KARACHI: A newly deepened cargo terminal at Pakistan’s Karachi port can now accommodate ships carrying twice as much cargo as before, potentially saving the country’s traders more than $150 million annually in freight costs, its chief executive told Arab News this week.

The development comes as Pakistan seeks to modernize its ports, attract foreign investment and position itself as a trade gateway for landlocked Central Asian economies. Disruptions to shipping routes in the Gulf have also created opportunities for Pakistani ports to attract cargo destined for regional markets.

The upgrade was carried out at Karachi Gateway Terminal Multipurpose Limited (KGTML), which handles bulk commodities and general cargo and is operated by a joint venture involving Abu Dhabi-based AD Ports Group, a major international ports and logistics company, and UAE-based Kaheel Terminals.

Khurram Aziz Khan, chief executive of KGTML and the adjoining Karachi Gateway Terminal Limited (KGTL), which handles container cargo, said the completion of dredging — the removal of sediment from the seabed to deepen shipping channels and berths — had doubled the cargo-carrying capacity of vessels the bulk terminal could accommodate.

“Prior to that dredging, our port was only equipped to handle Handymax vessel which means a 60,000-ton vessel at max,” Khan said in an interview.

“Now with our dredging completed already, we have the ability to handle up to 120,000 tons,” he said. “We are equipping ourselves to handle post-Panamax vessel.”

Post-Panamax refers to ships larger than those designed to pass through the Panama Canal’s original locks, allowing shipping companies to transport greater volumes of cargo on individual voyages.

Khan said the terminal’s ability to accommodate larger vessels, combined with faster turnaround times and more efficient cargo handling, could reduce freight costs by 25-35 percent.

He estimated that savings could exceed $50 million next year if just 20 percent of bulk cargo volumes gradually shifted to larger vessels.

“This will gradually increase and crossing $150 million per annum,” he said.

The projected savings would be significant for Pakistan, which relies on foreign exchange to finance imports and meet external debt obligations. However, the estimates depend on shipping companies shifting sufficient cargo to larger vessels and realizing the expected efficiency gains.

The dredging forms part of a broader effort to improve the capacity of Karachi port, where the Karachi Port Trust (KPT), the state-run port authority, has separately awarded a contract to deepen approach and navigation channels.

AD Ports Group, which operates ports and logistics businesses internationally, entered Pakistan’s maritime sector through long-term agreements to develop and operate container, bulk and general cargo facilities at Karachi port.

KGTL, the container terminal, currently handles around 500,000 twenty-foot equivalent units (TEUs), a standard measure of container cargo, annually, while KGTML handles more than 13 million tons of cargo, including imports, exports and transshipment.

Khan said the two terminals had already attracted some transshipment business, in which cargo is transferred between ships or stored temporarily before being sent to another destination.

“Whether we talk about the container and bulk, in both areas we managed to attract some transshipment volume,” he said, without providing figures.

The company is also exploring opportunities arising from disruptions around the Strait of Hormuz, a vital shipping passage connecting the Gulf with international markets.

Khan said the terminal was in discussions with shipping companies about handling cargo destined for Gulf markets.

“We are working with shipping lines where we should be able to use KGTL to transship or stay certain cargo for Gulf,” he said.

The company is separately working with the government on a proposed “stock and sale” arrangement that would allow international commodity suppliers to store bulk cargo in Pakistan before selling it domestically or distributing it to other regional markets.

“We are also working on that component that will encourage more regional drive of the volume from Pakistan,” Khan said.

As part of those plans, the company is working with global commodities trader Louis Dreyfus Company (LDC) to attract cargo that could be stored in Pakistan and subsequently distributed across the region.

“They will be able to bring their cargo dedicatedly toward Pakistan and then they will use it as a hub to distribute in the region,” Khan said.

KGTL and KGTML are also expanding their cargo-handling and storage infrastructure, with Khan saying the company has already invested about $200 million.

The expansion includes around 9 million tons of silo capacity for agricultural imports and a further 8.5 million to 9 million tons of warehouse capacity for exports, which the company says would add approximately 18 million tons of storage capacity.

“As part of our expansion we are developing a large scale of silo capacity within our dry bulk cargo handling facility ... that will provide a good edge in the market to the suppliers, global suppliers,” Khan said.

The company is also installing new bulk-handling cranes, expected to arrive by December, alongside conveying systems and other equipment aimed at reducing the time ships spend unloading cargo.

Khan said unloading vessels carrying 60,000 tons or more of agricultural cargo currently takes over 10 days when shipments are handled in bags for direct delivery. The new infrastructure is expected to reduce turnaround times to “within three days.”

Khan said the company was also close to securing another international shipping service for Pakistan, which could improve connections for exporters.

“We have almost secured new service for Pakistan, which will facilitate our exports,” he said, declining to identify the shipping line because an agreement had not yet been signed.

“We believe that during next month, we will start a new service from here,” he added.