Karachi International Container Terminal Free Essay Example

The industry is at growth stage, there are only strong companies in the sector. The revenues and profits are growing and investor can earn dividends as well as price gains. The risk is moderate and competitors are very strong. The major player currently is Karachi container terminal and in future Dubai Port. Business Cycle

The risk is moderate so industry is moderately cyclical It means when there is downfall in economy the industry also goes down but with a slower rate as compared with economy.

Competitor The only competitor is Karachi International Container Terminal (KICT), which is located west of the Indus Delta in the natural deep-water harbor of the century old Port of Karachi.

Subsequent to the signing of the concession agreement by the international project sponsors with Karachi Port Trust (KPT) in June 1996, KICT was formed as the Terminal Operating Company with the object of setting up a common user dedicated international container terminal at Karachi Port on the existing berths 28, 29 & 30, at West Wharf on a build, operate and transfer (BOT) basis.

has since been “Pakistan’s leading container terminal operator”, both in terms of productivity and efficiency.

As Pakistan’s shipment of containerized cargo consistently grows apace with the market economy, it is matched by KICT’s ability to handle increasing numbers of containers. In 2006 KICT recorded a container volume growth of 19% to 565,000-TEU from the previous year, representing over 50% of Karachi Port’s total container throughput and a 55% increase in EBIT due mainly to the higher throughput growth, comprehensive array of end user service offerings, improved productivity levels, minimized vessel turnaround times and deployment of leading technologies and terminal equipment.

KICT has the unique distinction for being the first container terminal operator in Pakistan to implement Pakistan Automated Customs Clearance System (PACCS), an automated risk assessment customs clearance process at KICT in collaboration with Pakistan Customs under Customs Administrative Reforms (CARE). Porter’s Five Model * Rivalry among existing competitors There are currently 2 Container terminals within the port of Karachi, Pakistan International Container Terminal (PICT) and Karachi International Container Terminal (KICT).

There is no rivalry between competitors as KICT is owned by KPT and PICT project is on BOT which will be transferred to KPT eventually after completion of 21 years and both terminals are operating at full capacity. But competition in international market is high. * Bargaining power of suppliers Bargaining power of supplier is low as there are many contractors to build port facilities and to provide equipment.  Bargaining Power of Customers The bargaining power of customer is low Ship owner is main carrier and has strong position in determining which port must be called on. PCIT and KCIT are only operators.

There is no option for customer to go for another source. Threat of New Entrants Terminal projects are very capital intensive and as Pakistan is emerging market and industry is growing and large companies with huge resources can entered the market and with the projects currently under construction by DP world. Hutchison Port Holding building huge and modern terminal at Keamari Groyne in Karachi. Availability of Substitute There are no perfect alternative sources available. Air cargo is expensive option but for very limited commodities. In container terminal industry Gawader port is substitute.

Government Effects Government of Pakistan is focusing on investment in mega projects. It has directing its efforts in ports with two mega project, one at Port Qasim and second at Gawader port is under way. Government has concessional rate of customs duty which is 10% and also avail first year allowance @ of 50% of the cost of plant, machinery & equipment and enhanced FYA from 50% to 75% of PME for infrastructure. To ease transportation problem between the port and the factory, the KPT has pledged to contribute over Rs. 2. 8 billion for reconstruction of roads.

As the new generation of container ships comes on board, KPT is taking initiatives to be able to cater to the even higher capacity fifth and sixth generation ships. This involves the development of 10 deep draught berths with the total cost of US $ 1,087million. Furthermore, a Cargo Village and Industrial Park in the Western backwaters of Karachi Port has also been proposed. Finally, to provide connectivity between the Pakistan Deep Water Container Port and the Cargo Village, KPT is planning to construct a Cable Stayed Bridge across the channel, which will also connect Cliftonwith Manora and Hawksbay.