Nepal’s logistics infrastructure is generally perceived as underdeveloped and unreliable with the rugged, mountainous terrain further complicating matters. It is crucial to carefully plan any movement through the road or air network, especially during the monsoon season.
Despite these geographical challenges, Nepal has seen some significant infrastructure development in recent years. A 2.68 KM tunnel is currently under construction on the Prithivi Highway and is expected to be completed by April 2024. This tunnel will provide a safer route for commuters entering and exiting Kathmandu, bypassing an eight-km stretch of road with sharp turns. The expansion of the Butwal-Narayangadh section from the existing two-lane road to six lanes of the East-West highway and the widening of the existing two-lane highway into four lanes of the Muglin-Pokhara section of the Prithivi Highway to four lanes is in progress. Another ongoing Mega Highway Project is the Kathmandu-Terai/Madesh Expressway which is 72.5 km and runs along the Bagmati River corridor, at Sano Khokana, travels through Chhaimale Gausel, Malta, Budune, and Chhatitiwan, and reaches to Nijgadh where it connects with East-West Mahendra Highway by 193 km and saves traveling time by more than four hours. In addition to these projects, local and provincial governments are also focusing on road infrastructure development.
As a landlocked nation, waterways are not a feasible option for the transportation of goods or passengers in Nepal. The country does have three railway lines: the Raxaul–Sirsiya and Bathnaha - Biratnagar lines, which are cargo rail lines, and the Jainagar– Bhangha line, which serves for passenger transport.
In collaboration with the Indian government, Nepal has constructed Integrated Check Posts (ICPs) in Birgunj and Biratnagar, with two additional ICPs in Bhairahawa and Nepalgunj currently under construction. These ICPs, equipped with facilities including customs, quarantine, and warehouses, facilitate easier cross-border trade.
Road Travel
Roads are of poor quality away from the main arterial highways. Bad driving, frequent traffic jams, road blockages caused by landslides or bridge collapses, broken down vehicles, and fuel shortages mean that logistics plans must allow a wide margin of error.
The total road network of Nepal is around 80,078 KM including 26,935 km of roads constructed and maintained by the Department of Roads (DOR) and 53,143 km of roads constructed by the local government. DOR data reflects the total length of National Highways is 11,178.92 KM. The road network is classified in two major groups: Strategic Road Network (SRN) and Local Road Network (LRN). Strategic Road Network (SRN), features featuring eight major north-south and three east-west corridors and assumes a central role in reducing the cost of logistics (including the cost of imports and exports). Mahendra Highway, Postal Highway, and Pushpa Lal Highway traverse east to west of the country, and Tribhuvan Highway, Araniko Highway, Mechi Highway, Koshi Highway, Mahakali Highway, Prithivi Highway, Sagarmatha Highway, Siddhartha Highway are the major highways from south to north. Besides being the major mode of access for passengers and goods, it provides a critical connection to India, the country’s largest trading partner and principal conduit for third-country trade, and China.
(Source: Sector Overview: Road and Transport)
Trade
Located between China in the north and India in the east, west, and south, Nepal’s trade competitiveness suffers from delays when passing through seaports in neighbouring countries, inefficiencies at land border crossings, and limitations on routes for transit cargo. Lack of efficient transit increases the costs of transportation and logistics, pushing up the prices of imported, essential, and nonessential consumer goods, as well as the prices of inputs.
Nepal shares 1770 km long border and 22 border points with India, placing India as the most important trading partner as well as transit for third-country trade. Visakhapatnam Port in Andhra Pradesh and Port of Kolkata in Kolkata are the two seaports from where Nepal brings in or sends goods to third countries. India accounts for over two-third of Nepal’s merchandise trade and almost 100% of petroleum supplies among others.
Trade with China through border points in the North has increased but still is significantly lower compared to trade with India. The Araniko Highway which is part of Asian Highway (AH42) is a major road link between China and Nepal. Nepal signed the Transit Transport Agreement (TTA) with China to boost trade through northern Border. (Source: Project Information Document, Asian Development Bank) As part of the TTA Nepal was granted access to four Chinese seaports at Tianjin, Shenzhen, Lianyungang and Zhanjiang and three dry ports at Lanzhou, Lhasa, and Xigatse. (Source: Ports Open for Nepal) However, since the closest Chinese port is 4,250 km overland distance from Kathmandu, this is not recommended as alternative to importing sea cargo via Kolkota, India.
Supply Chain from India
-
Kolkata
The sea port of Kolkota* is the main entry point for international cargo imported to Nepal. The Kolkata Port Trust (KoPT) manages two separate dock agglomerations: Kolkata Dock System (KDS) in the centre of Kolkota and Haldia Dock Complex (HDC) located 80 km South of KDS on the Haldia river, closer to the Bay of Bengal. The main cargo handled at HDC is petroleum, chemicals, coal, iron ore and steel, while KDS is the main port for containers, coal and fly ash. Birgunj Inland Container Depot (ICD) at Sirsiya is 924 kms away from KDS port; 2-3 days by cargo vehicle. Containers can be transported by Indian Railways which must wait until a full train of 90 container wagons is collected before dispatch, which takes three days to reach Birgunj. During dry season November to February, access to Port of Kolkata is limited due to low draft in the access river, leading to increased waiting times at the port.
The Biratnagar Inland Clearance Depot (ICD) is operational at the border is well connected to the gateway ports of Kolkata (600 kms) by road or by rail till Jogbani, Bihar.
-
Visakhapatnam
Visakhapatnam port in Andhra Pradesh, one of 12 major ports in India, is located 1,436 kms away from Nepal. The port is expected to facilitate Nepal’s third-country trade, as a deep-water port, where deep-water cargo vessels can be docked. To access Haldia Dock Complex of Port of Kolkata, cargo must be taken to Singapore or Sri Lanka and reloaded into smaller feeder vessels to enter India, which adds cost and time. Visakhapatnam with its bigger capacity could reduce shipping cost by sea by avoiding this step, but it adds transport costs and time overland to Nepal due to its longer distance to Nepal. Transport by rail from Visakhapatnam port to Birgunj takes approximately 10 days, while transport by truck will take around 12 days.
Air Transport
Domestic airports have an important role in connecting people across the country and are heavily used in rural areas in times of distress when road connectivity is limited. Presently, the country has three international and 28 domestic airports in operation. The terrain and high altitude of some deliveries mean specialist advice is always necessary, particularly during the monsoon from June to September.
Most airports in remote locations have no material handling equipment, re-fuelling facilities, adequate firefighting capacity, and limited or no storage capacity. However, airports in major towns and cities are well-equipped and have night landing facilities.
Storage
Nepal has several purposely built warehouses (called “go-downs”) that are owned by government entities, such as Food Management and Trading Company (FMTC) and Salt Trading Corporation (STC). There’s a lack of third-party logistics support, and an inadequate number of storage facilities, especially in sub-national and sub-metropolitan areas.
