Box train operators partially absorb rate hike under pressure

Faced with competition from within the container train segment, as well as the road sector, container train operators have been forced to absorb part of the haulage rate hike, which set in from December.

The Indian Railways increased haulage charges, which account for 60-70 per cent of operations cost for the train operators, by up to 22 per cent from December 1.

Container operators pay haulage charges to Indian Railways for their carrying their containerised cargo and flat wagons. There are 15 players in the segment, with incumbent Concor holding 75 per cent of traffic.

PARTIAL INCREASE

Container Corporation of India (Concor), Gateway Distriparks, APL-backed IIPL and MSC-backed Hind Terminals have increased container train movement tariffs in certain segments such as Ludhiana-Mundra, and Ludhiana-JN Port. But tariffs have not been increased in routes such as Kanpur-Mundra where the competition is high.

Concor has passed on less than 50 per cent of the total increase in cost it faces due to haulage rate hike.

“Given our nature of traffic mix, we would have had to pay Railways eight per cent extra haulage charges. Out of that, we have passed on 3.5-4 per cent increase on an average,” said Anil Kumar Gupta, Managing Director, Concor.

Gupta said it would be difficult to share route-specific data as it 638 streams where it operates. “We have partially passed on the hikes in specific routes based on the competition from other operators,” said L.R. Thapar, Chief Executive Officer, Hind Terminals.

STABLED RAKES

The hit has been hard for some entrants such as Kribhco Rail Infrastructure, which has stabled five rakes out of the eight it operated, because the operating losses were higher than the losses it incurred by just parking the rakes in sidings.

This is similar to that of shipping lines and airlines, who resort to keep their rolling stock capacity idle in slowdown instead of running regular services and booking losses.

“Most of our customers did not agree to take the entire hike. Some agreed to take the hike for loaded containers only,” said B.N. Shukla, Managing Director, Kribhco Rail Infrastructure.

Other players with focus in domestic segment that have stabled rakes include Arshiya Rail and Inlogistics.

TRAFFIC IMPACT

Since the cargo for container movement in December was already booked before the hikes were effected, impact on traffic volumes will be clear only by January, said Amitabha Chaudhuri, who heads NOL’s APL India Infrastructure.

APL’s IIPL passed on most of the rate hike to customers. Concor also stated that it is early to gauge any shift in containerised cargo movement between rail and road. “There is a strong resistance from the customers, who are already under pressure due to the general slowdown,” said Gateway Rail Freight Ltd’s Deputy CEO Sachin Bhanushali.

The potential exception could be lightweight containers, where there may be a shift from road to rail. “In line with the railways introduction of 0-10 tonne category, for which haulage charges are lower than the earlier 0-20 tonne category, we have dropped charges,” said Concor’s Gupta. This lightweight category of cargo comprises less than five per cent of container train traffic. At present, most of these lightweight boxes, which carry garments, consumer durables, spices and tyres, move on road.

EXIM BOXES

With the domestic business already under pressure, most container train operators had shifted focus to the export-import business of container movement, which is a relatively high margin business.

But, this year, the export-import container movement is also under stressed, as is evident from the port’s container handling data. For the April-November period of current fiscal, all major ports together handled 5.16 million teus, which is 0.6 per cent lower on a year-on-year basis.

Most of the key container ports – JN Port, Chennai and Pipavav Port – have handled lower number of containers during the period on a annualised basis. The only exception is Adani Port’s Mundra Port, which has seen a double digit growth in containers handled.

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