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Rail freight set to cut transport costs significantly

The transport of goods by railway could cut costs by 30 to 50 percent of the current charges for road transportation, a senior government official has said.


Deputy Director General of the Lao Railway Department, Mr Sonesack N. Nhansana, told Vientiane Times on Tuesday that Lao and Thai officials are preparing for the start of freight rail transport between the two countries. However, a precise date for the start of such a service has not yet been decided.

Lao and Thai authorities last week held an official ceremony to hand over a 38,000 square-metre container yard and other facilities at Laos' Thanalaeng railway station in Vientiane, as part of the Lao-Thai Railway Construction Project Phase II (Section I).

The Deputy Director said officials from both sides plan to initiate a single-window inspection system for goods to be transported by rail to streamline logistics and save time.

“Rail freight will be faster and cheaper [compared to the current transport mode],” he said. Mr Sonesack added that there was some detailed work that both sides needed to do before the rail transport of goods could begin.

“We will try to launch the service soon,” he said.

The plan involves turning Thanalaeng railway station into a dry port and is part of the government's interconnectivity effort to convert Laos from a landlocked to a land-linked country. It would help to reduce the existing expensive transport costs and boost trade and investment.

The government has announced its plan to build several railways to link the existing rail system with neighbouring countries and the rest of Asia. Laos currently has only 3.5km of railway track linking Vientiane with Thailand's Nong Khai province. So far, only passenger transport is provided by the railway.

High transport costs in Laos have contributed to the fact that many manufacturers are struggling to compete with their rivals in countries that have coastlines.

Freight costs between Vientiane and Bangkok Port (640 km) range from US$1,233 to US$2,088 per 40-ft container, according to studies carried out in 2016 by the Japan External Trade Organisation (JETRO).

The cost of transport between Vientiane and Laem Chabang Port (693 km) is US$1,333 to US$2,088.

Freight transport costs from Laos to Yokohama Port in Japan were the highest among 13 cities, according to a 2014 survey conducted by JETRO.

Shipping costs for a 40-ft container from Vientiane to Yokohama Port were almost US$2,500 in 2014 and 2015, followed by the US$1,500 it cost to ship freight from New Delhi to Yokohama Port.

Shipping costs from Hong Kong, Shenzhen and Taipei to Yokohama Port were the lowest at less than US$300.

By Souksakhone Vaenkeo
(Latest Update March 30, 2017)

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