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Laos expects to cut freight transport costs by railway

Xinhua, March 30, 2017 Adjust font size:

The transport of goods by railway could cut costs by 30 to 50 percent of the current charges for road transportation, a senior Lao government official said to local daily Vientiane Times on Thursday.

Deputy Director General of the Lao Railway Department, Sonesack Nhansana, said that Lao and Thai officials are preparing for the start of freight rail transport between the two countries.

Lao and Thai authorities last week held an official ceremony to hand over a 38,000 square-meter container yard and other facilities at Laos' Thanalaeng railway station in the capital 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, adding 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 Lao government's interconnectivity effort to convert Laos from a landlocked to a land-linked country. It would help reduce the existing expensive transport costs and boost trade and investment.

Lao government has announced its plan to build several railways to link the existing rail system with neighboring countries and the rest of Asia. Laos currently has only 3.5 km 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 1,233 U.S. dollars to 2,088 U.S. dollars per 40-foot container, according to studies carried out in 2016 by the Japan External Trade Organization (JETRO), according to the report.

However, shipping costs for a 40-foot container from Vientiane to Yokohama Port were almost 2,500 U.S. dollars in 2014 and 2015, while it costs 1,500 U.S. dollars from New Delhi to Yokohama Port. Endit