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Impact of China Pakistan Economic Corridor


Dec 14, 2008
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United Kingdom

DEGREE THESIS Arcada Degree Programme: BBA International Business Identification number: 5400 Author: Muhammad Aqeel Title: Impact of China Pakistan Economic Corridor (CPEC) Supervisor (Arcada): Siv Relander

Abstract: The work of this thesis primarily revolves around the concept of logistics’ shipping cost and transit time. China needs a short, safe and inexpensive trading route to European and Middle Eastern countries. The aim of the study is to verify if CPEC is a viable solution to the need. The study analyzes the impact of China Pakistan Economic Corridor (CPEC) on trade in terms of the shipping costs and transit time. Transport and infrastructure are called strategic levers of trade as they help in reducing the shipping costs and transit time. In the modern era, organizations want to reduce the shipping costs and transit time to maximize profit and ensure timely delivery of product. The focal point of the thesis is to study the importance of CPEC and its impact on import and export in terms of costs and transit time. Besides, this study compares existing route with proposed route. The research methodology used in the study follows qualitative and descriptive approach. In this study, dry port Kashgar (western China) has been taken as origin and three ports of each European and Middle Eastern countries are taken as destinations. The destination ports which have been selected in this study are key trading players with the port of origin. The selected European ports (Hamburg, Le Havre and Rotterdam) share huge trading volume with China. The selected Middle Eastern ports (Jeddah, Kuwait and Oman) fulfil Chinese energy requirements. In the first step, the variables (transit time and shipping cost) of 40-foot container are calculated when transported using current route. In the second step, the same variables are calculated using proposed route (CPEC). In the third step, both variables are compared for current and proposed route. Although it’s difficult to calculate the exact future road transportation cost (in case of CPEC), so this study considers average value of current road transportation cost. The results show that shipping costs will drop drastically if proposed route is used. The shipping costs between Kashgar and destination ports can decrease by 36% for European ports, 50% for Jeddah and Kuwait and 68% for Oman. Also, the transit time will decrease by 10-11 days for European ports, 11-13 days for Jeddah, 15-18 days for Kuwait and 10 days for Oman.
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