Kathmandu, August 26. On Friday, July 29, the news was published in Bloomberg, an internationally renowned media outlet in the field of finance and commerce which was entitled “China’s Port Shutdown Raises Fears of Closures Worldwide”.
The news was not of interest to the common people of Nepal. It became a piece of general news for the industrialists and traders here. However, Shikshya Bhattachan, who is just in her early thirties and is running a new business in Nepal, was upset. Because she is the Chief Executive Officer (CEO) of Nepal Shipping Lines, the first and only shipping company in Nepal. Therefore, her trade is directly affected by the closure of Chinese ports.
What is Nepal Shipping Lines?
Nepal Shipping Lines is the first Nepali shipping company, which transports goods in their new and modern containers to deliver to-and-from Nepal to all over the world. Its containers are sailing from the Bay of Bengal to the Arabian Sea, from the South China Sea to the Pacific Ocean and the Indian Ocean in hundreds of numbers. The Nepal based company has been allowed to launch a non-feeder independent container liner service directly to India’s base ports for the first time.
Nepal Shipping Lines is being recognized as the most preferred trading partner of importers and exporters in the entire region. The company, which is part of the Prabhu Group, has expanded its business areas to address issues related to ship management, terminal operations, and logistics services to support the group’s core activities. Providing opportunities for building the future of Nepal’s overall enterprises, the company is also contributing to the sustainable growth of Nepal’s foreign trade.
Shikshya claims that the activities of Nepal Shipping Lines, which facilitates to export of goods from Nepal to the destination country and import goods from other countries, is directly helping the economy of Nepal. She says, “Our contribution to the state is remarkable. A large amount of foreign exchange going out of Nepal as payment for transportation services has retained in Nepal because of our service.”
How is the Shipping Business?
To say simply, the shipping business is the process of sailing goods in containers and transporting them from one place to another. This business started by Nepal Shipping Lines in our country is now in its third year. Nepal Shipping Lines is the only company doing such type of business in Nepal. “Despite starting business in the new area, Nepal Shipping Lines is making progress as expected”, says CEO Bhattachan.
Nepal Shipping Lines has many agents and partner companies around the world. They load the shipments and hand it over to the importer upon arrivals. Therefore, regular contact with the agents and the partner companies abroad is the most important task in this business.
These are the Problems
Nepal Shipping Lines has operated the container with the Nepal’s flag. The containers are moving in the sea all over the world with flag of Nepal. If a Nepalese importer orders goods from here, the container with Nepal’s flag will reach Nepal. Shikshya says, “It is a matter of pride for all Nepalese as well. However, many things do not make us comfortable in this business. Even that we try to buy a ship, it is not being possible.”
She said that when Nepal Shipping Lines tried to buy its own ship, it was not successful due to legal hurdles. She informed that the process of purchasing a ship could not be completed as there is no any government body to register the ship in Nepal. Nepal Shipping Lines was preparing to buy a ship from Singapore. The process could not move forward as there was no law to regulate it in Nepal.
In addition, currency exchange is another problem the company faces.
As Nepal Shipping Lines is a company that only provides transportation services, it does not open a letter of credit (LC). However, the service has to be paid in international currency (dollars) to other agencies and partner foreign companies for the ship carrying their containers. NRB does not provide exchange facility to Nepal Shipping Lines as it has been providing currency exchange facility only to the importers who have opened the letter of credit (LC).
According to Bhattachan, this is a daily problem. “We don’t have a letter of credit so we cannot use dollars in our business. That is why the importers have to make all the payments to the foreign parties. We only receive a few commissions left. If it were easier, a lot of foreign currency as reserve would remain here.” She said that such a facility from the concerned body would make her comfortable in the trade and it would also contribute to the country’s foreign currency reserves.
Shipping Trade in Nepal
Currently, the price of shipping services in the world market has increased tremendously. This is the highest price increase in the history of such transportation services, which does not seem to drop down immediately in the market. As a result, many problems have arisen in the shipping business.
In the case of Nepal, this shipping business is a new business in itself. Almost 200,000 containers come to Nepal annually. So, there is an ample opportunity to trade on this sector. We can easily estimate the size of the internal market from the number of containers entering Nepal. CEO Bhattachan sees a bright future for the shipping business in Nepal. She said, “The market is empty. At present, we are the only one who is serving as a Nepali company. We have not seen it so difficult to take over the business of foreigners.”
Since containers will be available here at any time while exporting, it will save time for Nepalese exporters while transporting through Nepal Shipping Lines. This has not only made a hassle-free exports possible at a lower freight rates, but has also helped in export promotion and has reduced the outgoing foreign currency.
According to Bhattachan, Nepalese importers are also freed from the hassle of having to pay in advance when using the services of Nepal Shipping Lines. Also, the transaction with Nepal Shipping Lines is easy for all importers and exporters as there is no hassle of paying in form of foreign currency. She says that the objective of Nepal Shipping Lines is to provide competitive freight rate and quality services in the shortest transit time. Arrangement has been made for importers to place delivery order to Nepal Shipping Lines in Nepal.
Work did not stop even in the lockdown
Due to the Corona epidemic, the cost of shipping business has increased significantly. The containers stocked where they were. As a result, companies were forced to buy new containers. Thus, with the sudden increase in demand for new containers, China, the only container manufacturer in the world, also got a good opportunity. They increased the price of the container up to five times high.
Shikshya says that they have also experienced the lack of containers. “It was very difficult, but we kept the service on going. We have to pay up to $2500 for a container that used to get on only $500. We continued the service even by buying expensive containers,” she said. Nepal Shipping Lines had continued its service even during the lockdown period. The company has been operating shipping services by keeping thousands of containers of Nepal Shipping Lines ready at the ports of different countries.
Bhawana Balayar, an employee who has been working with Nepal Shipping Lines from the beginning, says, they were keeping hundreds of containers in stock at Birgunj to export cargo during the lockdown. According to Balayar, Nepal Shipping Lines has been operating efficiently keeping in mind the possibility of difficulties in importing the goods from India and other third countries.
Nepal Shipping Lines has made significant contributions to expedite the import of food, medicine, and health care supplies needed to combat the Corona epidemic. This is remarkable that the company have worked consciously even at the difficult situation of the coronavirus outbreak.