Northern Trade Hinges on Resilient Roads

Mustang Customs Office at Korala, once a remote and little-used outpost, has emerged as a key trade gateway, accounting for 1.13% of Nepal’s imports in the first quarter of the current fiscal year. Between mid-July and mid-October 2025, goods worth Rs 5.27 billion entered through Korala, surpassing the flood-hit Rasuwagadhi trade point which handled just 0.08 percent of imports. Another Nepal-China trade point, Tatopani, handled 2.02% of total imports. In the same period of the previous fiscal year, Rasuwagadhi and Tatopani had handled 4.28% and 3.16% of total imports, respectively.

Perched above 4,650 meters above sea level in the restricted Upper Mustang region, Korala began regular trade operations only in September 2025 even though it was officially inaugurated in November 2023. Its opening came at a fortuitous time: two major northern routes—Rasuwagadhi and Tatopani—were blocked for two months during the pre-Dashain trading season. Traders now see Korala, connected southwards via the Kaligandaki Corridor to Sunauli on the Indian border, as a promising alternative for north-south trade. Policymakers are even considering its inclusion in a potential trilateral corridor linking Nepal, India, and China.

Nepal’s trade with China, its second largest trading partner, has long been constrained by difficult terrain. Roads to Tatopani and Rasuwagadhi, built decades ago, are narrow, steep, and highly vulnerable to landslides, floods and snowfall. Each monsoon or winter brings disruptions that paralyze these vital trade arteries connecting the two neighbors.

In July 2025, a glacial lake outburst flood (GLOF) in Rasuwa destroyed the Miteri (Friendship) Bridge at Rasuwagadhi and damaged the Syafrubensi–Rasuwagadhi road. Cross-border traffic came to a standstill as vehicles were lost and cargo stranded. Authorities are now installing a temporary Bailey bridge about five meters upstream from the washed-away site. “Two new pillars are being installed, and the bridge should be ready within a week,” said Chandi Raj Gelal of Rasuwagadhi Customs Office.

Before the disaster, around 60 container trucks crossed Rasuwagadhi daily. The shutdown has halted trade and delayed revenue collection. Once the temporary bridge is complete, customs officials expect to process up to 100 trucks at a time.

Landslides on the Araniko Highway also blocked Tatopani for much of the monsoon, leaving both major northern routes out of operation just as the nation entered its busiest trading period ahead of Dashain and Tihar. Korala’s sudden rise as a trade point underscores the need for climate-resilient trade infrastructure. For landlocked Nepal, which depends heavily on both its giant neighbors, reliable northern corridors are no longer optional; they are essential for keeping goods and livelihoods moving.

Northern Trade Routes Gain Ground

Despite being surrounded by India on three sides, Nepal continues to view China as a strategic trade partner and a route toward diversification. The two countries share a 1,414-kilometer border, with 14 official crossing points—six of them significant for trade and travel.

In recent years, Nepal’s northern routes, particularly Rasuwagadhi and Tatopani, have steadily expanded their share in the country’s trade with China. In 2024/25, Nepal imported Rs 341.10 billion worth of goods from China. Of this, goods worth Rs 85.23 billion (around 25%) came through Rasuwagadhi and Rs 50.39 billion (about 15%) through Tatopani. Exports, however, remained modest at Rs 2.63 billion, with Rasuwagadhi accounting for Rs 2.045 billion (78% of the total), while Tatopani recorded none.

The previous fiscal year, 2023/24, followed a similar pattern, though at lower volumes. Imports from China reached Rs 298.77 billion during the year, with Rasuwagadhi handling 20% and Tatopani 13.5%. Exports were low at Rs 1.73 billion, of which Rasuwagadhi accounted for Rs 1.19 billion (roughly 67%) and Tatopani Rs 9 million.

Looking further back to 2022/23, imports from China reached Rs 222.71 billion, with Rasuwagadhi contributing Rs 30.14 billion (13.5%) and Tatopani Rs 13.21 billion (5.9%). Exports were low at Rs 1.76 billion, of which Rasuwagadhi accounted for Rs 1.19 billion (68%) and Tatopani only Rs 5 million.

Overall, these figures show that Rasuwagadhi has consistently been Nepal’s primary northern trade route, handling a quarter of Chinese imports and most exports. Tatopani, while smaller, has steadily increased its share of imports to nearly 15% but remains negligible for exports.

Tatopani Open, but Hanging by a Thread

Tatopani, once a bustling gateway for containers and trucks from China, has reopened after clearance work — but its revival remains fragile. Even when the road is open, far fewer containers cross than before. Traders and freight forwarders are puzzled as supply remains constrained and unpredictable. The reasons are familiar: weak infrastructure, slow customs clearance on the Chinese side, and logistical bottlenecks along Nepal’s narrow mountain corridors.

Officials, however, paint a more stable picture. “Goods are coming in,” said Ramesh Bahadur Shah, Information Officer at the Tatopani Customs Office. “Sometimes the flow slows a bit on their side, but recently — even during Tihar — trucks have been moving smoothly.” According to Shah, about 18 to 20 container trucks now cross daily, with no recent disruptions from floods or landslides.

Still, the challenges run deeper than seasonal debris. The Araniko Highway, which was badly damaged by the 2015 earthquake and years of heavy monsoon rain , is in dire need of retaining walls, proper drainage, and widening. The Department of Roads admits that highways like Araniko and Rasuwagadhi, winding through unstable, young mountain terrain, are notoriously difficult to maintain. Although officials have promised upgrades, the work is long overdue.

When both Tatopani and Rasuwagadhi were blocked, the remote Korala border in Mustang temporarily eased pressure. But Korala is no simple substitute. Perched high in the Himalayas, it faces harsh winters and a sparse road network. Higher fuel costs, longer transit times, and winter closures make it a costly alternative. Its rise only highlights one point: Nepal needs multiple resilient trade routes, not a single fallback.

Winter makes matters worse. Snow and ice close high passes like Korala, and customs operations slow sharply. Freight movements stall, leaving traders with critical inventory gaps just as demand peaks during Dashain and Tihar—Nepal’s biggest festivals. When northern routes close during these periods, customs windows shrink, retail shelves run thin, perishable goods rot, shipments rerouted through India send costs soaring.

Tatopani is technically open — but the road to reliable trade is still steep, narrow, and unpredictable. The 2015 earthquakes destroyed sections of the Araniko Highway, , and reconstruction has been uneven. The pandemic years brought a different kind of shock: COVID-era border controls and temporary closures on the Chinese side show how swiftly global policies could ripple through local supply chains. Together, these shocks have left Nepal’s northern trade routes more brittle than ever.

When northern routes are closed, goods must be rerouted through Indian ports. Shipments travel from Chinese ports to India, then overland into Nepal, adding weeks to transit and layers of expense: port handling, inland haulage, multiple customs checks, and transshipment fees. Freight forwarders raise tariffs to offset delays, small traders lose margins, and importers pass costs to consumers.

Impact on EV Imports and Stranded Cargo

The Rasuwa flood exposed the fragility of Nepal’s trade infrastructure. Vehicles parked at the dry port and customs yard — including electric vehicles (EVs) — were swept away or damaged as floodwaters surged through. Importers now face insurance claims, replacement costs, and delayed deliveries, which have added further strain to a fragile supply chain.

The disaster also highlighted the risks of building customs yards on floodplains. Goods awaiting clearance — especially high-value consignments such as EV batteries and electronics — remain vulnerable whenever rivers overflow.

Nepal’s EV imports slumped sharply ahead of Dashain following the closure of Rasuwagadhi and Tatopani routes. According to the Department of Customs, EV imports in the first two months of 2025/26 dropped to 1,594 units worth Rs 1.40 billion, compared with 4,818 units worth Rs 4.27 billion in the same period last year.

Who Pays?

When transport links fail, costs multiply. Traders face higher storage, insurance, and demurrage fees, while carriers raise freight rates to cover increased risk. Retailers pass these costs to consumers. Small traders, especially those dealing in seasonal or festival goods, often absorb losses or exit the market entirely. The government also bears the brunt as customs revenue dips, and public funds are diverted to emergency repairs.

Traders say Nepal’s northern trade resilience is near zero, and the cost of uncertainty is mounting. Importers must either reroute via India at higher cost or risk missing the festival window. Exporters, too, face delays that threaten contracts and competitiveness.

Ganga Bahadur Ghimire, Senior Vice President of the Nepal Trans Himalayan Border Commerce Association, said the main bottleneck is inadequate infrastructure. “Even though the trade volume is expanding, our facilities haven’t kept pace,” he said. “The Tatopani checkpoint should handle at least 100 containers a day. Right now, not even 15 are getting through. Hundreds of shipments are stuck on the Chinese side.”

Ghimire added that Nepal’s roads, bridges, and customs facilities have not developed in line with growing trade. “That’s why bottlenecks persist. Goods worth billions of rupees for the festival market are still stranded,” he added.

Korala has provided limited relief, but winter will restrict its usefulness.

Ghimire advocates a two-pronged approach. “In the long term, build durable infrastructure. In the short term, negotiate with China to allow more trucks daily,” he said. “Rerouting through Indian ports is impractical as it would require moving goods nearly 5,000 kilometers from where they’re loaded.”

Invest or Keep Paying the Price

Nepal’s geography cannot be changed, but its preparedness can. As climate volatility rises, floods and landslides will become more frequent — making pre-emptive investment urgent. Upgrading roads to key northern customs points and keeping routes like Korala open year-round would do more than improve trade data. It would stabilize supply chains, protect jobs, and make Nepal a more dependable trading partner for both China and the global market.

The story of the Miteri Bridge and this summer’s floods is a warning. The new Bailey bridge across the Lhende is a temporary fix. What Kathmandu must do next is build a resilient network of northern links — or keep paying the price in stranded containers, battered traders, and half-empty festival shelves. “Our biggest weakness is that we’ve always waited for others — especially China — to build our infrastructure. Theirs is excellent; ours is minimal,” said Rabi Shankar Sainju, Vice-chairperson of SAWTEE and former Joint Secretary at the Ministry of Industry, Commerce and Supplies.

He explained that key checkpoints like Rasuwagadhi and Tatopani were never upgraded to handle commercial volumes. “With proper infrastructure, Nepal could connect not only to China but to Northeast Asia. Instead, we’ve been reactive. China invests for profit, not charity — if we keep waiting, we’ll always lag behind,” Sainju added.

He added that China’s consumer market has transformed. “With per capita income around $12,000, Chinese buyers demand certified, high-quality goods. To access that market, Nepal needs infrastructure and strict standards,” he added.

Engineering Challenges and Solutions

Nepal’s policy documents and agreements show ambition. The December 2024 framework agreement with China under the Belt and Road Initiative aimed to deepen economic cooperation and turn roads like the Kaligandaki Corridor into trade lifelines linking Nepal to both neighbors.

However, despite the rhetoric, investments, execution, and maintenance fall short. Difficult terrains further compounded Nepal’s woes. “Our northern border lies along the Himalayas, where natural passes are few. Tatopani and Rasuwagadhi are the closest to Kathmandu; we must fully utilize them,” said urban planning expert Kishore Thapa. He warns that unstable mountain slopes make traditional road construction risky. “We often build roads without geological studies. In many sections, tunnels would be safer than hill cuts. Properly engineered two-lane roads with retaining walls are enough; four- or six-lane highways are neither feasible nor necessary,” Thapa added.

Comparing Nepal’s two fronts, Thapa said: “In the south, expressways and six-lane highways are spreading fast. In the north, we lack even one reliable two-lane all-weather road to China. We should have at least three dependable corridors — eastern, central, and western, but the government hasn’t prioritized them.”

Climate change is adding challenges for Nepal. “Alternate routes are essential,” Thapa said. “They don’t need expressway standards — just reliability. The issue isn’t money; it’s priority.”

Experts also call for stronger bilateral protocols with China to streamline container movement, ensure operations at alternate checkpoints, and fast-track clearance during peak seasons.

Engineer Shyam Bahadur Khadka, spokesperson for the Department of Roads, says road improvement works are underway. “Repairs include surface and slope stabilization. works. We’re studying permanent solutions for critical sections,” he added. Roads to Korala are functional but far from ideal. “Up to Jomsom, the road is blacktopped; up to Kagbeni, work is nearly complete. Beyond that, it’s gravel but usable,” Khadka said. “Monsoon rains have caused some blockages and minor slides.”

This article was first published in the November 2025 edition of New Business Age magazine.