Goldenrock workshop bags order for 1,000 BLC wagons from CONCOR

The Goldenrock Workshops (GOC) of the Southern Railway has fetched order for constructing 1,000 BLC wagons from CONCOR, said the Chief Workshop Manager (CWM), P.Mahesh.

The Wagon Wing of the GOC had manufactured and despatched 560 BLC-type wagons against an order of 600 and has also completed manufacturing 300 numbers of BOXN HL wagon. The next orders for 320 wagons have just been received, Mr.Mahesh said speaking at the Independence Day celebrations here on Thursday. He said that for the first time in the country, the GOC is privileged to build 50 numbers of BTFLN (bogie tank wagon without frame) and the prototype trials are on in 4 wagons. Mr.Mahesh said that against the target of 99 diesel locomotives, the workshop has completed 136 locomotives POH, which includes supply to RITES and select PSUs. During current fiscal, against the target of 111 locos the workshop has so far completed 35 locos. So far, we have converted 15 MG surplus locos as BG shunting locos for various divisional demands.

Four MG locos were refurbished and exported to Myanmar last year. Similarly two MG engine blocks were reconditioned and exported to Mozambique. Cylinder Liner Plating Shop crossed 11,500 liners, engine block shop reconditioned 135 blocks, HERS shop attended 322 units and CMS shop completed coil rewinding in 280 set of coils last year to cross the individual set targets. Referring to the functioning of the Carriage Wing, Mr.Mahesh said that this branch has crossed various milestones this year.

With respect to AC coach POH, it has completed 97 coaches so far against the last year completion of 67 coaches during the same period. To meet the demand of tourists in world heritage site at Udhagamandalam, nine NMR coaches were given POH and dispatched.

The Production Wing built three oil-fired steam locomotives to help Nilgiri Mountain Railway to serve tourists without interruption. During the last fiscal, the Wheel Shop has turned out 8,157 wheels to meet shop and divisional needs.

Referring to the other areas, Mr.Mahesh said that the Electrical Branch has introduced various energy conservation methods to ensure optimum uninterrupted power supply. By introducing regenerative battery chargers, considerable recycling of power has been effected in the battery section. The workshop has also introduced various industrial safety measures, and the safety standards have been enhanced.

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.


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.


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.


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.


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.

Container rail freight rates set to rise 31%

Indian Railways (IR) is going to increase haulage rates by up to 31 per cent for container train operators (CTOs). This is expected to impact both domestic and exim (export-import) businesses. The latter accounts for 80 per cent of the container business.

The increase is expected in two phases, a 22 per cent increase from December 1 and another rise from February 1, 2013. Haulage charges, which CTOs pay the railways for using the tracks, locomotives and signalling infrastructure, account for a little over 70 per cent of CTOs’ operating cost. For IR, this constitutes four per cent of its total annual freight earnings.

Of the 16 CTOs permitted to operate, those whose mainstay has been the exim business will get impacted the most — railways’ owned Container Corporation of India (having 75 per cent of the exim business), Gateway Distriparks, and those backed by shipping lines such as Hind Terminals and APL India Infrastructure.
The operator margins will be hit, while some of the rise will get passed on to the customers, according to the Association of Container Train Operators (Acto).

A senior executive of one of the CTOs said, “With the railways going for a straight hike of around 31 per cent for containers below 20 tonnes, we will be seriously hit in that segment. Containers are meant for primarily carrying piecemeal traffic. How is this hike supporting that?”

The executive conceded IR had now given specific rates for containers of below 10 tonnes, slightly positive for aggregation of piecemeal cargo having low weight (less than 10 tonnes) and high volume. But this benefit had been highly offset, he said, by rates almost jumping a slab downwards, with the new below-10 tonne category costing almost as much as the earlier 10-20 tonne slab, the new 10-20 slab costing more than the earlier 20-25 tonne slab, etc.

Due to weekend holidays, IR officials were not reachable for more details.

This increase comes on the heels of the railways’ increase in haulage charge for notified commodities by around 20 per cent earlier this year, in March.

Then, Anil Gupta , managing director of Concor, had told Business Standard, “Universally, rail movements are not competitive below 300 km. In our case, even beyond 300 km, we are competitive only if we get both-way loaded traffic. If we can’t match both ways, we have to add empty container deposition costs, making us totally uncompetitive.”

Rail movement of containers to get costlier by 31% in 2 stages

Moving goods in container trains may get costlier.

The Indian Railways — which moves 77 million tonnes of goods via containers every year — has decided to increase haulage charges for container train operators by up to 22 per cent with effect from December.

That’s not all. There will be another round of increase after two months. Thus, with effect from February the charges will go up by up to 31 per cent against today’s levels.

Haulage charges — which container train operators pay Indian Railways for using the tracks, locomotives and signalling infrastructure — account for 60-70 per cent of their operating cost.

The Ministry permitted 16 outfits to run container trains. They include listed companies such as Container Corporation of India (Concor), Arshiya International, Gateway Distriparks Ltd; and those backed by shipping lines such as Hind Terminals and APL India Infrastructure.


The hike varies depending on weight. For moving empty containers on flat wagons, or flat wagons without containers, the hike is 22 per cent from December, and 31 per cent from February 1. Due to India’s export-import imbalance, operators have to increasingly move empty containers on the route.

The Railways has also introduced a 0-10 tonne weight, which will be charged at close to current 20-tonne level charges.


The operator margins will be hit, while some of the hike will get passed on to the customers. Shocked by what it called the double-whammy, the Association of Container Train Operators (ACTO) said both the export-import and domestic business will be badly hit due to the hike.

“Announcing two rounds of hike to be implemented in two months is unprecedented. We have decided to approach the Ministry for lowering it,” said Amitabha Chaudhuri, General-Secretary, ACTO. Chauduri also heads the NOL’s APL IIPL.

On whether Concor will pass on the hike to its customers, Managing Director Anil Gupta said that tariff review will be done on a selective basis for specific routes as customers cannot be driven away.

Gateway Rail Freight Ltd’ Deputy CEO Sachin Bhanushali said that some of the hike will have to be passed on to customers. The 10-20-tonne container business will move to road if the entire hike is passed on, he said.

Concor to set up 3 logistics parks in State

Container Corporation of India Ltd, a public sector unit under the Ministry of Railways, plans to set up three logistics parks in West Bengal at an estimated investment of Rs 150 crore. This is part of the company’s plan to set up 15 such hubs across the country.

According to Mr Sanjay Swarup, Group General Manager of Concor, the corporation has identified land at Durgapur in Burdwan district, Dankuni in Hooghly district, and Siliguri in North Bengal, for developing these multi-modal facilities. One such park will require nearly 100 acres of land. These parks will have facilities like warehouses, container yards and cold chains under one roof.

“The land acquisition process is on for these parks. While the Railways will provide the land at Durgapur and Dankuni, we are in talks with the State Government for land in Siliguri,” Mr Swarup said here on Tuesday. He was addressing a seminar on logistics organised by the Confederation of Indian Industry (CII).

Apart from three parks in West Bengal, Concor has identified three locations in Andhra Pradesh; four in Odisha; one each in Maharashtra, Gujarat and Rajasthan; and two in Uttarakhand, for setting up such facilities.

Mr Swarup said Concor is trying to speed up the land acquisition process.

Rail Freight Corridor

On the occasion, Mr H. D. Gujrati, Executive Director of Railway Board, said the commissioning of dedicated freight corridors along the Eastern and Western regions, is expected before March 2017.

The 1,839-km freight corridor will cover Dankuni in West Bengal to Ludhiana in Punjab. Meanwhile, the 1,480-km western corridor will connect Dadri in Uttar Pradesh with Jawaharlal Nehru Port in Maharashtra.


(This article was published in the Business Line print edition dated July 25, 2012)

Published in: on July 28, 2012 at 7:38 am  Leave a Comment  
Tags: ,

Concor in talks with global shipping majors for JV

In an effort to include a shipping company as part of its value-chain, state-owned inland transport services provider, Container Corporation of India (Concor) is likely to ink a joint venture (JV) with global shipping majors for catering to exim trade requirements of shippers, a top company official said.

“We are in talks with various shipping companies to form a JV which will enable us to provide international freight logistics services catering to exim trade requirements of shippers,” Concor’s Chief General Manager (Western Region), P K Agrawal, told PTI here.

Presently, Concor is negotiating with various shipping majors and with non-vessel operating common carrier (NVOCC) companies, he said, adding the proposed JV will take place within a year.

“In addition, as a part of our overall strategy of expansion, an entry into the shipping business will complement our position as a multi-model logistics service provider,” Agrawal said.

“The idea behind this endeavour is to involve shipping companies in our logistical network of Inland Container Depots (ICDs) and Container Freight Stations (CFS), so that we can provide end-to-end solutions,” Agrawal said.

Concor uses its container train rail network to provide logistical support and involvement of shipping companies would widen its base in the country, he said.

Presently, Concor is the market leader having the largest network of 59 ICDs/CFSs in India.

Private rail: Strategies to stay on track

The Railways holds a special place in the hearts of Indians, most of whom have great memories of train journeys. But often, the impression is also of a bloated and badly run enterprise. Unde rinvestment since Independence is the key reason. This is also why the railway network has grown from 55,000 km in 1947 to just 63,028 km in 2008.

The Railways has been in the midst of a turnaround since 2004. The entry of private operators in containerised rail transport is expected to spur investment. Private rail will be a game-changer for the logistics industry.

Many industrial units in the country have been set up for tax reasons, which means that often transportation defies logic but represents a big opportunity.

In 2004, 13 licences were initially awarded to private players in the box-train sector, followed by two more. The industry seems to go through three stages — euphoria, reality check and maturity. The euphoria was reflected in the number of players that applied for licences, some for speculative reasons. However, there is no scarcity value as licences can be awarded every year. So money has to be made the hard way, by creating value, which is proving difficult.

Bypassing Concor

The second stage is a reality check, where the harsh lessons of an evolving industry are learnt. Private players initially focussed on the export/import trade, where traffic is one way — mainly from the port to the inland point but not vice-versa. In addition, more than 75 per cent of the containerised traffic plies between Mumbai and Delhi; the other significant corridors being Gujarat-Delhi and Bangalore-Chennai. Competition is fierce and the product is commoditised. Competing with the state-owned monopoly, Concor, has been difficult, as Concor penalises private players which use its rail terminals with high charges.

One way out is to build infrastructure that bypasses Concor’s facilities and establishes strong commercial ties with the customers directly. Both take time and money. The infrastructure to bypass Concor’s facilities and to be near the cargo is being gradually built around the country and the main build-out will be completed within 12 months.

Already, there are more than half a dozen rail-connected inland container depots in the National Capital Region (NCR) and the regional industry belt, and new facilities are being built outside Chennai, Bangalore, Nagpur, Rourkela and Raipur. Within a year, private operators will be able to operate a substantial part of their business outside the Concor network. This will help improve the cost structure, but the bigger challenge remains — access to customers.

Formidable competitor

In export/import trade, volumes are controlled to a large extent by the shipping lines. This is especially true of import volumes since three-fourth of India’s imports are on cost, insurance and freight (CIF) basis, as a result of which the importer has no say over the inland transportation leg from the port.

Some of the large importers may, over time, be able to negotiate inland rates, but in the vast majority of cases, the importer will not have the buying power to negotiate and the shipping lines will dictate terms. On the export front, while the customers have greater choice, the shipping lines — with or without a rail subsidiary — remain formidable competitors as they will be able to offer a total solution on the destination side.

The large shipping lines have little reason to tie up with private players as they can play the spot market or strike sweetheart deals with the monopoly player.

So, what can the private rail players do to compete? This is the stage of maturing, in which the players realise that the answer lies in segmentation and collaboration. Segmentation, in terms of geography or customers, and collaboration in terms of assets.

By 2012, the industry structure will change. Concor will settle into a long-range market share of around 55-65 per cent (down from 95 per cent in 2006).

A strong second national player will emerge, with a 15-25 per cent share and the rest will be shared by three-four players, which will be owned by shipping lines and focus on narrow trade corridors and export/import. The second national player will need to have at least three-five key hubs which it owns/controls to combat Concor’s position.

Over time, there will be only one or two players which will focus only on the rail handling. That can be a profitable strategy if at least 50 per cent of the facilities are in key locations such as Mumbai, Delhi, Ludhiana, Chennai, Nagpur, Bangalore.

Huge opportunity

The second player will have to build a successful domestic and export/import business. The ideal mix would be to bring domestic cargo to the ports where import cargo is being generated. Such a mix is possible only in Mumbai, Chennai, Bangalore, Kolkata, Delhi, where domestic and international consumption is large.

Domestic containerised transport represents a huge opportunity, considering that only five-seven million tonnes of domestic cargo, out of a total of 800 million tonnes carried by rail, moves in containerised form.

Rail transport in India will also change, thanks to the unusual combination of investment in ports along the eastern coastline and the gradual implementation of single Goods and Service Tax (GST) that will rationalise the warehousing set-up in the country.

Catch-22 situation

The investment in eastern ports will allow trade between the Far East and most parts of central and north India to be conducted through the eastern sea front.

For investors in this sector, patience and the willingness to commit large tranches of funds will be key.

Fixed costs are high and hence the high operating leverage, which means one needs to build scale and increase sales, which comes only after demonstrating investments and the ability to serve.

It is a classic Catch-22 situation. The investment risk is high but returns will be rewarding for those that survive.

Concor plans auto transport this year

Mumbai: State-owned Container Corporation of India’s (Concor) auto transportation project will start commercial operations in the current financial year.

Concor, which aims to be a service provider to domestic car manufacturers, is forming a joint venture with Nippon Yusen Kaisha (NYK Lines) for sourcing specially designed car containers.

P Alli Rani, executive director, finance, Concor, said, “Right now we are aiming at domestic movement of cars, but also plan to move export volumes.”

Concor is in talks with a number of car companies, including Maruti, for transporting their products, with which it had also done a trial run.

Manufacturers are increasingly looking at moving cars in rail containers as it can transport larger volumes for lesser costs and fewer damages.

“The containers that we will source can carry 5-6 cars, which makes it feasible for manufacturers to move cars by rail,” Alli Rani said.

Besides, Concor has lined up a capital expenditure plan of Rs 600 crore to acquire 2,000 wagons in the next two years. This will add to the company’s current fleet of 9,500 wagons or 225 rakes. An additional Rs 100 crore will be spent to increase the number of inland container depots to 64 from the current 59 by this financial year end.

The New Delhi-based company’s fourth quarter revenues fell 6% to Rs 841.22 crore from Rs 893.08 crore in comparable quarter in FY08. Its net profit declined 8% to Rs 187.66 crore from Rs 202.98 crore in the fourth quarter.

Revenue from export-import segment declined 10% to Rs 636.76 crore from Rs 704.25 crore. This decline in EXIM was compensated by the growth in the domestic segment, which saw revenues rising 8% to Rs 204.46 crore from Rs 188.83 crore.
Although the company’s financial performance has been impacted by the slowdown in the trade, the management expects a 10-15% growth in revenues in FY10.

“The company is looking at a 10-12% physical growth and 10-15% revenue growth in the coming year. Looking at the current uptrend in trade this seems possible, although exports are still subdued,” said Rakesh Mehrotra, managing director, Concor, in an analyst conference call post results.

While the growth would come from domestic or EXIM, Mehrotra said the company is focussing on both as the resources are available to nurture both. EXIM contributes 70% to Concor’s revenues and 85% to profits.

As a strategy, the logistics service provider is focussing on its premium customers, who would generate more business and better margins for the company, Mehrotra said.

Published in: on April 18, 2009 at 2:39 pm  Leave a Comment  
Tags: , ,