Pakistan has incurred trade and transit losses exceeding $1.4 billion in recent months, as ongoing tensions on its western border and the Iran war have disrupted key export routes, according to submissions to a parliamentary committee on Tuesday.
The losses, per a briefing to the National Assembly Standing Committee on Commerce, stem from the prolonged closure of the Pak-Afghan border and disruptions to shipping and air routes serving Gulf markets amid regional tensions involving Iran. The officials said the setbacks occurred despite a broader improvement in Pakistan’s performance, with exports rising 18% to $31.8 billion during the first 10 months of fiscal year 2025-26.
Pak-Afghan border
Pakistan closed its border with Afghanistan on Oct. 11, 2025, effectively halting bilateral trade and transit cargo destined for Central Asian states. According to officials, exports to Afghanistan plunged from $818 million during the corresponding period a year earlier to just $85.6 million by April 2026. During the closure, over 7,500 containers remained stranded at ports and border crossings, affecting shipments of pharmaceuticals, cement, tractors, motorcycles, processed food and edible oil.
The closure also halted Pakistan’s transit trade services to Central Asian countries, including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. Officials estimated losses linked to the Afghan route at $705 million in direct exports and an additional $100 million in transit trade earnings between October 2025 and April 2026, bringing the total impact to approximately $805 million.
Gulf crisis
While exporters were still grappling with the Afghan trade disruption, escalating Middle East tensions triggered disruptions to sea and air transportation routes through the Strait of Hormuz, affecting Pakistan’s access to Gulf Cooperation Council (GCC) markets.
The Gulf region is a major destination for Pakistani textiles, rice, fresh produce and manufactured goods. About 80% of Pakistan’s trade with GCC countries is routed through Dubai’s Jebel Ali port. Officials said shipping services between Pakistan and Gulf destinations faced significant interruptions beginning in March 2026, while air cargo cancellations reached 30%.
Exports to GCC countries declined 2.2% during July-April, with sharper contractions recorded in Oman, Qatar and Bahrain. The government warned that Pakistan could face an additional decline of around $600 million in GCC exports over the next three to six months if regional conditions fail to improve.
Emergency measures
To mitigate the impact, per the briefing, the government established a high-level monitoring mechanism led by the Special Assistant to the Prime Minister on Industries and Production and later formed a dedicated trade council.
Authorities increased freighter flight operations, eliminated additional airport handling charges on exports and negotiated lower air freight rates with Gulf airlines. Islamabad also redirected cargo previously routed through Jebel Ali to alternative ports in Saudi Arabia and Oman, including Jeddah, Sohar and Salalah.
To secure energy supplies, Pakistan National Shipping Corporation tankers were deployed to transport petroleum products from Saudi Arabia and the United Arab Emirates. A commercial PNSC vessel also launched services between Karachi and the U.A.E. port of Khorfakkan in May.
Central Asia trade
As an alternative to the Afghan route, Pakistan expanded the use of the Iran corridor for exports to Central Asia. Officials told lawmakers that, since December 2025, more than 7,000 trucks carrying approximately 200,000 metric tons of kinnow and potatoes worth $40.2 million had reached Central Asian markets through Iran.
The government also extended regulatory waivers for exporters shipping food products, medicines and rice to Iran, Central Asian countries and Azerbaijan. In addition, Pakistan held discussions with China and convened meetings under the Quadrilateral Traffic in Transit Agreement framework to explore alternative regional transport arrangements involving Uzbekistan and Tajikistan.
Uncertain outlook
Officials said consultations with exporters and regional partners are ongoing as the government seeks to maintain trade flows and limit further losses. The committee was informed that unless conditions improve in both Afghanistan and the Gulf region, Pakistan’s exporters could continue to face significant logistical challenges and declining market access in the coming months.