What Happens When Trade Has Nowhere to Go?

Nepal Confronts the Economics of Corridor Concentration

For Nepal, the real economic cost of a disaster is rarely confined to what is physically destroyed. It is also measured in what stops moving.

The disruption of Rasuwagadhi and Tatopani has exposed a deeper vulnerability in Nepal’s trade architecture: an economy can have multiple border points on a map and still lack genuine supply-chain redundancy. When critical corridors fail simultaneously, the consequences travel quickly from stranded containers to customs revenue, inventory losses, freight costs, working capital, insurance claims and, eventually, consumer prices.

That makes the current disruption more than a logistics problem. It raises harder questions about how Nepal manages trade concentration and fiscal exposure, and whether infrastructure built around increasingly climate-vulnerable terrain is sufficiently resilient for an economy dependent on cross-border commerce.

The timing makes those questions particularly consequential. Importers entered the peak festive trading cycle with inventory stranded or destroyed, alternative routes carrying significantly higher logistics costs, and uncertainty surrounding insurance, supplier credit and replacement stock. For smaller businesses operating on narrow margins and short selling windows, a disruption at the border can rapidly become a balance-sheet problem.

But perhaps the larger issue is structural. Nepal has experienced repeated disruptions along its northern trade routes over the past decade. The challenge now is not simply restoring another road, bridge or customs point. It is determining whether the country can build a trade network in which alternative corridors are commercially viable, operationally interchangeable and resilient enough to function when the primary route fails.

In this edition of Business 360, Rajan Sharma, CEO, Quality Freight Service; Sangay Gurung, Director, Richa Treks; Chunky Chhetry, CEO, SALICO; and Urmila Rana Magar, Deputy CEO, Ethico Retreat and Brew Table Cafe, examine the economics behind that vulnerability -from customs revenue and inflation to insurance exposure, importer solvency and the case for a fundamentally different approach to national logistics planning.

When a single flash flood on the Bhotekoshi can instantly paralyse up to 11% of Nepal’s Chinese imports, at what precise threshold does landlocked trade concentration shift from an operational bottleneck into a national security vulnerability?

Rajan Sharma, CEO, Quality Freight Service

Rajan Sharma: A trade corridor becomes a national security vulnerability when obstruction or disruption on one route cannot be absorbed within a predictable time by alternative routes, different modes, inventory buffers and customs systems. The relevant threshold is not merely a percentage of national imports; it is when the lost corridor carries essential or time-sensitive goods - energy equipment, medicines, industrial inputs, food, EV parts and seasonal inventory -for which the country cannot restore equivalent capacity within weeks or the short term.

In Nepal’s case, the concern is real because the Rasuwagadhi and Tatopani corridors together have carried roughly Rs 93 billion of imports in a year, while Korala historically had much lower capacity and far weaker operating infrastructure. After the August flooding, both major northern points were affected, leaving Korala to absorb traffic for which it was not designed. That is a systemic resilience gap, not a failure of either neighbour.

The policy response should be a national corridor-resilience standard: no single border point should be permitted to carry critical import categories unless Nepal has at least two operational alternatives, pre-agreed diversion procedures, digital customs continuity, strategic stockholding and insured inland logistics capacity. In that respect, Rasuwa was carrying far more than its capacity.

Sangay Gurung: There is no universal percentage at which a trade route automatically becomes a national-security vulnerability. The practical threshold is crossed when a disruption can neither be absorbed by alternative routes within weeks nor managed through emergency stocks without jeopardising essential supplies, public revenue or economic stability.

Rasuwagadhi is already beyond the level of a mere operational bottleneck. It handled about 10.7% of Nepal’s imports from China in FY 2025/26—around 2.18% of Nepal’s total imports, and it carries higher strategic importance than that headline share suggests because it is a principal route for Chinese consumer goods, industrial inputs and electric vehicles.

A sensible policy trigger would be to classify a corridor as a strategic national vulnerability when it carries more than 10% of imports from a major supplier and no alternate network can replace at least 70% of its normal volume within 30 days. By that test, Rasuwagadhi qualifies. The August disaster also closed Tatopani, demonstrating the real danger: not one bridge failing but Nepal losing multiple northern gateways simultaneously.

Chunky Chhetry: There is no universally accepted single percentage at which trade concentration automatically becomes a national-security vulnerability. The more useful concept is a criticality threshold based on dependency, substitutability, disruption duration and strategic importance, rather than trade share alone.

A trade corridor becomes a national vulnerability when disruption on one route can materially affect essential imports, government revenue and domestic prices. The recent Rasuwa flood has demonstrated that risk clearly. Nepal needs to view trade corridors as strategic infrastructure, with redundancy built into the system rather than treating alternative routes as emergency arrangements.

Urmila Rana Magar: Although the landslide and flash flood along the Kerung-Rasuwagadhi corridor in Rasuwa and Nuwakot districts have significantly disrupted imports from China, those imports are mainly vehicles, clothing and footwear rather than basic necessities. Most essential goods, such as food, petroleum and cooking gas, come from India. So, at the operational level, the flash flood’s impact on Nepal’s national and economic security is smaller than many anticipate.

With customs infrastructure at Rasuwagadhi destroyed and billions in taxable goods washed away, how heavily will this revenue loss widen the government’s budget deficit right before the peak fiscal quarter?

Rajan Sharma: The immediate fiscal effect is serious, but it should not be overstated as though it alone will determine Nepal’s budget deficit. The direct hit comes from the collection of customs duty, VAT, excise and related clearance revenue, while the indirect hit comes from lower import volumes, delayed consumption, insurance claims, disrupted business turnover and reconstruction expenditure.

Rasuwagadhi collected Rs 13.64 billion in FY 2025/26 and had a revenue target of Rs 25.5 billion for FY 2026/27. Its closure therefore creates a revenue shortfall for that customs point, especially during the pre-festival import cycle. However, some revenue can be shifted, though not fully recovered, through alternative corridors such as Korala and southern customs points if cargo is rerouted rather than cancelled.

The Ministry of Finance should treat this as a cash-flow and revenue-composition shock. It needs revised monthly customs forecasts, fast-track temporary clearance capacity at alternative points, a fast mechanism for changing the choice of entry point, prevention of leakage during diversion, and funds set aside for reconstruction.

Nepal collected Rs 184.58 billion in the first two months of FY 2026/27, about 85.93% of the period’s target, indicating that the national fiscal effect must be measured from actual collection data rather than assumed from estimated cargo-loss figures.

Sangay Gurung: The immediate fiscal effect is serious but it should not be described as a permanent loss equal to the value of all washed-away goods. Customs duty is collected only when goods are cleared; destroyed cargo therefore represents foregone future collection, not tax revenue already earned and lost. The larger shock is delayed customs revenue, reconstruction spending, business failures and a weaker tax base.

Rasuwagadhi had a Rs 25.5 billion revenue target for FY 2026/27. If the point remained entirely shut for a quarter, the crude upper-bound exposure would be roughly Rs 6.4 billion, one quarter of its annual target. But this is not the likely final deficit impact because cargo that successfully moves through Korala or other gateways is still taxed. Indeed, Korala collected Rs 1.5 billion in the 15 days after the August 26 flood, showing substantial revenue diversion rather than total disappearance.

The deficit will widen most if reconstruction costs accelerate while trade volumes fall or shift into informal channels. The Finance Ministry should publish weekly figures for foregone and recovered customs revenue, rather than treating the full Rasuwagadhi target as an automatic deficit addition.

Chunky Chhetry: The fiscal effect is material, but it is unlikely that the Rasuwagadhi shutdown alone will dramatically widen Nepal’s annual deficit. The bigger danger is a cash-flow and revenue-collection shock during the high-import months, when the government is trying to accelerate revenue collection. The immediate revenue impact is significant because customs revenue is directly linked to the movement of imported goods.

However, the loss should be viewed beyond a temporary decline in collections. Delayed imports, damaged infrastructure and reduced commercial activity can create a wider fiscal impact. The diversion of cargo to Korala shows that some revenue can be recovered, but capacity constraints remain.

Urmila Rana Magar: It will definitely hurt government revenue because the whole border crossing is closed. But China is restoring its side of the road quickly and Nepal will likely speed up its own repairs ahead of Dashain. The government also still has about nine months of the fiscal year to recover the lost customs and tax revenue. So, although there is an impact, we will need to wait a few more months to see how much it actually affects the deficit.

Beyond short-term price gouging, how much ‘permanent’ inflation will be injected into the economy as importers are forced to reroute cargo through high-altitude, logistically punitive bypasses like Korala at triple the freight cost?

Rajan Sharma: The immediate effect is likely to be higher input costs and price increases in specific categories, rather than a permanent economy-wide inflation shock of the same magnitude as the freight increase. If a particular consignment is diverted through a much longer and more difficult high-altitude route, freight, handling, inventory financing, insurance, damage and delay costs all rise sharply. Reported transport costs to Kathmandu via Korala have risen as much as 15-fold in some cases, which shows the severity of the immediate logistics distortion.

But not every product will pass the full cost increase on to consumers. Market competition, demand elasticity, available stock, exchange rates, tariffs and traders’ margins will determine the pass-through. Essential goods may see price pressure sooner; highly discretionary festival goods may instead suffer reduced sales and lower margins.

The permanent inflationary risk arises only if emergency routing becomes normal practice. The solution is not to accept Korala as an expensive substitute for Rasuwagadhi. It is to develop it as a planned, multimodal, digitally managed supplementary corridor with predictable procedures, adequate warehousing, testing facilities, banking, insurance and year-round road reliability.

Sanjay Gurung, Director, Richa Treks

Sangay Gurung: The cost shock is real, though “permanent inflation” is the wrong term. A disrupted route can create a one-off rise in the price level; it becomes sustained inflation only if the higher logistics cost persists, spreads to wages and expectations, and is accommodated by broader monetary or fiscal pressures.

The available evidence suggests the rerouting penalty may be worse than “triple”: the reported container transport cost from Rasuwagadhi to Kathmandu was about Rs 50,000, compared with roughly Rs 750,000 through Korala, a 15-fold increase in that transport component. Korala is 415 km from Kathmandu; its approach road is largely unpaved, and diverted containers must travel roughly 450 km more on the Chinese side.

The consumer-price effect cannot honestly be stated as one precise percentage without cargo-level data: the value and composition of each container, trader margins, inventory levels, exchange rates and duration of closure all matter. For low-value, bulky goods, the freight increase could add double-digit percentage points to landed cost. For high-value goods, it will be much smaller. At the national level, Rasuwagadhi’s 2.18% share of total imports limits the direct CPI effect, but festival-season shortages and opportunistic mark-ups can make the impact on affected household goods much sharper.

The policy goal should be to prevent a temporary logistics shock from becoming a permanent price increase: restore at least one major northern route quickly, subsidise only verified incremental emergency freight for essential goods, enforce anti-hoarding rules, and publish daily stock and price information. Korala is vital as a contingency route, but it is not yet a cost-effective substitute for Rasuwagadhi.

Chunky Chhetry: The immediate concern is higher logistics costs rather than permanent inflation. Korala has become a critical alternative, but transportation costs have risen substantially because of the longer distance and difficult terrain. If such disruptions persist, these additional costs will inevitably be reflected in the prices of imported goods and ultimately borne by consumers.

Urmila Rana Magar: In the short term, there will be price gouging and, because shipping costs are higher, prices of goods coming from China into Nepal will definitely rise for a few months while businesses manage their cash flow. But this can’t last in the long term.

Inflation only persists when prices are being pushed up by something ongoing elsewhere in the economy. For example, the Iran war is driving up fuel prices, but as that pressure eases, product prices come back down because they cannot stay elevated without a lasting cause.

The same will happen with the flash flood’s effect on Chinese imports. People will face higher prices for a while, but after that, prices should come down.

With over 200-500 containers swept away and billions of rupees in festive inventory lost in the border “no-man’s land”, who ultimately bears the insolvency risk when insurance firms reject cross-border disaster claims?

Rajan Sharma: The first principle is clear: the party carrying the contractual risk at the point of loss bears the initial liability. That may be the seller, buyer, freight forwarder, carrier, terminal operator, customs custodian, warehouse operator, insurer or another party, depending on the sales contract, Incoterms, bill of lading or transport document, insurance policy wording, and the exact location and status of the cargo when the flood occurred.

Where goods were in the border area after customs clearance or under a local handling arrangement, importers may face severe exposure. Where goods were still under a Chinese supplier’s delivery obligation or under a carrier’s custody, the liability analysis could be different. No one should presume that all losses automatically fall on Nepali importers or insurers without examining the documentary chain.

The core problem is that many small importers use inadequate cargo cover, unclear Incoterms, under-declared cargo values, fragmented transport contracts or informal risk arrangements. That turns a natural disaster into an insolvency event. We should establish a rapid cargo-loss verification cell involving customs, insurers, banks, freight forwarders, transport operators and border authorities on both sides so legitimate claims can be documented promptly while fraudulent claims are screened out.

Sangay Gurung: The immediate insolvency risk falls first on the importer whose goods were destroyed, not automatically on the insurer, Chinese supplier or government.

But the final allocation depends on the sale contract, Incoterms, cargo-insurance wording and whether the goods had legally passed into the importer’s ownership. A rejection solely because the loss occurred in Chinese territory or the border “no-man’s land” should be tested against the policy’s territorial limits, transit attachment point and named insured; it is not a universal rule. Where the policy genuinely excludes that location or phase of transit, the importer remains liable for bank debt, supplier credit, freight and replacement stock. If a carrier, logistics operator or warehouse had contractual custody, it may also face liability, though recovery will be difficult after a catastrophic flood. Government relief may soften the shock, but it does not replace commercial insurance coverage.

The exposed loss is substantial but still needs formal reconciliation. Reports range from roughly 200 containers lost, with goods estimated near Rs 2 billion, to 200–250 loaded trucks with cargo valued at Rs 5-10 million each, Rs 1-2.5 billion in cargo alone. Broader trade-association estimates that include containers, vehicles and infrastructure exceed Rs 10 billion. These figures should be treated as preliminary rather than a completed balance-sheet loss assessment.

Chunky Chhetry: The key point is that the insolvency risk does not automatically transfer to insurers simply because the goods were destroyed. If the cargo was uninsured, excluded, inadequately insured or outside the insurer’s legally covered risk, the importer ultimately bears the capital loss, and the loss then propagates to banks, suppliers and, potentially, the wider financial system.

The scale at Rasuwagadhi is substantial. Initial reports put the number of affected loaded containers at more than 200, while officials said the exact number was initially impossible to establish; 70-75 containers that had cleared customs were specifically reported swept away. Traders estimated the destroyed merchandise at more than Rs 10 billion.

Urmila Rana Magar: Most imports are insured, so I expect something similar to what happened during last year’s protests. Insurance companies will pay part of the losses, and some national and international bodies, both governmental and non-governmental, will likely help cover costs as well. The rest will be borne by the businesses themselves.

Speaking as a businessperson, this kind of event happens once in a while, and it is part of the risk of investing. Still, business owners have definitely suffered because of this flash flood.

How severely does the physical destruction of pre-paid inventory damage the creditworthiness of Nepali importers in the eyes of Chinese vendors, and will this trigger stricter financing terms for future trade cycles?

Rajan Sharma: The damage can weaken the credit standing of Nepali importers, particularly those who had taken supplier credit, used advance payment, borrowed from banks or already pledged incoming inventory as working capital. Chinese vendors may respond by seeking higher advance payments, shorter credit periods, stricter documentary requirements, additional guarantees or payment through more secure banking instruments.

However, the response should not be to portray this as a bilateral trust crisis. Chinese suppliers also lose when a viable Nepali buyer collapses. Both sides have an interest in preserving legitimate trade relationships. The best remedy is transparent documentation that helps verify cargo loss, bank-supported restructuring of affected trade finance, insurance claim-status reports, and clear settlement arrangements between buyers and suppliers.

The government, banks and business associations should consider a time-bound trade-finance relief mechanism for verified flood-affected firms to enable rescheduling of working-capital loans, avoid automatic downgrading of borrowers, and facilitate negotiated supplier-payment extensions. Relief must be tied to audited exposure, not broad debt forgiveness.

Sangay Gurung: For Nepali importers, the damage is also a credit event. Chinese vendors will distinguish between buyers who can document the loss, meet agreed payments, and present credible insurance or bank support, versus firms seeking extensions after an uninsured loss. The likely consequence is tighter terms for the next cycle: higher advance-payment requirements, reduced supplier credit, smaller shipment sizes, bank guarantees, or the use of alternative routes and insurers. This is especially damaging because the border closure coincides with peak stocking for Dashain and Tihar, while freight and rerouting costs are already rising.

The balance-sheet effect is more severe than the invoice value of the destroyed goods. For each importer, it includes inventory written down to zero or salvage value; unrecovered freight, handling, deposits and any duties already paid; interest and principal still payable on working-capital loans; expedited replacement and rerouting costs; lost festival-season gross margin; and a likely increase in future insurance, financing and supplier-credit costs.

Chunky Chhetry: Loss of prepaid inventory can put considerable pressure on an importer’s working capital and ability to meet payment obligations. Repeated disruptions could make suppliers more cautious and potentially lead to tighter payment or financing terms. In this context, having adequate insurance coverage also strengthens an importer’s financial resilience and creditworthiness by demonstrating that major operational risks are being actively managed.

This can help maintain confidence among suppliers, lenders and other financial partners even when unexpected disruptions occur. Vendors may demand larger deposits, irrevocable letters of credit, bank guarantees, confirmed L/Cs, trade-credit insurance, shipment-specific insurance, stronger collateral, higher financing charges or smaller shipment lots.

Urmila Rana Magar: In B2B import deals, I think this disaster will push both sides—Nepali importers and Chinese exporters—to add clauses covering what happens when a disaster like this strikes. You never know when the next one will come, so they will need to plan for it in the long term. I expect new negotiations, deposit arrangements or some kind of system to manage the risk, since so much money is at stake.

But the bigger challenge will be for insurance companies because they carry more of the risk than the businesses on either side. Most of these imports are already insured. If insurers are not fully covering claims when disasters happen, they will have to rework their policies so trade between the two countries can continue.
So, the main changes will be on the insurance side, with some smaller adjustments in how businesses in Nepal and China work together.

With Dashain and Tihar weeks away, what is the total balance-sheet impact of destroyed seasonal apparel, electronics and agricultural cargo? Are small-to-midsize importers facing systemic bankruptcy?

Rajan Sharma: The impact is potentially severe because the loss is not only the value of the goods. It includes freight already paid, customs and handling charges where applicable, bank interest, demurrage, storage, exchange-rate exposure, lost festival sales, and the cost of replacing stock through more expensive routes. For perishable goods, delay can destroy the entire commercial value even if the cargo is physically recovered.

For Dashain and Tihar inventory, timing is decisive. Apparel, footwear, electronics and gift items may lose much of their value if they arrive after peak demand. Fruits, garlic, ginger, onions and other perishables face a more immediate spoilage risk. Preliminary reports indicated hundreds of containers may have been swept away or damaged, while others were stranded on the Chinese side; final losses need a properly verified inventory and valuation process.

Small and medium importers are the most exposed because they operate with narrow margins, concentrated suppliers, limited insurance and high dependence on short seasonal sales. It would be premature to call this “systemic bankruptcy” across the sector, but it is clearly a solvency threat for a defined group of highly exposed firms. The practical priorities are loan rescheduling, temporary moratoriums on penal interest, supplier-credit renegotiation, expedited claims settlement and transparent loss certification.

Sangay Gurung: Seasonal apparel, electronics, fruits and other festival merchandise are particularly exposed because their selling window is short; late replacement may preserve some sales but not the intended margin. The event can plausibly cause bankruptcies among highly leveraged small and midsize importers with concentrated Rasuwagadhi exposure and no effective insurance. It is not yet evidence of a sector-wide insolvency crisis: that conclusion requires importer-level data on uninsured inventory, debt maturities, collateral and insurer claim outcomes.

The policy priority should be a rapid, independently verified cargo-loss register; accelerated settlement of valid claims; temporary working-capital restructuring for viable firms; and a Nepal-China protocol clarifying cargo-insurance coverage and liability at the border.

Chunky Chhetry, CEO, SALICO

Chunky Chhetry: The evidence now points to a serious capital-loss event for affected traders, but not yet to systemic bankruptcy of Nepal’s small and mid-sized importers as a class. The critical issue is that these are not ordinary inventories. They were seasonal inventories purchased specifically for Dashain, Tihar and Chhath, so the value of the goods can collapse rapidly if they miss the selling window. There is strong evidence of individual and sectoral insolvency risk, but “systemic bankruptcy” requires evidence that losses are widespread enough to impair a substantial portion of the banking system or overall corporate sector.

Current reporting does show serious stress. Traders say many imported goods were financed through bank loans and credit, and representatives warn that some businesses could be forced to leave the trade.

Urmila Rana Magar: The northern border crossing is closed, and honestly, not much hope is resting on Chinese goods arriving this season, since full restoration will probably take a few more months, even though repair work is moving very fast. Most of the Chinese products that usually come in this season will be replaced by goods from India or other Asian markets.

The flood happened last month, so importers already knew Chinese goods wouldn’t arrive and have been planning to source elsewhere, at least for this season. India is closer and easily reachable by road, so even if the products are not identical, I do not see a big impact there.

Bankruptcy is a fair concern, though, at the level of small and medium enterprises. Many importers are counting on strong festival sales, but the country is mourning after the flood, and people are not in the mood to celebrate and spend. On top of that, many simply have less money, since cooking gas and electricity costs have gone up. That combination will hold back spending this season.

So, some small and medium businesses may face bankruptcy, but I would expect far fewer failures at the corporate level.

From the 2015 earthquake to the 2025 bridge collapse and the recent 2026 flooding, why has a decade of recurring northern border crises failed to produce a single resilient, climate-hardened trade bypass?

Rajan Sharma: The problem is not that we have forgotten the risks; it lies in treating the threat as an isolated disaster instead of designing the northern trade network as critical national infrastructure. The 2015 earthquake, the 2025 flood-related disruption, recurring monsoon landslides and the 2026 flood all pointed to the same lesson: mountain trade corridors require redundancy, climate-resilient engineering, real-time monitoring, emergency logistics protocols, permanent sustainable corridor management and customs capacity.

Rasuwagadhi had already been disrupted by prior flood damage, and its resumption in early 2026 did not eliminate the underlying vulnerability. The August 2026 flood then destroyed the border crossing and heavily damaged the 16 km Syaphrubesi–Rasuwagadhi road corridor that was being upgraded with Chinese support.

The responsibility lies primarily with domestic institutional coordination: fragmented mandates among road agencies, customs, disaster authorities, local governments, security agencies and trade bodies; a weak maintenance culture; inadequate corridor-level risk assessment; and the absence of guaranteed financing for resilient infrastructure. China’s support for reconstruction and India’s role in Nepal’s broader transit system should be viewed as opportunities for cooperative regional connectivity, not as competing geopolitical choices. The recent meeting in Kunming, China, from August 19 to 21, was about comparing China and the Greater Mekong Region’s connectivity and corridor management with the management and status of the northern border between China and Rasuwa, Nepal.

Sangay Gurung: The record suggests not a lack of warnings but a failure to convert them into binding infrastructure priorities. The 2015 earthquake crippled Tatopani; Rasuwagadhi then became the preferred northern gateway, only for its Friendship Bridge and dry-port infrastructure to be swept away in the July 2025 flood. A temporary connection did not restore normal trade, while Korala - opened to international trade only recently - remains high-altitude and capacity-constrained.

Chunky Chhetry: The pattern suggests that Nepal’s problem is not simply a shortage of infrastructure. It is a failure to convert repeated disasters into institutionalised redundancy, risk standards and long-term corridor planning. The sequence is remarkably revealing: the 2015 earthquake crippled Tatopani, the July 2025 Lhende flash flood destroyed the Rasuwagadhi–Kerung bridge, and the August 2026 Bhotekoshi disaster then destroyed much of the Rasuwagadhi corridor itself. The 2025 event was already a warning in the same watershed that ultimately suffered the much larger 2026 catastrophe.

The repeated disruption of northern trade routes suggests that resilience cannot be built through post-disaster reconstruction alone. Nepal needs to incorporate climate and disaster risk into infrastructure planning from the outset. The lesson from successive events is that restoring the same infrastructure is not enough. We need infrastructure designed for the risks we now face. Overall, climate risk has also outgrown the original engineering assumptions.

Urmila Rana Magar: In 2015 we had the earthquake, a disaster no one expected. Floods have also happened almost every year. One in Tatopani washed away most of the houses on the Nepal side, while the China side was fine. Disruptions like this will likely keep happening next year too because the risk remains. There are a few reasons the problem has not been solved on the northern border, at least on Nepal’s side.

First, investment. If you visit the Nepal-China border, you will see a huge difference in how the two governments handle it. On our side, the border post looks like a tea house. It barely feels like a border. On the Chinese side, there is serious national investment because they know that is where the money comes from. Nepal has not had a stable government for the last 20 years, so many major projects have never been finished, and the northern border is one of them.

Second, climate finance. The countries most responsible for global warming have not delivered the finance, policies and action needed to reduce disaster risk. Disasters can’t always be prevented, but systems can be built to minimise harm to people. In Nepal, we still haven’t implemented much on the prevention side.

Third, terrain and cost. Nepal is a hilly, mountainous country, so building this kind of infrastructure is very expensive. And because the government is poor, that is also a big part of why the problem hasn’t been solved.

Does forced reliance on high-altitude, seasonal passages like Korala expose a fundamental failure in national logistics planning, or is it proof that Nepal’s “multi-corridor” strategy exists only on paper?

Rajan Sharma: The present disruption shows that Nepal has multiple named corridors but not yet a genuinely diversified and interchangeable logistics network. A corridor is not operationally diversified merely because it appears on a map or has a customs office. It must have reliable roads, bridge redundancy, adequate cargo yards, scanners, warehousing, banks, insurance services, telecommunications, trained customs personnel, risk-management systems and predictable cross-border operating protocols.

Korala has demonstrated strategic value by receiving diverted containers and vehicles after the closure of Rasuwagadhi and Tatopani. In the first 15 days after the flood, it reportedly cleared 434 containers and 641 EVs, and customs collected Rs 1.5 billion in that period. But that emergency performance should not be confused with full substitute capacity: Korala faces high transport costs, seasonal and terrain constraints, and limited logistics facilities.

Therefore, the correct conclusion is not that the multi-corridor strategy has failed completely. It is that the strategy is very incomplete. Nepal needs to move from “route opening” to “effective and efficient corridor operationalisation,” a network in which Tatopani, Rasuwagadhi, Korala and southern gateways can function as interoperable, digitally connected and commercially viable alternatives that facilitate movement without paper or permit hassles.

Sangay Gurung: Nepal’s “multi-corridor” strategy is therefore better described as a map of intended routes than a network of interchangeable, all-weather supply chains. A corridor exists only when it has resilient roads and bridges, customs and warehousing capacity, predictable cross-border operating arrangements, redundancy within the route, and pre-agreed emergency logistics. Korala is valuable as a relief valve, but it cannot credibly substitute for Rasuwagadhi or Tatopani during a national disruption simply because a road reaches the border. That distinction matters: diversification is not the number of gateways Nepal can name; it is the volume it can reliably move through each one under stress.

Chunky Chhetry: The evidence suggests that Nepal has pursued corridor diversification on paper but has not yet achieved operational diversification at the network level. The distinction is important. Nepal now has several identified north-south corridors: Rasuwagadhi, Tatopani, Korala, Hilsa and Kimathanka among them, but having multiple geographical entry points is not the same as having multiple interchangeable trade corridors. Nepal’s own 2024 Nepal-China cooperation framework identifies several north-south corridors, including the Hilsa-Simikot, Kimathanka-Khandbari and Rasuwagadhi-linked routes. The clearest evidence is what happened when Rasuwagadhi and Tatopani were simultaneously unavailable.

Korala is not proof that Nepal has no diversification. It is evidence that diversification is still incomplete. Nepal has created multiple geographical options, but the recent sequence of disasters demonstrates that those options do not yet possess sufficient capacity, infrastructure, reliability and economic substitutability to function as a resilient national logistics network.

Urmila Rana Magar: Nepal has been digitalising much more than before, even with an unstable government. But the question itself contains the answer: yes, the strategy has mostly existed only on paper. We have had governments that were very weak at implementation and follow-through.

That is not entirely the fault of the governments themselves. I would blame the country’s political leaders, who could not tolerate even their allies staying in power for a full five-year term. It is also partly a matter of time, since our current constitution has only been in effect for about a decade.

Having the current government serve its full five years gives real hope that this multi-corridor strategy will move from paper to reality. Kerung is just one of the routes, and everyone knows that. I believe the young leaders now in government are focused on this.

Is it time for Nepal to institute a hard policy cap on single-corridor import volume, forcing supply-chain diversification before nature or geopolitics forces it for us?

Rajan Sharma: A rigid legal cap on all imports through one corridor may be difficult to administer and could unintentionally raise costs or restrict legitimate trade. But we should absolutely adopt risk-based concentration limits for critical goods and critical infrastructure.

For example, the government could require that no single corridor account for more than a defined share of time-sensitive strategic imports such as essential medicines, energy equipment, telecommunications equipment, key industrial raw materials and disaster-response supplies, unless a verified contingency plan exists. This should be accompanied by incentives, not only restrictions: lower transaction costs at alternate gateways, priority customs clearance, digital pre-arrival processing, strategic warehousing, and bank and insurance products that support diversified routing by adhering to internal shipping norms. At the moment, Nepal does not comply with international Incoterms, and the risk of logistics disputes and fraudulent activities makes the suggested chain unavoidable.

The practical policy is therefore a corridor-resilience framework: a national map of critical import dependencies by corridor, product and season; a minimum two-corridor contingency rule for critical cargo categories; climate-hardened roads, bridges, yards and customs facilities in northern corridors; pre-agreed emergency diversion protocols with both China and India; digitised, paper-light customs procedures and interoperable cargo tracking; multimodal links, including road- and rail-linked dry ports where viable, inland depots and bonded warehousing; compulsory clarity in Incoterms, cargo insurance, custody and catastrophe-risk cover; joint public-private disaster drills before every monsoon and festival-import season; and an innovative drone-service pilot project to facilitate SMEs and emergency medical or aid transport.

Sangay Gurung: A hard cap on single-corridor imports is worth considering, but only as a phased resilience standard, not a blunt quota imposed before alternatives can carry the load. An immediate cap could raise prices and punish firms for infrastructure failures they cannot solve. A more credible policy would set exposure limits by essential commodity, require importers and public agencies to maintain alternative routing plans and buffer stocks, and tie progressively lower dependence thresholds to verified capacity at other corridors. The government should then publish corridor-level stress tests: maximum all-weather throughput, closure risk, recovery time and the cost of disruption.

Chunky Chhetry: The recent northern-border disruptions make a strong case for trade-concentration limits as a risk-management tool, but a crude legal cap - for example, “no more than 20% of Chinese imports through any one corridor” - could create distortions if imposed before alternative corridors have the capacity to absorb the displaced trade.

The more defensible approach would be a graduated Strategic Corridor Concentration Policy: measure concentration, identify critical goods, require diversification where practical, and impose progressively stronger requirements as a corridor approaches a defined systemic-risk threshold. When both Rasuwagadhi and Tatopani subsequently became unavailable, around 200 containers originally destined for Tatopani were diverted towards Korala, whose infrastructure and road capacity were not designed for such a sudden concentration.

Urmila Rana Magar, Deputy CEO, Ethico Retreat and Brew Table Cafe

Urmila Rana Magar: Concentrating import volume in a single corridor has some advantages, but centralising anything in business is risky. Nepal needs a multi-corridor import system to get goods on time, maintain quality and help the government earn the revenue it needs to invest in the country as a whole.

Geopolitically, I do not think India or China wants Nepal to depend on a single corridor either. Both benefit from exporting to Nepal, and funnelling everything through one route would not serve them well.

It also protects against disasters. If a flood hits one corridor, the others keep working. This time, Kerung-Rasuwagadhi was hit hardest, and Tatopani was affected too, but less, and it should be running again within a few weeks. So, there are alternatives. The real question is how strong the infrastructure and transport strategy behind each corridor will be.

As for geopolitics, it is hard to say what is good or bad in the abstract. The better approach is to work towards arrangements where everyone wins.