By Vijay Kurup
In December 2021, Vishakhapatnam was beset with a huge backlog of 4000 import containers bound for Nepal. CONCOR which reportedly operated about 20 rakes a month, scaled down to eight rakes a month. Reportedly they were evacuating only those containers that were assigned to them. What led them to scale back their operations?
On June 29 last year, the Nepal-India Railway Service Agreement (RSA) was amended to boost rail cargo movement between the two countries. The agreement, inter alia, had permitted authorized cargo train operators to utilize the Indian railway network to carry Nepal’s containerized shipments and other freight, which hitherto was conducted exclusively by CONCOR. However, with the opening of this sector to private operators, CONCOR which reportedly operated about 20 rakes a month, scaled down to eight rakes a month that led to the huge pendency of containers. For Nepal, an import dependant nation, the dip in the movement of containers was not without impact.
The transit arrangements between India and Nepal are governed by two legal instruments: viz India and Nepal Rail Services Agreement (RSA) signed in 2004 (renewable every ten years) and The Treaty of Transit. The RSA was executed on 21.05.2004 between the Governments of India and Nepal for the introduction of freight train services between these two countries. This agreement guided the movement between India and Nepal by rail. The freight train service was from Raxaul, India to Birgunj, Nepal. The agreement was necessitated since there existed no previous arrangement for rail movement between the two countries. The RSA amendment was in accordance with India’s efforts to enhance regional connectivity under the “Neighbourhoods First” policy.
A provision in the RSA stated that the Agreement would be reviewed every five years and modified, if required, by the contracting parties through Letters of Exchange (LoE). A LoE was signed between India and Nepal on June 29 last year, that came into effect on 09.07.2021.
Broadly the LoE agreement stated that:
Cargoes in all categories of wagons that can carry freight on the Indian Railways (IR) network, could now carry freight to and from Nepal. Wagons owned by Nepal Railway Company will also be authorized to carry Nepal-bound freight from Kolkata/Haldia to Biratnagar/Birgunj, over the IR network.
All authorized cargo train operators which include public and private container trains Operators, automobile freight train operators, special freight train operators or any other operator authorized by IR will be able to utilize the IR network to carry Nepal’s container and other freight. Wagons owned by Nepal Railway Company will also be authorized to carry Nepal-bound freight from Kolkata/Haldia to Biratnagar/Birgunj, over the Indian Railways network as per IR standards and procedures.
The agreement ended the exclusive right of CONCOR to carry shipments to Nepal. The elimination of exclusivity is expected to bring in market forces in the rail freight segment in Nepal, and further it is likely to increase efficiency and cost- competitiveness, that would eventually benefit the Nepalese consumer.
An executive from the industry who did not wish to be identified said that there was a potential to increase the Nepal bound volumes with the Private Container Train Operators being allowed to operate. Nepal is an Import driven market and very few exports are taking place. With more train operators to choose from, the Nepal trade will get the benefit in rail haulage cost which otherwise was monopolistic with a single rail operator running rake in this circuit. Further he felt that prising the sector open to private players, would bring in more efficiency in operation, better service levels and stabilization of costs to the end customers.
The ICD at Birgunj was operated by Himalayan Terminal Private Limited, a Nepal-India joint venture terminal management company. The Nepal Intermodal Transport Development Board (NITDB) had awarded the management contract to Himalayan Terminal. The Birgunj ICD is Nepal’s first rail-linked terminal to the Gateway ports of Vishakhapatnam and Kolkata. It was constructed in 2000 with World Bank assistance. Currently only Kolkata and Visakhapatnam are connected to ICD Birgunj.
The other three active dry ports are Biratnagar, Bhairawa and Nepalgunj ICD. In addition, five more ICDs are planned at Tatopani, Rasuwa, Kathmandu, Kakarbhitta and Dodhara Chandani. The Inland Clearance Depots are connected by road and/or by rail, to a seaport or other international dry port and operate as a centre for transhipment and importation of cargo by sea, to inland destinations in Nepal.
The route via Kakarvitta, Panitanki and Banglaband is with the port of Mongla in Bangladesh and Chittagong but that is not operational yet due to high logistic cost of transporting freight to Bangladesh and lack of infrastructures. India has a big role to play in facilitating Nepalese trade via Bangladesh.
The volume of the exim movement to and from Nepal is about 75,000 to 100000 teus per annum. Rajan Sharma, CEO, Quality Freight Service Pvt Ltd, felt that, with the private sector being permitted to operate rail services the choice for the traders has increased. He believed the capacity of the government to negotiate smooth operation with CONCOR and with other private railway operators had been a major problem.
With new operators coming in, Rajan felt that the new terminal operators will have to manage the terminals better than the earlier incumbent M/s Himalayan Terminal Pvt Ltd. He expected to see more reduction in cost, improvement in time and better management of terminal inventory and warehousing. He further stated that there was also a need to integrate automation of terminal operators with a standard SOP for all terminals which is Transparent, accountable and easily accessible.
Bandaru Mohan, Executive Director with Pristine Group of Companies, Nepal and Eastern Region said in an email response to Maritime Gateway, “the idea is to have fair competition and the trade would be facilitated by lowering costs and improvement in Digitisation and provision of modern equipment (once private Sector operates the terminal) and efficient service round the clock are some of the major boosters.”
Currently two private container train operators are operating along with CONCOR. Pristine Group has 8 rakes operating from Visakhapatnam, J M Baxi and Concor reportedly have 2 and 8 rakes respectively. Mohan said that more trains would be introduced in the month of March. The situation, he hoped would considerably improve by then. In the meantime, Maersk Line has pitched in to clear some containers stranded at Visakhapatnam port.
What necessitated a fresh LOE was the fact that large developments have taken place in the intermodal movement which required changes to the RSA. The scope of the rail services has SINCE been expanded with several amendments requiring redefining of terminology.
The agreement now covers freight rail services between Haldia/ Visakhapatnam Port, Kolkata and any other ports in India with ICD Birgunj and any other agreed ICD/ICP stations in Nepal.
A very wide spectrum of rolling stock has been defined into the RSA. ICD Birgunj has been defined as Inland Clearance Depot. Provisions with respect to movement of rail traffic have been added. The rail traffic between the two countries shall comprise all types of cargo in all types of rolling stock which are permitted to move on the Indian Railway network including container/ reefer container traffic moving in Flat Wagons, breakbulk, bulk and bagged cargo in covered wagons and over dimensional cargo. Reefer containers too have been defined and inserted into the Articles of the RSA. Reefer containers are allowed for movement and Power Points are available at the dry port. The major importers M/s Dabur Nepal and ITC, Coca Cola. Juice Concentrate and Pulp are imported apart from Chocolates and Frozen food.
All types of locomotives running on the Indian Railway system can be used to haul the rolling stock between India and Nepal. The movement of reefer containers has been subject to a minimum of 14 FEUs (forty feet equivalent units). Wagons owned by the IR or other authorized cargo train operators licensed by IR will be allowed for movement between the two countries.
VCTPL is connected to ICD Birgunj. With more rake operators available, there is a good potential for enhancing the Nepal bound volumes through Visakhapatnam. The direct call of main line vessels combined with marine and rail infrastructure makes Visakhapatnam a viable alternative to Kolkata and Haldia. There has been substantial progress in the Customs procedures as well. Customs processes have been simplified with the implementation of the Electronic Cargo Tracking system (ECTS). The customs infrastructure has been set up and connected through EDI at both ends. The opening of the sector to private operators and the addendums in the RSA augurs well for the trade. With multiple players in the field, the market forces will bring in rationality in the cost structure. The redefining and insertion of many terms into the Nepal-India Railway Service Agreement, is a potential indication of expansion of trade movement between India and Nepal. It also promises of ease movement of goods between the two countries. Opening the sector to private train operators, is flagging the train in the right direction.
