First port of call

June 11, 2017 00:35 AM Purushottam Ojha


Nepal needs a port authority that can be entrusted with overseeing the operation and management of dry ports
For a land-locked country like Nepal it seems somewhat weird talking about the need of a port-related regulatory institution. But it is also true that more than 90 percent of external trade of Nepal moves through combined land-sea routes, with Indian sea ports used for the purpose. The transit and transport agreement signed between the governments of Nepal and China in 2016 also opens up the possibility of using the ports of China.

Again, it is important to understand the nuances of sea-borne trade, even for land-locked countries, to bring about much-needed dynamism in their trade. Yet the obvious lack of knowledge and expertise in this field is also constraining the capacity of those countries to assert their rights in international negotiations. Knowledge about global supply chains, along with the processes, and terms and conditions of movement of trade across the other territories, are crucial for such negotiations. 

It is vital that the negotiators have fair knowledge of international laws and conventions that form the framework of transit transport arrangements. For this, Nepal should have plans to build a storehouse of knowledge on this field, but this should be done outside the realm of normal bureaucracy.

The normal bureaucratic structure in Nepal is largely based on generalization, as cadres in the services work as general administrators rather than specialists. The officers in the ministries and government departments are frequently transferred to posts that come with oft-contradictory responsibilities. 

According to the Civil Service Act, staffs are deputed on two-year stints, before they are transferred to other positions, either within the same ministry or to some other ministry, and with different roles and responsibilities. Job placement now more than ever demands specialization, as called for by emerging innovations and technology. But our system is arranged in a way that erodes competitiveness and productivity of service delivery systems.

Nepal has been looking to develop dry ports or Inland Clearances Depots (ICDs) since late nineties, with the construction of border infrastructure at Birgunj, Biratnagar and Bhairahawa. The process has set in motion development of similar facilities at Kakarbhitta, Tatopani and Rasuwa. Similarly, the offshoot program of development of border infrastructure has been initiated at major border posts, in the name of development of integrated customs check-posts. Likewise, construction of a container freight station is underway at Chobhar of Kathmandu. This will, it is hoped, serve as a distribution park for traded goods within Kathmandu valley.

Development of dry ports was driven by the need to facilitate the movement of containers from origin to destination. For the record, containerization of trade was first mooted in mid 1950s by Malcolm McLean, a trucking entrepreneur from North Carolina, who offered the idea of using metal boxes of standardized size for transfer of traded goods. Such a container could be transferred from one mode of transport to another, eliminating the need of handling or removing individual packages. 

This gave birth to the concept of inter-modalism, which is based on the notion that efficiency will be vastly increased when the same container with same goods can be transported with minimum interruption through different modes of transport. This helped reduce pilferages, theft and losses of goods dramatically and also cut the cost of transport. The developments of dry ports, modernization of sea-ports and manufacture of container handling equipment, and new multi-axle trucks and trailers were supplementary measures to enhance such containerization and multi-modal transport systems.

Dry ports are the extensions of sea ports. Hence operation of sea ports is normally shifted to dry ports to avoid unnecessary delays and congestions at the port. In such cases, the function of sea port is only transferring the cargo or container under the customs bond and seal so that clearances of cargo and customs are completed at dry ports. Enhanced connectivity between sea-port and dry-port has added new dimension to transit movement of cargo for all countries, irrespective of their location. 

Operational complexities of the sea port may be minimized by adopting the simplified transshipment modality that could allow movement of transit cargo under a simple mechanism secured by customs seal and bond. This benefits both land-locked and transit countries, as it ensures secure movement of cargo and reduces the cost of delivery.

Nepal needs to consider building a port authority, specifically the Land Port Authority (LPA), with the responsibilities of overseeing the operation and management of dry ports and also as a storehouse of knowledge in the areas of multi-modal transport of goods, maritime transport, logistics and supply chain management. Such an institution should be well equipped with human resources to carry out training and research in the areas of supply chain, logistics management and transit transport related matters. It is imperative to have such an organization also because Nepal needs to maintain linkages with similar organizations in neighboring countries like India and Bangladesh that provide transit services to Nepal.

Trade cost for Nepal has been high due to transit related costs, which in turn are eroding the competitiveness of Nepali trade. Experience tells that transit transport related costs are opaque, that there are avoidable delays in processing the documents in sea ports and land border posts, and that we lack modern transport infrastructures and equipment.

These malaises can be remedied with more collaboration among the stakeholders and service agencies operating between Nepal and other transit-providing countries. 

The government of Nepal should thus seriously consider building a vibrant and self-sustaining land port authority. This will greatly ease the process of transit transport and help establish good working relations with their counterparts in other countries. 

The writer is a former Secretary of the Government of Nepal

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