New cargo tracking system increased freight forwarders’ cost

Freight forwarders today complained that the electronic cargo tracking system has raised transportation costs by 25 per cent despite minimising documentation costs also due to reduction of transportation time, detention and demurrage charges for Nepali traders.
“Despite government’s assurances that the new system will make shipping cheaper due to reduction of transportation time to almost four times, the shipping companies at Indian ports have been imposing additional surcharges under different headings increasing the cost against the government’s claim, they complained.
The government has recently launched the electronic tracking that uses the Global Positioning System (GPS) – a satellite-based radio navigation system – and allows the shipper to keep track of consignments. Nepal has received transshipment privileges from Indian authorities – along with the system – under which goods imported from third countries undergo customs clearance directly at the customs points on the Nepal-India border.
The government has been implementing the electronic tracking and the transshipment on Nepal-bound cargo released from Kolkata, Haldiya and Visakhapatnam ports in India since mid-February. The system permits electronic documentation that has been claimed to make shipping cheaper apart from reducing time of transportation to five days from earlier 21 days, saving demurrage and detention charges.
The traders – to use the system – need to pay Rs 4,200 extra per container as fitting charge for electronic tracking device. However, the freight forwarders complained that they are forced to pay higher consignment charges. “Shipping companies hiked the cost of cargo handling by Rs 25,000 to Rs 125,000 from Rs 100,000 per container,” according to past president of Nepal Freight Forwarders Association (NFFA) Rajan Sharma. “Shipping lines give only a four-day concession period for empty containers to be returned from Birgunj to Kolkata after they are unloaded,” he said, adding that the companies charge an additional $100 per container per day, if there are delays. “The limited capacity of Sirsiya Dry Port in Birgunj to handle containers has pushed the costs up.”
Apart from congestion at Sirsiya Dry Port in Birgunj, the rising labour cost and the need to train manpower at the ports have also contributed to the hike in the price, according to the incumbent president of the association Prakash Singh Karki.
Karki also suspected intervention of customs agents behind the hike in freight charges. “When the system was launched in February, customs handling agents at Indian ports had disrupted the movement of Nepal-bound cargo,” he said, adding that they used to earn by using the manual system but upset by the loss of income, the agents protested by halting the movement of Nepal-bound cargo.
Currently, six shipping lines are providing services to Nepali traders. Among them, Maersk Line handles around 60 per cent of the cargo destined for Nepal. The small number of companies handling Nepal-bound cargo is also one of the reasons for increasing the cost due to the monopoly.
The association has suggested the government to use more shipping companies to check such malpractices.

Visakhapatnam could be alternative port for third country trade for Nepal

The Railway Service Agreement (ASA) and bilateral transit treaty between Nepal and India need to address the early usage of Visakhapatnam Port by Nepal as it could serve as an additional and alternative port for third country trade.

“Visakhapatnam Port could be additional and alternative port to Nepal for its third country trade but Nepal-India Transit Treaty and Railway Service Agreement should address it for smooth operation of the route from Visakhapatnam in India to Birgunj in Nepal,” according to former commerce secretary Purushottam Ojha.

Though, in 2009, the Indian government had approved Visakhapatnam Port as a second shipment point for handling container cargo from Nepal, the two governments are yet to exchange Letter of Credit for its implementation, he said, during Nepal-India Business Conclave on ‘Visakhapatnam Port: Additional Gateway for Nepal’s Export-Import Traffic’, here today.

Currently Nepal is using Kolkata Port for its third country trade.
As Nepal’s trade volume has seen increment in recent years, the governments of Nepal and India should address the port’s early usages in the bilateral trade treaty, according to chief operating officer of Visakha Container Terminal — the operator of Visakhapatnam Port – Sushil Mulchandani.

Though, Nepal had asked India to provide access to five more trade and transit routes between Vishakapatnam Port and four major customs points, rail route between Birgunj dry port and Vishakapatnam, and Rohanpur-Singhabad-Jogbani and Phulbari-Banglabandha routes, during the renewal of Nepal-India Transit Treaty last year, the treaty was renewed without any changes making Nepal impossible to use Vishakapatnam Port for the time being.

Opening of Visakhapatnam Port – that is 700-km far away from the Kolkata Port – would give Nepal an alternative trade route as the overall cost could not much differ, according to him.

“It would be, however, more feasible for Nepali exporters and importers as India's second largest port by volume of cargo handled, Visakhapatnam Port is more efficient, ultra modern, fully computerised in handling the container and non-containerised vessels,” Mulchandani said, claiming that Nepali traders could also check the status of their containers inside the port from Nepal by visiting the company's website.

The cost will not exceed compared to Kolkata Port as they will save Ocean Freight time, and Visakhapatnam Port is nearer to China – one of Nepal’s largest trading partners – and the US, he added. “Visakhapatnam Port is congestion free and follows scheduled shipment that will also save cost.”
Inviting Nepali traders to visit the port, he also claimed that his company could help arrange road and rail transportation up to the Nepal’s border from Andra Pradesh, where the Visakhapatnam Port is.

Currently, Nepal bound vessels, if starts from China are shipped via Singapore, to Visakhapatnam Port, and then to Kolkata Port in filler vessels from where it is routed to Birgunj Inland Container Depot (ICD), which takes more Ocean Freight time. But the containers could be routed to Birgunj ICD directly from Visakhapatnam Port saving the ocean freight time, Mulchandani suggested.

However, the traders and freight forwarders were of the view that the Birgunj ICD also needs to be upgraded and automated, apart from a special container railway from Visakhapatnam Port to the Birgunj ICD to take maximum benefit from the port. “Birgunj ICD needs to be automated and linked to Visakhapatnam Port for the smooth trade,” said Nepal Freight Forwarders Association president Rajan Sharma, on the occasion.