Afghanistan’s new trade routes leave Pakistan’s border economy reeling

New Delhi, Aug 25 (IANS) Five years after the Taliban returned to power in Kabul, Afghanistan’s trade relationship with Pakistan is undergoing a significant transformation which raised concerns for businesses and industries in Khyber Pakhtunkhwa (KP), particularly in Peshawar, a report has said.

According to a report published in Dawn, the clearest sign of this shift is the sharp decline in Afghanistan’s transit trade through Pakistan.

According to customs data cited in the report, container traffic which had reached a record 102,886 containers worth $6.7 billion in FY23 which fell to 54,114 containers in FY24 and 42,959 in FY25.

In addition, volumes collapsed further to just 11,592 containers valued at $367 million in FY26.

The figures suggest that Pakistan’s border restrictions introduced in October 2025 did not trigger the downturn but accelerated a trend already under way.

As Afghanistan increasingly redirects trade towards Iran and Central Asia, Pakistan risks losing not only transit revenues but also the wider commercial ecosystem linked to Afghan trade.

The World Bank’s Afghanistan Economic Monitor also notes Iran has emerged as the backbone of Afghanistan’s import supply chain.

“In FY25, Iran accounted for 31.3 pc of Afghan imports, while direct imports from Iran and imports transiting through Iran together represented 48.6 pc of total imports. Central Asian routes are also gaining importance,” the report said.

Moreover, the impact extends beyond transit fees with Afghan exports moving through Pakistan to third countries plunging from $454 million in FY25 to just $7 million in FY26, customs data show.

For decades, Afghan demand supported manufacturers, wholesalers, transporters, clearing agents and warehouses across Pakistan.

“When that flow contracts, the damage travels far beyond the customs post,” the report noted. Industries in KP already facing high energy, financing and transport costs are now confronting weaker demand from a key export market.

Products such as cement, food items, pharmaceuticals, textiles and consumer goods have traditionally found buyers in Afghanistan.

Additionally, reduced orders threaten businesses across the supply chain, while disruptions in imports of industrial inputs, including Afghan coal, risk increasing production costs..

–IANS

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