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With all the key advantages on its side such as better connectivity, infrastructure, shorter transit and detention time, Vizag Port is expected to prove itself as better alternative for Nepali traders who are into third country exports and import trade
While Nepal is speeding up homework to operationalise the extra transit routes through India provided by the pact signed by the two countries earlier this year, Visakhapatnam Port is all set to start handling Nepal cargo, being the second gateway port for Nepal’s third country EXIM traffic. A high level delegation led by Chief Secretary of Nepal, Somal Subedi, visited Visakhapatnam in the month of June, this year, in order to see the facilities available at the Port City of Vizag and they looked impressed and vowed to start using the port and related facilities as soon as possible.
Meanwhile, the authorities of Visakha Container Terminal Private Limited (VCTPL), the container terminal at the port, have ensured the delegation that Nepali traders of almost all business verticals could benefit using the port for their end-to-end third country EXIM trade. The only seemingly hassle, the trader would face is the comparatively longer distance from Visakhapatnam to Birganj ICD but VCTPL is confident enough to ensure and offer a better leverage in the whole trade as the Vizag Port has better facilities in almost all segments of the trade, compared to Kolkata Port.
Vizag’s offers to Nepal
Once Nepali traders start using Vizag as their second gateway port for the third country EXIM transhipment, in the overall end-to-end trade, they can enjoy a margin benefit of at least Rs.60,000 to Rs.65,000 compared to what it would have been through Kolkata Port, ensures VCTPL. This would be made possible, comparing different verticals of doing the business with Kolkata Port and Visakhapatnam Port.
Deepest container terminal
VCTPL claims to be the deepest container terminal in the country with a 17-metre deep draft which is good enough to berth the biggest container vessels ever available at this point of time in the ocean trade. According to Sushil Mulchandani, Chief Operating Officer of the terminal, the bigger vessels bring down the ocean freight rate, compared to those smaller ships which can only carry a limited number of containers. Kolkata Port has only 7 metres of draft where only smaller vessels can be berthed and this is one of the prominent drawbacks of the Kolkata Port compared to Visakhapatnam Port.
Shorter transit from China and better connectivity
After India, China is the biggest trade partner of Nepal and China is the biggest trade partner for its third country imports. On an average, Nepal imports 0.3 to 0.7 million teu of goods annually from China and by 2020 it is expected to grow up to two million teu. So it is essential that Nepali importers have better and short distance connectivity to China and Vishakhapatnam has edge in terms of direct calling from China, taking lesser voyage time. While KoPT doesn’t have any direct calling from China, VPT has almost seven direct services. Almost all Nepal bound cargo reaches Kolkata Port, after transshipping it through Port of Singapore, it delays the shipment by at least four to five days, compared to Visakhapatnam. While it takes total 26 days of voyage for a vessel to reach Kolkata from China via Singapore, it takes only 22 days for a vessel to reach Visakhapatnam from China.
Visakhapatnam is closer to all the important ports of southeast Asia, compared to Kolkata. While Singapore is 1,573 NM away from Visakhapatnam, it is 1650 NM from Kolkata. Similarly, Kelang Port is 1385 NM away from Vizag, compared to 1556 NM from Kolkata.
Less detention time
In the end-to-end movement of cargo between China and Kolkata, an estimated detention time of eight days are being calculated, which includes two days of detention at the Singapore Port and six days of detention at the very Kolkata Port, but in the entire course of voyage between China and Visakhapatnam, the detention time is just three days at the Vizag Port. Detention charges on the boxes are one of the main factors which make transshipment through Kolkata Port costly for the Nepali traders. While detention charges across the globe is fixed and constant, efficiency at the port and the entire supply chain is what makes a relieving thing for the traders. After a grace period of almost 14 days, the trader has to pay Rs.3,350 for a box as detention charges to the liners and less the detention time makes the less money spending for the trader.
Back-end infrastructure
While in terms of port and terminal infrastructure, Vizag is far ahead of Kolkata Port, it outsmarts the one of the oldest operating ports in the country in terms of back-end infrastructure too. Back-end infrastructure, which mostly consists of Container Freight Stations, CFS are considered to be pivotal back-end support mechanism for a smooth port operations when it comes to container handling. Kolkata has only three CFSs with a total capacity of 51 acres, whereas Vizag has as many as eight CFSs as a back-end infrastructure with almost triple the size of Kolkata’s entire CFSs, a total area of 150 acres, at present.
Strong rail connectivity
Railway network at Port of Visakhapatnam is the largest amongst Indian ports with over 200 km of rail length, over 30 sidings and 60 per cent rail coefficient. The port has a close interface with Waltair Division of East Coast Railways which facilitates quick transportation of EXIM cargo from/to all the states in the country and at time to Pakistan and Bangladesh also. The port is equipped with 15 WDS-6 locos of 1400 HP and 3 WDG-3 locos of 3100 HP capacity for carrying train operations.
Divisional Railway Manager Chandralekha Mukherjee said, “The decision of the Govt of India identifying VPT as a second Gateway Port for freight handling to Nepal provides major impetus to container traffic. Indian Railways in general and East Coast Railway in particular are committed to develop Visakhapatnam Port as a major container hub.”
From Vizag to Birganj ICD, the routes are almost electrified and the flexibility of interchanging diesel and electric locomotives is easier as the proximity of both locomotive sheds is very minimal in the route. “Engine waiting for train” will be introduced for Nepal bound containers and also closed circuit rakes will be introduced between Visakhapatnam Port and Birgunj, which would enable real-time monitoring of the rakes.
Nepal notifies NRB about Vizag Port
The Nepal government has notified the Nepal Rastra Bank (NRB) about operationalisation of Vizag Port and has asked the latter to make arrangements for the payment of third-country cargoes destined for Nepal.
The central bank will issue a circular to the commercial banks allowing them to issue letters of credit to import consignments via Vizag Port.
After the commercial banks are notified by the NRB, import from Vizag Port will formally commence. While consignments could be brought through means of bill of lading, the cost of goods, insurance and freight (CIF) is a must for valuation of cargoes imported from third-country. Customs officials fix customs duties and other taxes based on the CIF mentioned in letters of credit.
According to Commerce Secretary Naindra Prasad Upadhyay, traders can now import goods via Vizag and all the operational hurdles will be settled gradually after traders start utilising the port.
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