Shipping Companies Benefit from Reduction in Freight Charge as Private Players Enter the Fray

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Shipping Companies Benefit from Reduction in Freight Charge as Private Players Enter the Fray

November 21: With the entry of the private sector in rail freight transportation for Nepal, competition among the service providers is increasing. Private railway service providers of India are competing among each other to transport goods to Nepal via third countries. 

The competition started after a shipment transported by Hind Terminal entered the Birgunj dry port for the first time last September. The monopoly of the Container Corporation of India (CONCOR) was broken via the amendment of the Railway Services Agreement thereby allowing the private sector to transport goods to and from Nepal. 

CONCOR had reduced its fare by 30 percent when the train of Hind Terminal entered the dry port of Birgunj.

Citing a sharp reduction in fares aimed at influencing the competitors, there was apprehension about private companies continuing the service. 

Pristine Valley, a dry port operator, said that Hind Terminal has continued their service. According to B Mohan, executive director of Pristine Valley, Hind Terminal has so far installed seven railway racks at the dry port of Birgunj. 

“The Hind Terminal has already shipped seven racks of containers. Other companies are also in the final stage of preparing for the service,” he told New Business Age. Hind Terminal has so far delivered 630 containers to Birgunj port. 

Another Indian company Pristine Logistics InfraProjects, a major partner of Pristine Valley, is also set to launch the service in a few days. The JM Baxi Group, which operates port and rail services in India, is also preparing to ship containers. 

Along with CONCOR, other companies have also reduced the freight charge. However, importers say that they are not yet able to reap the benefits even after two months. 

There is no benefit in Nepal's foreign trade as the shipping company transports goods to Birgunj port and the train fare is transaction takes place between CONCOR and the shipping company. The shipping company has been charging the freight fare to the importer up to Birgunj.

Importer Pradip Kedia says that the shipping company is yet to reduce the charge even though CONCOR has already reduced the fare. “Even though CONCOR has reduced the fares, Nepal’s trade has not benefited from it. Shipping companies and shippers are benefiting instead,” said Kedia. CONCOR had reduced fares until March 31, 2022. 

 

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