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While Visakhapatnam Port is attracting the Nepal cargo with its efficient infrastructure, the Kolkata and Haldia Ports are also pulling up their socks to gain back the lost business. Meanwhile, China through its One Belt, One Road initiative is trying to shift the Nepal transit trade to itself
A container train carrying Nepal bound cargo including pulses, garments and electronic goods imported from China and Korea was flagged off from Visakhapatnam Port last month, marking a new milestone in the Indo-Nepal cargo movement. The train will cover a distance of 1,350 km, including 800 km in India, before reaching Nepal to unload 2.1 lakh tonnes of cargo. The rail enters Nepal through the Raxaul-Birgunj entry point.
Earlier, Kolkata and Haldia served as gateway to Nepal, but congestion in Kolkata Port is one of the reasons for Nepal looking at Visakhapatnam Port as an alternative. According to a BIMSTEC study, cargo arriving in Haldia takes 11.5 days to reach Birgunj in Nepal by rail, covering a distance of 680 km, against the 22 days’ sea travel from Shanghai to Kolkata. The cost of transporting cargo from Kolkata to Birgunj is much the same as the sea freight.
Kolkata to Birgunj is much the same as the sea freight. “Visakhapatnam gives the advantage of cheaper ocean freight as they can bring in larger vessels. The haulage charges for railway movement from Vizag to Nepal will be offset by the cheaper ocean freight,” reveals P L Haranadh, Deputy Chairman of the port. It has been reported that, due to efficient cargo handling, and flexible offers from Maersk Line and CONCOR, which have monopoly rights to take railway rakes to Nepal, Visakhapatnam Port operations are cheaper than those at Kolkata.
Meanwhile, Haldia Dock Complex is trying to woo Nepali traders by offering several concessions, such as 10 days’ free time for road-bound containers, 20 days’ free time for containers to be moved by rail, concessional box rates for haulage and terminal charges have been introduced. CONCOR has reduced the tariff for movement of containers from Haldia to Birgunj and back, and agreed to carry minimum 60 teus directly from Haldia without levying additional freight with the option of returning the empty boxes either at Haldia or Kolkata.
- Senthilvel, Deputy Chairman, Haldia Dock Complex has informed that there was no shortage of trains for Birgunj from Haldia and committed to offer prompt loading of containers without levying any additional charges. Movement of Nepal bound cargo from Haldia has been on a decline recently To further reduce the cost and time for moving Nepal bound cargo, the India-Nepal Electronic Cargo Tracking System (ECTS) will soon be implemented to facilitate movement of traffic-in-transit belonging to Nepal from the port of arrival in India. Currently cargo clearance is done through physical inspection which is time-consuming and costly for business. ECTS will reduce cost and time as it speeds up cargo clearance at border crossings.
Trade imbalance
In 2015, Nepal imported goods worth $6.6 billion and exported goods worth $660 million only. About 60 per cent of Nepal’s exports and imports are routed through India. Nepal’s export to third countries is very low. For the past 13 years, more than 96 per cent of containers entering Nepal carrying third-country imports from Indian port have been returning to India empty. Of the 100 containers bringing imports to ICD Sirsiya of Birgunj, only four containers return with exportable goods.
The number of containers reaching Sirsiya ICD increased by 14 per cent to 33,196 in 2016/17. A total of 33,196 containers entered Nepal with imports in Fiscal Year 2016/17, as compared to 20,188 containers in 2015/16. Of them, only 1,254 containers returned with exports. A total of 31,942 containers, which is 96.22 per cent of the total containers, returned empty.
Of the 237,397 containers that brought import goods to the Sirsiya ICD in the past 13 years, only 8,638 containers carried back Nepal’s exports.
The number of containers entering Nepal has been increasing every year, but as the containers have to return empty, traders are forced to pay for their return journey as well.
Capacity constraints
The rail yards at Raxaul and Birgunj are said to be suffering with serious capacity constraints. It took 25 hours on an average in 2016-17 to unload a rake, against the stated capacity to unload two-and-a-half rakes a day. At Raxaul the railways had restricted loading on 35 of the 90 days from April to June last year. To ease congestion, the railways is opening a new goods shed at Ramgarwa.
Improving rail connectivity
Rail service from India to Janakpur in Nepal is being revived, connecting Nepal to the rest of the subcontinent.
The Chinese trap
China is conducting a feasibility study for a railway line connecting Kathmandu to Lhasa in Tibet, cutting straight through the Himalayas at an estimated cost of $8 billion. The project is part of the “One Belt, One Road” initiative to which Nepal has given its accord. China has extended its rail network in Tibet up to Shigatse and plans to extend upto the Nepal-China border by 2020. These cross-border rail services will link Nepal’s planned eastwest railways to the railways from Kerung to Kathmandu.
China controls only 14 per cent of Nepal’s trade demand, but is now aiming to significantly shift Nepal’s transit trade from India to itself. Even though Nepal has geographical proximity to India but the high cost of logistics makes the Chinese rail proposal seem more viable. Issues faced by Nepali traders
The transit procedures and custom formalities on the Indian side increase the cost and time for transit trade. The infrastructure at the port, the system of train formation as well as the handing over procedure of custom cleared containers by the clearing agent to CONCOR are said to cause the delay.
The transit cargo for import from Kolkata/Haldia to Kathmandu via Birgunj takes 16 to 27 days at times through rail and for export it takes around 7-8 days by road and nearly 14-18 days till it is on board a vessel.
Poor road conditions and old vehicles used for logistics are the main cause of delays. The shortest distance is Kathmandu-Birgunj-Kolkata which is 1,256km. Distance from Birgunj to Kolkata by rail is 704 Km and time it takes is 3-4 days and sometimes it extends to 15 days. ICDs have reduced the cost of transit for cargos weighing above 20 metric tonnes only.
The average cost of bringing in a TEU load goods to Birgunj ICD and returning of empty costs approximately $1,950.
The transhipment time taken at Kolkata/Haldia Ports is 4-7 days. The feeder vessel takes minimum 7-9 days to reach Kolkata/Haldia from Singapore or Colombo. The presence of multiple checking agencies at the border increases the transit time.
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