed pressure on the relevant departments to resolve the

issues. Exchange of letters and engagement at lower levels would only result in the documentation.

 Institutional Capacity: Trade and transit is a specialized area of study. Therefore, it is important to

ensure people with expert-level knowledge are deployed to facilitate the operations of relevant entities,

particularly MoF, MoFA, and MoIC. The investment on institutional capacity-building would enable

these instructions to adopt technical approaches to address underlying issues.

43
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

9. Annex: Chronology of Events

No Date Event
March 02,
1 Pakistan closes Chaman – Spin Boldak Crossing Point for Seven days until the 09th of March
2020
March 09, Pakistan extends closure of Chaman – Spin Boldak crossing point for another week until the 16th
2
2020 of March70
March 16,
3 Pakistan closes all border crossing points with Afghanistan and Iran for two weeks71
2020
As a result of the closure of crossing points, 1700 trucks are stuck at Chaman- Spin Boldak and
Torkham crossing points. The Commercial Attaché writes to D.G. Transit Trade Customs House
March 18,
4 Karachi about the risk of spoilage and damage to perishable food items and medicines due to
2020
exposure to sunlight and high temperature. He also raises concerns about potential detention
charges that Afghan traders would have to pay due to force majeure.72
The Commercial Attaché writes to D.G. Transit Trade Customs House Karachi and requests
March 18,
4 waiver of demurrage and detention charges on humanitarian grounds. The traders were already
2020
facing huge losses due to the closure of crossing points resulting from force majeure.73
Imran Khan expresses his commitment to support Afghanistan during the crisis and that he has
March 20,
5 instructed the relevant authorities to open Chaman- Spin Boldak crossing points for Afghan
2020
bound trucks to cross over74
Following the statement of PM Imran Khan, two dozen vehicles carrying export goods from
March 20,
6 Pakistan to Afghanistan were allowed to cross over to Afghanistan on the 21st of March.
2020
However, not even a single transit vehicle was allowed.75

70
Pakistan Extends Chaman Border Closure with Afghanistan, Garda World Crisis24 (April 26, 2021)
https://www.worldaware.com/pakistan-extends-chaman-border-closure-afghanistan
71
Pakistan shuts border with Iran, Afghanistan over virus, Anadolu Agency, (March 16, 2020)
https://www.aa.com.tr/en/asia-pacific/pakistan-shuts-border-with-iran-afghanistan-over-virus/1767278
72
Letter of Commercial Attaché to DG Transit Trade Customs House Karachi (Ref No. AFG/CA/111 Dated: March 18, 2020
73
Letter of Commercial Attaché to DG Transit Trade Customs House Karachi (Ref No. AFG/CA/114 Dated: March 18, 2020)
74
Imran Khan orders opening of Afghan border in Chaman, Business Recorder, (March 20, 2020)
https://www.brecorder.com/news/581819/
75
Pak-Afghan trade slips to $720.4mln in July-January, The News International, (March 22, 2020)
44
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

According to the Chairman of All Pakistan Customs Bonded Carrier Association, the number of
Afghan bound containers stranded in Pakistan crosses the 8000 marks.76
March 22, - 1600 vehicles carrying Afghan bound containers stranded en- route to Chaman crossing
7
2020 point
- 400 vehicles carrying Afghan bound containers stranded en- route to Torkham crossing point
- 6000 Afghan bound containers stuck at the port
The National Tax Number (NTN) of almost all bonded carriers is blocked by WeBOC (Web Based
One Customs) as they failed to cross over to Afghanistan within the required 14 days period.
March 22,
8 The unblocking of the NTN is a lengthy process. Hence, there is a shortage of bonded carriers in
2020
the market leading to further delays and a significant hike in the freight rates for Afghan-bound
cargo.77
The Commercial Attaché writes to multiple authorities, including the prime minister's office, and
reminds them about the commitment of PM Imran Khan to open the crossing point. He provides
an account of the appalling situation of truck drivers and cleaners who have been waiting in the
open air without basic facilities under the open sky for around a month. He points out
discriminated attitude towards Afghan cargo as transport of goods from port to all other dry ports
of Pakistan are allowed. In contrast, Afghan cargo is not allowed to the nearest crossing point of
March 29, Chaman on the pretext of COVID measures. He adds that seven trucks of chicken, 53 trucks of
9
2020 fruits and vegetables, and 17 trucks of rice were exported to Afghanistan; however, transit trade
remained on hold. He expresses concerns over accumulating demurrage and detention charges
on Afghan cargo for around a month and provides a detailed breakdown of stranded containers:78
- 1657 transit containers stuck at Chaman crossing point
- 351 transit containers stuck at Torkham crossing point
- 2000 export containers from Pakistan stuck at Torkham and Chaman crossing points
- 9500-10000 containers stuck at the Karachi port
March 31,
10 Pakistan extends the closure of border crossing points until the 09th of April.79
2020
March 31,
11 Pakistan agrees to allow the import of food and medicines to Afghanistan after the 09th of April.80
2020

https://www.thenews.com.pk/print/632519-pak-afghan-trade-slips-to-720-4mln-in-july-january
76
ibid
77
ibid
78
Letter of Commercial Attaché to multiple government departments, PM Office and Chambers of Commerce (Ref No. AFG/CA/125
Dated: March 29, 2020)
79
Pakistan to Allow Imports of Food, Medicine to Afghanistan, Tolo News, (April 03, 2020)
https://tolonews.com/business/pakistan-allow-imports-food-medicine-afghanistan
80
ibid
45
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

FBR sends a letter to different stakeholders that demurrage and detentions charges should not be
March 31,
12 charged for 15 days in addition to free days already granted by port authorities as the free time is
2020
exceeding the normal free days.81
Pakistan International Container Terminal (PICT) waives all its charges on import containers of
hand sanitizers, surgical gloves, masks, and COVID testing kits. Further, it extends the
April 02,
13 demurrage free period from five days to ten days for containers arriving between the 20th of
2020
March and the 06th of April 2020 with the spirit to respond to a national crisis and sustain the
logistic and trade cycle of the country.82
Model Customs Collectorate (Enforcement and Compliance) refers to letter of the 31st of March
April 03, from FBR and asks all Pakistan Shipping Line Association and Pakistan Ship Agents Association
14
2020 not to charge any demurrage and detention charges for the period from the 25th of March, 2020
to the 16th of April, 2020 in addition to free days already allowed by shipping lines.83
Federal Board of Revenue (FBR) issues notification to customs house Karachi under the subject
“Measures Required for Reactivating Transit Operations at Chaman/Torkham. The most
concerning part of the instructions are:84
April 07,
15 - 100% scanning of Afghan Transit cargo at the port of entry, including the containers which
2020
are already cleared and lying at the port and waiting for the gate out.
- 100% scanning of transit cargo at Torkham/ Chaman
- Compulsory use of tracking devices
April 10, Torkham and Chaman crossing points re-open for trade and transit for three days in a week after
16
2020 weeks of closure.85
Commercial Attaché complains to Customs House Karachi about re-scanning of goods that are
April 15,
17 already cleared (and are at scanning stage), 100% scanning of goods at the port, and again 100%
2020
scanning at the crossing points and requests that only one-time scanning should be enough.86

81
Letter from FBR to different stakeholders (Ref No. C. No.3(1)E&C/2017; Dated: March 31, 2020)
82
Pakistan International Container Terminal circular to chambers of commerce, custom agents associations, and maritime affairs
directorate (Ref # CCD0001/04/2020 dated April 02, 2020)
83
Letter from Model customs collectorate to Shipping Lines Associations and Ship Agents Association (No. SI/Misc-01/2020-Lic(P)
84
Letter from FBR to DG Transit Trade Customs House Karachi and other relevant directorates (No. C.No.1(13)T&BT/2013-64606R;
Dated: April 07, 2020)
85
Transit trade resumes at Torkham border, Daily Times, (April 11, 2020)
https://dailytimes.com.pk/593462/transit-trade-resumes-at-torkham-border/
86
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to DG transit Trade
Custom House Karachi (Ref # AF/CA/129 April 15, 2020).
46
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

In order to facilitate the trade, the federal government of Pakistan has conveyed approval for
April 22,
18 extension in the existing free period from 05 working days to 15 working days for cargo/
2020
containers landing with effect from 52.03.2020 till 30.04.2020 87
The arrangements put in place for the resumption of transit trade on the 10th of April was revised.
May 04,
19 Now 100 vehicles per day would be allowed, including 50 transit vehicles and 50 vehicles of
2020
exports of Pakistani to Afghanistan via Torkham for five days a week.88
Commercial Attaché complains to Customs House Karachi regarding Unsettle Pending Afghan
Trade Transit Issues and the most concerning parts of the complaint are:
- Shortage of tracking devices
May 20, - Demurrages and detention
20
2020 - Scanning and examination
- Slow movement at CHAMAN/ TORKHAM cross points
- Amend in WEBOC
- Excess weight 89
Commercial Attaché follows up the complaint with the Custom House Karachi in continuation
of letter AFG/CA/136 dated 20/05/2020 regarding Unsettle Afghan Trade Transit Issues, and the
most concerning parts of the complaint are still:
- Shortage of tracking devices
21 June 2, 2020 - Demurrages and detention
- Scanning and examination
- Slow movement at CHAMAN/ TORKHAM cross points
- Amend in WEBOC
- Excess weight 90
June 22,
22 Exports of Afghanistan to Pakistan resume after three months. 91
2020

87
Letter from Karachi Port Trust (Traffic Deportment) to 1: President, Karachi Chamber of Commerce & Industry. 2: All Pakistan
Customs Agents Association, Karachi. 3: All Pakistan Shipping Association, Karachi. 4: Karachi Export Proccing Zone, Karachi. 5:
The Karachi Customs Agents Association. 6: Pakistan Shipping Agents Association, Karachi. 7: Secretary, Pakistan Stevedores
Conference, Karachi (Ref # TR/ADMN/WVR/COM/04/2020/021 April 22, 2020).
88
KP traders demand complete opening of Torkham border, Profit News, (May 04, 2020)
https://profit.pakistantoday.com.pk/2020/05/04/kp-traders-demand-complete-opening-of-torkham-border/
89
Letter form Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/136 May 20, 2020).
90
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to 1: Director Trade
Custom House Karachi. 2: President PAJCCI, Karachi. 3: President FPCCI, Karachi. 4: President KCCI, Karachi (Ref # AFG/CA/138
June 02, 2020).
91
Pak-Afghan trade: 500 truckloads of goods to cross Torkham border on Monday, Daily Times, (June 18, 2020)
47
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Karachi Customs Agents write to the prime minister's office and blame TPL Ltd for the delay in
23 July 2, 2020 clearance of the goods. It asks the PM to hold the company responsible for demurrage and
detention charges. 92
Commercial Attaché follow up the complaint with the Custom House Karachi under letters
AFG/CA/136 dated 20/05/2020 and AFG/CA/138 dated 02/06/2020 regarding Unsettle Afghan
Trade Transit Issues and provides details of stranded containers:
Currently, up to 7000 trade transit containers/ consignments are stuck at Karachi port. With only
July 3, 2020 3 scanners available to Karachi port, the maximum scanning capacity is 150 containers per day.
24 Afghan importers are worried about the ensuing demurrage and container detention charges that
accrue because of the slow clearance/ screening procedures and no availability of sufficient
tracking devices at Karachi port. This invariably causes huge losses to traders on both sides and
loss of interest in imports via Pakistan. 93
Commercial Attaché sends a letter to China Overseas Porting Company (COPC) Gwadar port
Pakistan due to unexplainable delays at Karachi port and pending Afghan Trade Transit issues,
the ministry of Industry commerce govt. The Islamic Republic of Afghanistan, on long-standing
Afghan business community requests and for generating business opportunities and
25 July 3, 2020
employment both in Gwadar and along our highways, is considering Gwadar Port as an alternate
to Karachi Port for the smooth flow of Transit Cargo to and from Afghanistan. If the Afghan Trade
Transit issues remain pending/ unresolved, the private business sector of Afghanistan is very
seriously considering shifting the Afghan Transit through Chabahar port.94
China Overseas Porting Company Pakistan (COPC) sends letter to Commercial Attaché thanks
them for interest in considering Gwadar Port as an alternate route for Afghan Transit Trade and
26 July 5, 2020
about letter no AFG/CA/145 dated 03/07/2020 notifies Commercial Attaché that Gwadar Port is
handling both containerized and bulk volumes for Afghan Transit Trade from Jan 2020.95

In continuation of letter No AFG/CA/145 dated 03/07/2020, Commercial Attaché asks China

27 July 6, 2020
Overseas Porting Company Pakistan (COPC) to confirm the possibility of Exports/Imports of

https://dailytimes.com.pk/628390/pak-afghan-trade-500-truckloads-of-goods-to-cross-torkham-border-on-monday/
92
Letter from Karachi Customs Agents Association to Prime Minister Imran Khan (Ref NO: KCAA-449-/2019-2020 Dated: July 02,
2020)
93
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan to Director Transit Trade Custom
House Karachi (Ref # AFG/CA/147 July 03, 2020).
94
Letter form Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan to Director Transit Trade Custom
House Karachi (Ref # AFG/CA/145 July 03, 2020).
95
Letter from China Overseas Ports Holding Company Pakistan (Pvt) Ltd to Commercial Consular/Attaché, Consulate General of
the Islamic Republic of Afghanistan in Karachi (Ref # COPHC/2020/13, July 05, 2020).
48
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

good/Consignment between Afghanistan and India via Gwadar port to Commercial Attaché
Office through an official letter and notification.96

Commercial Attaché sends letter to H.E Mr. Atif Mashal. Ambassador of the Islamic Republic Of
Afghanistan requesting his support for the pending Afghan Transit Trade issues and provides
the details as follow:
Despite all the Commercial Attaché, the Afghan Transit Trade issue is still in vain. Afghan traders
28 July 6, 2020
are under unnecessary demurrage and detentions charges for no fault of their end, which is unjust
on their part. Sometimes, Karachi authorities escaped from the issues by saying we could only
consider the request if the instructions; therefore, it is suggested to please tackle the above issues
with iron hands by raising these issues on The Presidential Level of both States.97
Commercial Attaché sends a reminder to Trade Transit Custom House Karachi about pending
Afghan Transit Trade issues under letter # AFG/CA/147 dated 03/07/2020, AFG/CA/136 dated
20/05/2020, AFG/CA/138 dated 2/6/2020 and asks Trade Transit House Karachi to rectify and
29 July 7, 2020 solve the matters by initiating a complete inquiry of shortage of Tracking Devices to the
Commercial Attaché office of the Consulate General of the Islamic Republic of Afghanistan in
Karachi and release transit cargo from Karachi ports with special relaxation/favor in this time of
crisis because the Afghan traders are still in a grave situation. 98
Commercial Attaché sends letter to H.E Mr. Atif Mashal. Ambassador of the Islamic Republic Of
Afghanistan requesting him to arrange a meeting with Chairman FBR Islamabad, the Ministry of
27 July 7, 2020 Commerce and Industry of Pakistan, and the ministry of Maritime Islamabad so that Afghan
traders could discuss with higher authorities because Afghan Trade Transit issues are still in vain.
99

China Overseas Porting Company Pakistan (COPC), in a letter to Commercial Attaché, confirms
28 July 9, 2020
the possibility of Import/Export of goods/consignment between Afghanistan and India via

96
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Chairman,
C.O.P.H.C., Karachi (Ref # AFG/CA/149, July 06, 2020).
97
Letter form Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Ambassador of the
Islamic Republic of Afghanistan, Islamabad (Ref # AFG/CA/148, July 06, 2020).
98
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/151, July 07, 2020).
99
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Ambassador of the
Islamic Republic of Afghanistan, Islamabad (Ref # AFG/CA/154 July 07, 2020).
49
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Gwadar port and assure the Commercial Attaché that there is no restriction from the government
of Pakistan for transit trade between Afghanistan and Pakistan via Gwadar Port.100
Commercial Attaché shares its concerns with the Office of Special Assistant to Chief Minister on
Industry & Commerce, K.P. regarding the collection of illegal extortion from Afghan Transit
Trade Consignment & Afghan transporters in Bara Frontier Road, Peshawar by irresponsible
July 13, people led by Shaker Afridi under the name of Khyber Trailer-Drivers and workers union. Also,
29
2020 Commercial Attaché requests the SACMIC, K.P. to take actions against mentioned illegal
extortion and abolish the mafia band which has been extorting from Afghan Transit Trade
Consignment/Containers & transporters under the name of Khyber Trailer-Drivers and workers
union in Bara Frontier Road, Peshawar.101
Director Transit Trade Customs House Peshawar to Director General Transit Trade Customs
House Karachi and provides a detailed account of underlying problems including pile-up of
July 13,
30 cargo, exploitation by local transport mafia, and other relevant issues. He requests a relaxation of
2020
COVID- 19 related SOPs for a period of three weeks that would help clearance of Afghan transit
cargo a great deal. 102
Office of Commercial Attaché in Karachi writes a letter to the Embassy of Afghanistan in
Islamabad. It informs them that the representative of transit and member of the board of directors
of joint Chamber of Commerce and Industries of Afghanistan and Pakistan and members of the
July 17,
31 Afghan businessman would like to have a meeting with H.E advisor to Prime Minister for
2020
Commerce and other relevant authorities of the Ministry of Commerce of the Islamic Republic of
Pakistan regarding the problems created in transit, and asking them to arrange the above
meetings.103
Commercial Attaché shares the grievance of Afghan Importers with Transit Trade Custom House
Karachi that their consignments have been pending since April 2020 at Karachi port due to non-
July 21,
32 availability/shortage of tracking Devices; their consignments are getting extra Demurrages and
2020
Charges. They request the Transit Trade Custom House Karachi to provide TPL Devices for
Afghan Transit Trade.104

100
Letter from China Overseas Ports Holding Company Pakistan (Pvt) Ltd to the Commercial Consular/Attaché, Consulate General
of the Islamic Republic of Afghanistan in Karachi (Ref # COPHC/2020/014 July 09, 2020).
101
Letter form Directorate of Transit Trade Custom House, Peshawar to the DG Transit Trade, Custom House, Karachi (Ref # 05-
01/DTP/2013/Pt-II/16 July 13, 2020).
102
Letter from Director Transit Trade Customs House Peshawar to Director General Transit Trade Customs House Karachi (No:
C.No.05-01/DTP/2013/Pt-II/16 Dated: July 13, 2020)
103
Letter form Embassy of the Islamic Republic of Afghanistan Islamabad to the Ministry of Foreign Affairs to the Islamic Republic
of Pakistan Islamabad (Ref # PROTOCOL-914/10, July 17, 2020).
104
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/162 July 21, 2020).
50
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

Commercial Attaché follows up with the Transit Trade House Karachi regarding the pending
July 22,
33 consignments at Karachi Port & Shortage of Tracking Devices. It requests them to instruct the
2020
TPL company to provide tracking Devices for Afghan Transit Trade ASAP.105
Commercial Attaché requests Transit Trade Custom House Karachi to issue Tracking Devices to
July 23, the consignee supplying goods for NGOs, namely Human Resources development agency
34
2020 (HRDA), because the said cargo is meant to be distributed noncommercial relief cargo and has to
be distributed to needy people before Eid ul Adha.106
Commercial Attaché follows up the following letters AFG/CA/147 dated 03/07/2020 AFG/CA/136
July 28, dated 20/05/2020 AFG/CA/138 dated 2/6/2020 AFG/CA/151 dated 7/7/2020 regarding pending
35
2020 Afghan Transit Trade Issues & shortage of tracking Devices with the Transit Trade Custom House
Karachi requesting them to take actions.107
Commercial Attaché Shares concerns of an Afghan Importer with Transit Trade Custom House
July 29, Karachi requesting them to release his containers because the stuck containers are carrying sugar
36
2020 that can be badly affected due to moister and the consignments are stuck at Karachi port due to
shortage of Tracking Devices with no fault of the Importer end.108
Commercial Attaché Shares concerns one of the leading importers of Afghanistan with the Transit
August 12, Trade Custom House Karachi. Due to the shortage of Tracking Devices, the consignment is
37
2020 getting late. At the same time, the goods in Transit are very required in Afghanistan and are
Noncommercial. 109
Commercial Attache writes the following suggestions on Afghan Transit Trade to Trade Transit
Custom House Karachi.
- The Scanning of Afghan Transit Cargo should be 20% instead of 100%.
August 18, - The examination of Afghan Transit Containers should not be more than 5%.
38
2020 - Afghan Transit should be exempt 100% from Demurrages and detention charges during the
global economic crisis due to COVID-19.
- Detention charges on Afghan Transit Cargo Containers should charge equally without any
discrimination.

105
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/163, July 22, 2020).
106
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/264, July 23, 2020).
107
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/Ca/164, July 28, 2020).
108
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/166, July 29, 2020).
109
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade,
Custom House, Karachi (Ref # AFG/CA/166, August 12, 2020).
51
 Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

- Insurance guarantee should be accepted instead of Containers Deposit Pay Order.

- TPL Tracking Devices Providers should release unlimited Tracking Devices to avoid further
huge Demurrages and detention charges by Afghan Traders. The flow of the Afghan Transit
should also run smoothly.
- The negative list order on Afghan Transit Trade on Immediate base should be terminated.110
Commercial Attaché shares concerns of an Afghan Importer with Transit Trade House Karachi
August 23,
39 requests them to provide him TPL Devices as his consignments are stuck for a very long time,
2020
and his Cargo delivery agreement is about to expire.111

Ministry of Foreign Affairs of the Islamic Republic of Pakistan informs Commercial Attaché
August 27, regarding their letter No. AFG/CA/174 dated 23.08.2020 directly to H.E Prime Minister's
40 2020 Standing Committee and instruct them that all communication should be routed through the
Ministry of Foreign Affairs of the Islamic Republic of Pakistan.112

September
41 Around 9000 Afghanistan-bound transit containers are still stuck at Karachi port. 113
07, 2020

110
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the DG Transit Trade
(Custom), Karachi (Ref # AFG/CA/170, August 18, 2020).
111
Letter from Commercial Attaché Office, Consulate General of Islamic Republic of Afghanistan, Karachi to the Standing
Committee of H.E. Prime Minister of the Islamic Republic of Pakistan, Delegation of Afghan Transit Issues National Assembly of
Islamabad (Ref # AFG/CA.174, August 23, 2020).
112
Letter from Ministry of Foreign Affairs of Pakistan, Islamabad to the Embassy of the Islamic Republic of Afghanistan Islamabad
(Ref # Afg(II)-4/1/1010, August 27, 2020).
113
Border Delays Risk Pakistan’s Trade Surplus, The Bloomberg (September 07, 2020)
https://www.bloombergquint.com/onweb/border-delays-risk-pakistan-s-trade-surplus-with-afghanistan
52
Pakistan’s Disruption of Afghan Transit Trade during COVID-19 Pandemic
Analysis, Lessons-Learned & Recommendations

53