In today’s global economy, supply chain transparency has become essential. International buyers, regulatory bodies and consumers now demand traceability and ethical sourcing.
Failing to meet these standards risks exclusion from high-value markets. For Pakistan, improving supply chain infrastructure and transparency is both a compliance challenge and a strategic opportunity to boost exports, attract investment and enhance economic resilience.
Pakistan’s Logistics Performance Index (LPI) remains low. In 2023, it ranked around 85th out of 139 countries, far behind India (38th) and Bangladesh (79th). This reflects issues such as outdated transport systems, fragmented logistics, low customs digitalisation and limited visibility across supply chains.
To address these challenges, Pakistan launched the Pakistan Single Window (PSW) in 2022, integrating over 70 government departments into one digital platform. The PSW is expected to save $450 million annually in logistics costs and reduce transaction costs by 20 per cent. According to UNESCAP, paperless trade could cut CO2 emissions by up to 86 kg per transaction – the environmental equivalent of planting millions of trees.
Meanwhile, the private sector is adopting digital tools. In textiles, brands are using IoT sensors and AI analytics to manage inventory, reduce waste and improve production tracking.
Still, physical infrastructure lags. Karachi Port Trust and Port Qasim handle over 90 per cent of maritime cargo but suffer from congestion, poor intermodal links, and long dwell times. Rail freight, though efficient and eco-friendly, carries only 4.0 per cent of cargo. Cold chain logistics remain weak, with under 10 per cent of perishables transported under temperature control, leading to spoilage rates above 30 per cent.
Major projects are underway. The Karachi Freight Corridor – a 55-kilometre double-track rail line – has begun moving containerised cargo from Karachi Port to industrial hubs via public-private partnership, addressing key freight bottlenecks.
Pakistan is enhancing its infrastructure through the development of SEZs in alignment with corridor projects. The Bannu Economic Zone in Khyber Pakhtunkhwa, established under the framework of CPEC, spans approximately 408 acres and includes internal roads, power, gas, drainage, and telecommunications networks. Initial infrastructure development has been completed, with capacity for up to 260 industrial units. Similarly, KPEC, principally funded by the World Bank with approximately $482.8 million, aims to facilitate trade between Peshawar and the Torkham border, thereby enhancing direct trade with Afghanistan and Central Asia. KPEC is anticipated to generate over 100,000 jobs while significantly reducing freight transit times and costs.
Public-private partnerships, multilateral loans facilitated by institutions such as the Asian Development Bank and the World Bank, and funding from China’s Belt and Road Initiative are playing a pivotal role in financing railway upgrades, exemplified by the Main Line-1 (ML-1) railway project under CPEC, as well as port expansions at Gwadar and Karachi. In February 2025, Pakistan and China reaffirmed their commitments to upgrade Pakistan’s railway network further and to unlock the potential of Gwadar as a regional logistics hub.
Pakistan’s strategic geopolitical location, positioned at the crossroads of South Asia, Central Asia and the Middle East, presents unparalleled opportunities for the nation to function as a regional transit hub. The government has delineated six major trade corridors connecting Pakistan to Central Asia, Russia, Europe and the Gulf through routes traversing China, Afghanistan and Iran. Notable corridors include the Karachi-to-Moscow route (via China-Kazakhstan), the Gwadar-to-Moscow route (via Afghanistan), and other pathways through Turkmenistan, Iran, Azerbaijan and Russia.
A pivotal initiative within this broader vision is the Mazar-e-Sharif-Kohat Railway Project, estimated to cost approximately $633 million. A particularly transformative project is the Uzbekistan-Afghanistan-Pakistan (UAP) Railway, which received formal affirmation on June 1, 2025. This project will connect Termez in Uzbekistan, through Mazar-e-Sharif and Kabul, ultimately reaching Gwadar Port. Feasibility studies project a reduction in transit time from over 35 days to merely five days. This infrastructure endeavour signifies the advent of a new era in geo-economic diplomacy, fostering Afghanistan’s integration into peaceful trade networks, granting landlocked Uzbekistan access to the Arabian Sea and establishing Pakistan as a premier transit hub.
Pakistan is also advancing several multilateral agreements, including QTTA with China, Kyrgyzstan and Kazakhstan; accession to the Ashgabat Agreement linking Central Asia to the Gulf and the implementation of the TIR customs transit system. As of early 2025, the NLC has initiated containerised TIR shipments from Pakistan through the Sost Dry Port via the Khunjerab Pass to Uzbekistan and onward to the UAE. These convoys are completed within eight days, a significant improvement compared to the traditional 30-day sea routes and have generated revenue amounting to $34.9 million in the first half of FY2025, compared to $23.4 million during the same period the previous year.
Cooperation with Azerbaijan is also progressing, as both nations agreed in early 2025 to collaboratively promote Pakistan’s integration into the North-South Transport Corridor (INSTC). Pakistani officials have proposed utilising Gwadar Port as a strategic node within the western and eastern routes of the INSTC, facilitating access to energy markets and European destinations via Azerbaijan, Iran, Russia and Turkey.
Domestically, Pakistan is actively enhancing its transport infrastructure. The Sukkur-Multan M-5 motorway, constructed in 2019, remains one of the largest projects under CPEC. Further motorways and economic zones are also being activated along the M-1, M-2 and M-5 corridors to connect industrial parks, agro-processing centres, vocational training institutes and tourism hubs, a strategy that has been promoted by planning leadership since late 2024.
In addition to infrastructural advancements, there is a growing emphasis on transparency and innovation. Pakistan is making strides towards the implementation of blockchain proof-of-origin systems for high-value exports, such as Basmati rice and cotton. The nation is exploring certification workflows that will enable producers and exporters to access premium markets in the EU, the US and Canada.
The adoption of digital traceability supported by industry associations provides a pathway for Pakistan into Environmental, Social and Governance (ESG) compliant supply chains and international sustainability frameworks. Furthermore, ongoing digitisation efforts throughout the logistics chain, such as electronic cargo tracking in road transport, smart customs terminals at key border crossings like Torkham, Taftan and Chaman, and post-clearance audit protocols under PSW, are enhancing transparency, mitigating corruption and ensuring accurate, real-time data flow.
Pakistan is currently encountering significant political, security, and governance challenges, despite its potential. In January 2025, widespread protests regarding extensive 20-hour power outages in Gilgit-Baltistan resulted in the blockage of the Karakoram Highway, which halted trade with China and delayed the delivery of hundreds of trucks. This incident underscores the vulnerability of regional supply chains to domestic unrest. India’s persistent objections to the expansion of CPEC, particularly concerning the disputed territories of Kashmir, were also reiterated in July 2025. These tensions may further complicate multinational investment initiatives and corridor extensions.
From a financial perspective, Pakistan must exercise prudence in debt management, establish clear regulatory frameworks for public-private partnerships (PPPs) and adhere to environmental and labour standards. Infrastructure projects, such as the upgrade of the ML-1 rail system, continue to face delays and funding constraints, while the Torkham-Kabul links on Afghanistan’s side remain underdeveloped, which impedes the efficiency of the Khyber Pass corridor.
Supply chain transparency is increasingly becoming an essential requirement for Pakistan, necessary for gaining access to global markets and achieving sustainable development. The integration of digital tools such as blockchain traceability and Internet of Things (IoT) support systems, alongside the advancement of modern logistics infrastructure, including railways, ports, SEZs and trade corridors, is pivotal in transforming Pakistan’s trade landscape and enhancing its strategic position as a trade bridge.
For Pakistan, unlocking transit trade and enhancing export competitiveness necessitates the stimulation of industrial activity, attraction of foreign investment and creation of job opportunities, while also lowering import costs and improving food security. Strengthening regional connectivity can yield peace dividends by fostering economic integration with Afghanistan and linking Central Asia to global markets.
Continued public-private collaboration, targeted digital reforms, transparent governance practices and balanced diplomatic efforts are crucial. If Pakistan persists in its investment in end-to-end logistics visibility, interoperability of digital platforms, corridor linkages, transit trade frameworks and the development of an inclusive logistics workforce, it may usher in a new era of economic integration.
As of mid-2025, Pakistan stands at a pivotal moment. Advancements in supply chain transparency, digital traceability, and regional connectivity – through UAP railways, Gwadar port and corridor trade lanes – signal a shift from isolation to integration and inefficiency to competitiveness. With the right execution, Pakistan can move from potential to performance and emerge not just as a trading nation, but as a vital logistics hub and economic bridge between continents in the coming decade.
The writer is a trade facilitation expert, working with the federal government of Pakistan.