Railways to tweak rates to attract more vehicle freight

The Indian Railways is working out a fresh automobile freight train operator (AFTO) policy, which will open the sector for investors such as Maruti Suzuki and APL Logistics subsidiary APL Vascor.

Both the firms have been in talks with the Railways and have made initial investments to enter the sector. At present, about 5 per cent of the total automobile movement in the country happens by rail, according to industry estimates.

The earlier operator policy, which was formulated about two years ago, failed to attract investors.

According to the policy, companies have to pay Rs 5 crore to get an AFTO licence for 20 years, extendable by another 10 years. Firms can invest in specially designed wagons to offer transport services. They have to pay freight charges to the Railways.

Railways freight rate structure, which was earlier perceived as complex, will be simplified.

“We have simplified the rate structure in the new policy. There will be two freight rates — one for loaded trains and another for empty trains,” Suhas Kumar, Advisor (Freight Marketing), Indian Railways, said. “The policy is in its final stages,” she added.

Special wagons

Maruti Suzuki has already invested and acquired a patent for a wagon design developed by Railway Designs and Standards Organisation. Similarly, APL Vascor will get specially designed wagons from Titagarh Wagons, William Villalon, Vice-President, Global Automotive APL Logistics, and Chairman, APL Vascor, said.

The specially designed auto wagons can carry 318 small cars a train. At present, the Railways moves about 150-170 cars a train, or 270 cars a train depending on the kind of train.

Pointing out that close to 70 per cent of vehicles move by rail in the US, Villalon said there is a huge growth potential in India.

Kumar said that the Railways had put a charge on empty movement of wagons not just to cover costs, but also to ensure that any automobile manufacturer that get into this sector do not waste the capacity to prevent competitors from using the service. In fact, container-train operators also have to pay haulage charges for both loaded- and empty-wagon movement.

Meanwhile, automobile manufacturers have stated that they are keen to shift to the Railways, as highways get congested, making it difficult to move large trucks.

Deepak Sharma, Head-Logistics, Hero MotoCorp, said they moved about 6 per cent of two-wheelers by trains now and are already in talks with APL for their services. Sugato Sen, Deputy Director General, Society of Indian Automobile Manufacturers, said that automobile manufacturers would like to move a fourth of vehicles through the Railways.

http://www.thehindubusinessline.com/todays-paper/tp-logistics/railways-to-tweak-rates-to-attract-more-vehicle-freight/article4432996.ece

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