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The countdown began in April 2017 when India’s Container Corporation (Concor) entered into an agreement with the Container Company of Bangladesh to run container trains between the two nations to reduce the trade logistics costs.
On Tuesday, V Kalyana Rama, Chairman and Managing Director of Concor, flagged off a container train, carrying 60 boxes containing 1,200 tonne of de-oiled cakes (an animal feed) from its city terminus to Bangladesh to explore the techno-economic feasibility for commercial operations.
The train will take 24 hours to reach Bangabandhu West station, 117 km from Dhaka.
“If the trial run is successful and Bangladesh gives clearance, container train services will be made available on regular basis. The frequency of trains will be determined based on the demand,” Rama said.
The primary concern is if the train can negotiate the load restrictions on Jamuna bridge over the Padma. To overcome technical hurdles, the pilot train is running at 70 per cent of its capacity.
Gain for both sides
Will the trial run be successful? Both sides have to wait for the answer. The load restriction and low capacity utilisation of rakes will surely impact the freight tariff. Also a lot will depend on the flow of return cargo as running empty trains will be unviable.
What is undeniable though is the strong intent shown by both sides to find more cost-efficient logistics solution to service the rising trade volume between the two nations.
According to India’s Commerce Ministry, Bangladesh is India’s largest trade partner in the region and ninth largest export market. Bilateral trade increased by 11 per cent during 2016-17 to $7.5 billion with Indian exports contributing $6.8 billion.
What is unfortunate though is, this huge volume of trade is serviced by non-containerised road cargo and, nearly 80 per cent of it pass through the congested Petrapole-Benapole border gates.
This is not only costly but also time-consuming as a it takes at least three weeks for Indian cargo to cross the border because of congestion at customs point.
A faster and cost-efficient trade logistics is a win-win for both sides. Bangladeshi consumers will end up paying much less for Indian goods.
During Eid, Bangladesh imports huge volumes of women-wear from India by air, which is the costliest mode of transport. The container train service can, therefore, make Eid shopping less costly.
Also container train services will reduce pressure on the congested Chittagong port, and free capacities for Bangladeshi exporters of ready-made garments to tap demands in high value European markets.
India will also gain in terms of market competitiveness in Bangladesh.
Multi-modal options
Interestingly, India is not banking only on direct container train services to reduce trade costs. It has already proposed to fund a container handling facility on the Bangladeshi side of the Gede-Darshana rail link to shift the road cargo.
More importantly, the Shipping ministries of two countries are geared to include the Pangaon river terminal near Dhaka in the bilateral river protocol.
This will help using the inland waterway, which is the cheapest mode of transport, for movement of containers between Kolkata and Dhaka.
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