INDIA, BANGLADESH AND THE NORTHEAST - IV
Transit and transshipment-strategic considerations
K.A.S. Murshid, Research Director, BIDS
In this study we have rooted for rail based transit, which we consider
the most beneficial for Bangladesh. Although rail connectivity remains
incomplete, there are a number of grounds that favour the rail option
over the road option:
Opportunity to revive BR: The Bangladesh Railways has turned into a
moribund organization, and over the years it has lost out to other
modes of transport, especially roads. The huge potential demand for
transit services suggests that BR can tap into a large and profitable
market. This is a unique opportunity to revive the BR and undertake a
concerted effort to reclaim its share in the freight market. A vibrant
role of the BR would serve to ease the huge congestion on Bangladesh's
road infrastructure, improving efficiency and reducing accidents.
The railways are a better option for Bangladesh which is a densely
populated, land scarce country. The basic rail infrastructure already
exists and its improvement and up-gradation will not be land intensive
(unlike that of roads).
Railways are much more environmentally friendly, and cost of freight
is much cheaper. A big advantage of the road sector is door-to-door
delivery. In the case of the freight transit market, this advantage is
immaterial for Bangladesh as both the "doors" are located in India and
the problem can be handled at the respective ends through suitable
complementary facilities.
Unlike in roads, accidents are rare and usually do not involve
ordinary bystanders.
Traditionally, railways have carried low value freight while higher
value freight has tended to go to trucking companies. There is no
reason why high value goods cannot be containerized for transport by
train. In other words, if so desired, both high and low value freight
can be accommodated by the railways.
One of the most contentious points that surround the transit issue in
Bangladesh is governance and what constitutes a suitable transit trade
facilitation agreement. This is a serious issue as can be seen from
the experience of the Greater Mekong Subregion. Thus, while physical
connectivity was easily established amongst the countries of the GMS
(Yunnan, Myanmar, Thailand, Laos, Cambodia and Vietnam), a trade
facilitation agreement took more than five years to negotiate. Even
after two years of signing the CBT agreement, the cross-border flow of
passenger and freight is yet to begin.
While the potential demand is significant, BR needs to address it very
carefully and strategically. It is important to adopt a gradual
approach, and to decide very early on that it will target only the
relatively higher end of the market, leaving the transport of low
value freight to Indian North Eastern Frontier Railways. This will
require BR to work out an investment plan to improve its
infrastructure and signalling systems, bridge missing links,
synchronise tracks, build container depots and raise its container
handling and deployment capability gradually. Most importantly, BR
will need to vastly improve its governance regime, perhaps in
appropriately designed partnerships with the private sector, including
the foreign private sector. Given the size of the market, there should
be no lack of interest on the part of investors at home and abroad,
perhaps even from India.
The aim would be to enable non-stop through freight for Indian goods
over Bangladesh, once security and customs clearance is obtained at
the border check-point(s). Given the much higher return to high value
freight (and no demand side constraint), this strategy is bound to be
economically viable, and can even be extended to domestic freight if
sufficient capacity is developed. This, at any rate, is the desired
scenario. If however, we decide to go for transit right away with
minimal investments, the costs will rise due to frequent transhipment
arising from non-compatible infrastructure, transport of low-value,
non-containerised freight, and high losses from handling and
pilferage. In that event, the missing link between Akhaura and
Agartala would need to be immediately constructed and the link from
Kulaura to Shahbazpur re-commissioned. The Asian Development Bank has
expressed some interest in financing the former component at a cost of
$35 million as well as generally funding investments in Bangladesh's
rail sector (Kaler Kontho, 23 March, 2010).
The unlikely prospect of allowing broad gauge freight trains over the
Bangabandhu (Jamuna) Bridge anytime soon, suggests that it will be a
while before a through, non-stop service can be made available. In all
likelihood, arrangements for a transhipment hub will have to be made
short of the Jamuna Bridge requiring a ferry crossing and
loading/unloading of freight on each side of Jamuna. The need to
unload and load trains will add to cost and to governance problems. In
the case of high value freight, the option is likely to be
economically viable but for low value freight, this scenario is not
likely to be attractive. It will be important to examine these cost
issues before making a final pronouncement.
An added advantage of BR is that it already has significant experience
in handling container-freight on the Dhaka-Chittagong Port route. The
ICD in Kamalapur Station in Dhaka also serves as a customs
checking/inspection point. Container trucks bring in loaded containers
to the ICD from warehouses and factories from where trains are loaded
and sent directly to the Chittagong Port. It should be relatively
simple for BR to translate this experience into cross-border
containerized transit freight services with minor operational
modifications.
Recent newspaper reports however reveal that BR's capacity to handle
even such small quantities of freight is problematic. Inadequate
number of locomotives has led to slow movement and inordinate delays
of up to a month in moving containers from Dhaka to Chittagong (Daily
Star, May 2010). This illustrates graphically, the plight of BR and
its woefully inadequate capacity to respond to the newly emerging
market demand under discussion.
Investments required
Physical barriers identified by the SAARC Regional Multi-Modal
Transport Study, are as follows:
Bangladeshi locomotives are unable to haul air-braked freight wagons
used by India, and is restricted to BCX wagons (covered, vacuum braked
eight-wheeler wagons); holding capacity of loops, yards and terminals
are inadequate on the Bangladesh side, even at the current low volume
of traffic;
Container traffic and open wagons are currently restricted by BR;
Speed of freight trains is impeded by mechanical signalling;
Restrictions in using the JMB
Section capacity constraints: between Tongi and Bhairab junctions –
generally there is a need to convert to broad gauge beyond Joydevpur;
Missing link between Akhaura and Agartala;
The Kulaura-Shahbazpur section is not currently operational;
There is need to have dual gauge on the Tongi-Shahbazpur line
Need transshipment hub at Ishwardi/Sirajnagar
Some specific sections have speed restrictions due to poor condition
of rails, e.g. Rohanpur to Rajshahi, Azimnagar to Ishwardi, Ishwardi
to Mooladuli etc.
Thus, introduction of transit services by rail requires removal of the
above type of barriers. Massive investments in rolling stock and
associated rail infrastructure should not be made at this time. The
missing links need to be restored and transshipment capability at
critical points need to be established. Thus, the Kulaura-Shahbazpuir
link will cost $33 m and the Akhaura-Agartala link will involve $8
million. In addition, land port infrastructure needs to be
strengthened, costing perhaps around $20 million. The existing ICD
terminals and transshipment yards will need expanded capability, but
it is difficult to put a figure to this. All in all, the basic
investment needed to enable rail based transit is unlikely to exceed
$100 million. If the scale of transit assumes a very large magnitude
(as surmised in ADB, 2010) then the investment scenario will change
dramatically – estimated at over $750 million in the same study.
However, quite distinct from physical barriers are the so called
non-physical barriers that restrict flow of goods by road or rail,
requiring an appropriate regulatory regime to enable transit trade.
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The author was assisted by Md. Zabid Iqbal, Research Associate, BIDS.
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