Afghanistan is a landlocked country. For exports and imports at regional and international levels, Afghan businessmen have to cross one of the two neighboring countries of either Iran or Pakistan to reach water ports. Afghanistan and its traders have gained enough experience and learned lessons while doing international business via Chabahar and Karachi ports.
As the seaports accelerate the rate of international trade and act as an inhibitor in trade cost. Likewise, the beehive of activities at the seaports has a significant economic impact nationally, regionally, and internationally as some countries carry 60 percent of their overseas cargo by using seaports. Keeping the importance of seaports in international business, Afghanistan has two options, Chabahar or Karachi. Let us elaborate on the challenges and opportunities these two water ports have for Afghanistan in general and its traders in particular.
Afghanistan’s trade with Pakistan is always accompanied by baneful outcomes. Due to the non-sustainability of economic and political relations between the two countries, Afghan traders inflicted deleterious losses in Torkham port when their trucks were kept waiting for days led to the devastation of the loaded goods as most of Afghanistan’s export items are agricultural which are precious and time bound.
It was in 2018 when Pakistan closed its border to Afghan businessmen where tons of goods were wasted on both sides of the Durand Line. Afghanistan Ministry of Commerce and Industries had said that Afghanistan suffered a US$ 100 million loss during the period and up to 6000 containers of Afghan goods were stuck on the Pakistani side of the Durand Line. Pakistan also charges US$50 per day for each container of Afghan traders while waiting for the border resumption. Pakistan uses its border as leverage of pressure on Afghanistan to achieve its aims. Additionally, Pakistan charges high transit tariffs for Afghanistan goods and commodities.
The continued uncertainty on the Pakistan border created a huge loss for Afghanistan and its traders, also Pakistan does not allow Afghanistan over land transit access, a major obstacle for critical trade for Afghanistan to reach India which is the largest market for the country’s agricultural products. Hereupon Afghanistan and the exporters/importers looked for an alternative sustainable and economically viable trade route. Chabahar seaport via Iran was found to be the utmost sustainable one as a trade route.
To connect Afghanistan with Iran’s Zabul province for smoothing and accelerating goods movement, the Delaram-Zaranj Highway with a 218 km roadway in the Nimruz province was designed and constructed by the government of India at the request of Afghanistan and cost $ 175 million. Zabul province in Iran is well-connected by road to the Port of Chabahar. It is one of the busiest roads in Afghanistan and provides an important trade route between Afghanistan, Iran, and the rest of Asia.
Chabahar road is much shorter and more stable than any of the routes in Pakistan, making it perhaps the most efficient means that Afghan traders can reach the final destination for their exports, where 80 percent of Afghanistan’s cargo traffic now lies.
Furthermore, the Chabahar route paves the opportunity to gain access to two countries’ markets with a population of 1.4 billion people rather than one country with a population of 200 million people, Since the port begin its functioning, Afghanistan’s dependency on Pakistan decreased significantly, and the trade with Pakistan fell to US$500 million in 2018 compared to US$2.5 billion. Meanwhile, Chabahar Port, located off in Iran’s southeastern province of Sistan-Baluchistan, is the lifeline Afghanistan needs to reinvigorate its trade potential.
In the meantime, such trade opportunity provides cutting cost and leads to greater revenue for economic empowerment and international integration which help in the county’s prosperity and stability.
Iran and India constructed a multimodal system, and overall, the routes provide a 60 percent reduction in shipping costs and a 50 percent reduction in shipment time between Afghanistan-India and other Central Asian countries. Afghan traders have responded with enthusiasm to Chabahar’s reliable trade and transit offerings. Iran and India have provided as lucrative a deal as possible to Afghan traders and at the initial stage provided a 30 percent discount in customs tariffs, 50 acres of land for Afghan investment, and free cooling storage facilities.
The Chabahar port is intended to have a nominal capacity of 86 million tons by 2024, and Afghanistan intends to have a considerable stake in these operations. Afghanistan’s strongest prospect for a brighter future is greater trade through the Chabahar port. Finally, Afghanistan’s main export items are agricultural products which India is the largest market for it, especially, since the market potential is high in Mumbai and Gujrat where Chabahar has direct shipping to these states.
