The historic trade corridor between Afghanistan and Pakistan has effectively collapsed, with transit volumes hitting their lowest levels on record in the fiscal year ending June 2026. Down from nearly 89,000 containers valued at $5 billion before the Taliban's return to power, the corridor now handles just 11,592 containers worth $367 million. This dramatic shift exposes a deliberate Afghan strategy to reduce dependence on Pakistani ports, a move that accelerated long before Islamabad closed its border in October 2025. Main Developments Transit trade between Afghanistan and Pakistan plunged to 11,592 containers worth $367 million in FY26, a steep decline from pre-Taliban levels of nearly 89,000 containers valued at $5 billion. The border closure by Pakistan in October 2025 over security concerns intensified the downturn, but data shows the decline began years earlier. Container traffic peaked at 102,886 units in FY23, valued at $6.7 billion, before falling sharply to 54,114 containers in FY24 and 42,959 containers worth $1.36 billion in FY25. The most dramatic collapse occurred in reverse transit, which allows Afghan exports to reach third countries via Pakistan. Reverse transit fell from $454 million in FY25 to just $7 million in FY26, bringing that decades-old corridor almost to a halt. Read also: Pakistan Finance Minister in US for Trade Talks Amid Tariff Shifts Background Pakistan served for decades as Afghanistan's cheapest and principal gateway to international markets. During the period of the democratically elected government under former President Ashraf Ghani, container traffic grew steadily from about 60,500 containers in FY17 to nearly 89,000 containers in FY21, despite often strained political relations. Following the Taliban's return to power, transit cargo initially recovered, reaching 102,886 containers in FY23. However, trade analysts note that the Taliban had already begun pursuing a deliberate policy of expanding trade through Iran and strengthening commercial links with Central Asian neighbours. The border closure in October 2025 did not initiate Kabul's search for alternatives—it marked the culmination of a strategy already underway. Why It Matters While the Taliban secured alternative import routes, particularly through Iran, the shift came at a high economic cost. According to the World Bank's Afghanistan Economic Monitor 2026, Afghanistan's imports rose 15 percent to $13.2 billion in FY25. Iran emerged as the largest source of imports with a 31.3 percent share, while Iran's direct and transit corridors accounted for 48.6 percent of total imports. The diversion reduced Pakistan's leverage but also carried costs for Afghanistan. The country lost export opportunities, especially for agricultural products and coal, while longer and more expensive supply routes increased import costs, adding inflationary pressure. Traders report sharp increases in the prices of essential goods—including rice, vegetable ghee, and pharmaceutical products—as imports are routed through costlier corridors. The near-collapse of transit trade has affected thousands of people whose livelihoods depend on cross-border commerce, including truck drivers, loaders, customs clearing agents, warehouse workers, and other semi-skilled labourers. Reduced commercial activity has translated into fewer employment opportunities and lower household incomes on both sides of the border. The burden falls disproportionately on eastern and southern Afghanistan, particularly Pakhtun communities that have traditionally relied on Pakistani goods. What's Next The World Bank notes that prolonged closures of key Pakistan border crossings, coupled with conflict and geopolitical tensions in the Middle East, have weakened Afghanistan's external trade by disrupting traditional transit routes and increasing transport and logistics costs. With Afghanistan's import corridors now heavily dependent on Iran, any disruption to Iranian routes could further destabilise the country's fragile economy. The collapse of reverse transit has all but ended Afghan exports to India via the Wagah border and Karachi ports, raising questions about whether that trade corridor can ever be restored. For Pakistan, the loss of transit trade reduces its economic leverage over Afghanistan and eliminates a significant source of port revenue, while Afghan consumers and businesses face higher prices and reduced access to international markets.