Strengthening Connectivity for Trade and Development: An Assessment of the Southern Asian Container Rail Corridor

Limitations of cross-border transport connectivity has been observed to have curtailed the full potential of trade led development in the Southern Asian subregion. Inefficiencies of international transport has hurt the trade prospects of not only Southern Asian countries but also trading partners from neighboring subregions, especially the landlocked countries of South and Central Asia which could use well-functioning Southern Asian transport corridors to the advantage of all. UNESCAP has proposed operationalization of a trunk Southern Asian transport route, namely the Istanbul–Tehran–Islamabad– Delhi–Kolkata–Dhaka-Yangon (ITI–DKD-Y) Container Rail Corridor, opening possibilities of new cost-effective transport options. This paper undertakes an assessment of the operational feasibility of this trunk corridor, and finds significant cost and time advantages. Comparing with existing alternative transport options, which often involve circuitous carriageways and transshipment delays, usage of even partial segments of the ITI-DKD-Y Corridor can lead to cost reduction to the tune of US$ 1122 per container (twenty-foot equivalent unit), potentially halving the current costs under modest assumptions. In certain segments, such as Delhi-Lahore, the rate of savings could be as high as 80 percent. Such high rates of cost reduction could translate into savings worth over 50 percent in transaction cost for regular cargo rail services between segments. Besides cost reduction, such services could also yield considerable time savings compared to available alternatives. In certain segments, the delivery time could be reduced by up to 14 days. Activation of end-to-end rail service along the ITI-DKD-Y route, along with multimodal transit linkages to landlocked countries at strategic terminals in the route, can maximize traffic volumes and revenues. Operationalization of the corridor requires concerted efforts to build institutional collaboration, facilitation of container train operators, introduction of container interchange protocols, usage of ICT tools, development of strategic dry ports for intermodal connectivity and adoption of a connectivity master plan.