The floods have also severely affected the infrastructure linking the Karachi port to the spinning mills in Punjab, disrupting textile production. With about 70% the spinning mills located in Punjab and a substantial portion of cotton inputs being imported via the Karachi port, the roads linking the port and the spinning mills are important for the efficient transportation of cotton.
The floods have damaged portions of the routes connecting Karachi with Hyderabad, Sukkur, and Lahore. Anecdotal evidence indicates that transportation time is now 4 to 5 times longer with implications both on transport costs and on truck availability. Interviews with key industry players reveal that up to half of Faisalabad’s spinning mills are currently closed due to a combination of factors that include a lack of inputs to process, alleged challenges to obtaining open letters of credit to import machinery or parts, and a reduction in orders.
According to the World Bank’s October 2022 Pakistan Development Update, there is also anecdotal evidence indicating that spinning mills across South and Southeast Asia are operating at very low capacity, possibly signaling a slowdown in global demand for textiles, and consistent with the fewer textile orders being received by Pakistan.
The report estimates that the flood-related cotton crop losses would range from 11% to 36% trends in global demand for textiles, the sector can expect to import close to 5 to 5.8 million bales of cotton, an increase in a range from 11 to 28 percent, to mitigate the domestic shortfall.
However, small sized mills are particularly reliant on domestic supplies and unable to fully substitute with imports.
Accordingly, overall textile production may decline, consequently contributing to lower textile exports.
