Food Bill May Boost Freight Movement of Railways: Official

Indian Railways expects a huge movement of food grains across the country, once the UPA government’s proposed Food Security Bill is passed, a senior official said here today.

D P Pande, General Manager of South-Central Railway said the national carrier encourages private freight terminals under the PPP model to meet the future cargo handling demand from all sectors.

“As per our estimation, with Food Security Bill, there will be a major increase in the rail movement across the country. In Andhra, as a strong producer of food grains, there will be an increased movement,” Pande told reporters in a press conference.

The landmark legislation aims at giving legal right over a uniform quantity of 5 kg food grains at a fixed price of Rs 1-3 per kg via ration shops to 67 per cent of the population.

He said the cement industry in the country has made investments worth nearly Rs 30,000 crore to increase capacities which would be required for transportation.

According to him, the major constraint for Railways is terminals. Freight handling terminals have to be increased proportionate to tonnage.

“That is why we promulgated private freight terminal policy. Anybody, who can set up a terminal in a private property, we will provide the authority to handle goods and he can charge the customers,” Pande explained.

The Ministry of Railways, in 2010, had finalised policy on Private Freight Terminal (PFT) with the participation of the private sector.

The main objectives of this policy are to enable rapid development of network for freight terminals with private investment to integrate rail transport with supply chain to provide efficient and cost effective logistic to end users.

It would also provide a new business opportunity to the investor who gets rail access to handle third party cargo. This policy has become effective from 31st May, 2010.

Pande said South Central Railway aims to garner Rs 11,700 crore revenue in the current fiscal as against Rs 10,036 crore last year.

Pristine Logistics to set up four private freight terminals

Pristine Logistics is the latest to queue up for setting up private freight terminals (PFT) in Indore, Ludhiana, Patna and Cuttack.

The Railway Board already has close to 35 proposals from 22 companies for setting up PFTs. The companies include Concor, Kribhco Rail Infrastructure, Lloyd Steel and Hind Terminals, amongst others.

In PFT business — rights of which are given by the Railways — operators are allowed to handle various types of goods for the Railways, roads and various value-added services. To become PFT operators, companies have to pay Rs 2 crore to the Railways, out of which Rs 1 crore is paid back after the notification.

The size of each of Pristine’s private freight terminals would be about 50 acres and land has been acquired by the company. The company has received Rs 60-crore investment from India Infrastructure Development Fund of UTI Capital recently.

“Pristine’s PFT projects are greenfield in nature and in about a year, three of these parks — Indore, Ludhiana, and Patna — will start operations,” Amit Kumar, Director, Pristine Logistics, said. The terminals will handle commodities such as cement, foodgrain, and pulses, Kumar said.

Pristine Logistics is a start-up backed by Amit Kumar, Rajnish Kumar, and Sanjay Mawar. Both Amit and Rajnish were earlier in railway traffic service, and have worked in Container Corporation of India and Gateway Distriparks Ltd, the private container train operator, before starting this venture.

According to Railways’ policy, brownfield PFT operators have to share 50 per cent of cargo handling revenue or Rs 20 a tonne — whichever is higher — with the Railways, after two years of operation; while greenfield PFT operators have to share the same five years after commencing operations.

The Railways asks for this revenue share because it provides access to its over 65,000-km network. Moreover, business of PFTs is expected to increase by offering rail-based transportation services.

Railways Encourage Private Investment for Improving Rail Infrastructure

A draft policy for strengthening rail connectivity and capacity augmentation is under consideration. The policy envisages certain participative models to encourage private investment for improving rail infrastructure.

A number of areas have been identified for project execution through Public Private Partnership. These include an elevated rail corridor (Churchgate, Private freight terminals, Terminal Development Scheme, Development of Automobile and Ancillary Hub, Liberalized Wagon Investment Scheme, Wagon Leasing Scheme, Automobile Freight Train Operators Scheme, Special Freight Train Operator Scheme, Port connectivity, Dedicated Freight Corridors and loco and coach manufacturing units, etc.

Memorandums of Understanding (MoUs) have been signed with Belgium, Austria and Spain for cooperation for effective development and modernisation of Railway sector in the country. The cooperation programme, inter alia, includes consultation for modernisation of railway stations, introduction of High Speed, Signalling, etc.

This information was given by the Minister of State for Railways Shri Adhir Ranjan Chowdhury in written reply to a question in Lok Sabha today.

Rlys’ private freight terminals biz draws Tata Steel, 21 others

Indian Railways’ private freight terminals (PFTs) appear to be catching up slowly. A host of companies, including Tata Steel, Kribhco Rail Infrastructure, Concor, Sahani Logistics, India Glycols-backed Kashipur Infra Freight Terminals, Central Warehouse Corporation, and Rajasthan Spinning Mills are queuing to be operators.

The Ministry now has close to 35 proposals for PFTs from 22 companies. Of this, the Railways has notified eight terminals, approved 15 and the remaining are under consideration. Setting up a PFT will require Rs 100-150 crore.

The gene-pool of companies is varied — logistics players, container train operators, mining companies such as Goa-based Fomento Group, and commodity trading firms such as Navkar Group.


A PFT operator can handle various types of goods for the Railways and provide value-added services such as storage and distribution. This is different from private rail sidings where Railways permitted specific type of cargo to be handled, usually on a captive use basis for use by the company that built the siding.

There were two reasons for Railways to come out with a PFT policy, apart from the fact that land acquisition has become difficult.

First, private good sidings that were built years ago in outskirts are now a part of the cities.

These sidings, which are small going by the current norms, and cannot accept or despatch cargo during the day as large trucks entries are restricted for most part of the day. So, the rail freight customer evacuates cargo and moves to another distribution point. PFTs — which will be much larger and located in outskirts — are expected to eliminate this layer of handling and reduce costs for customers.

Also, by allowing companies to earn revenue by handling cargo of various types, the Railways expects to get some incremental cargo, and attract some cargo from the road as well.


Many rail private sidings are converting their sidings to PFTs. Close to half the PFT proposals are brownfield.

Many container train operators are also converting their inland container depots (ICDs) to PFTs so that they can handle non-containerised cargo as well.

Railways PPPs need Rs 80,000 cr

n estimated Rs 80,000 crore of private investment will be required for implementation of various PPP (public private partnership) projects identified by the Railways. The areas to be covered under PPP will include an elevated rail corridor, high-speed corridors, redevelopment of stations, logistics parks, private freight terminals, port connectivity, dedicated freight corridor, loco and coach manufacturing units, energy conservation, etc. The projects identified include the Rs 20,000-crore Mumbai-Ahmedabad high-speed corridor, the Rs 20,000-crore elevated rail corridor between Churchgate and Virar in Mumbai, Rs 10,000 crore for redevelopment of stations, the Rs 10,000-crore dedicated freight corridor between Sonnagar (Bihar) and Dankuni (Bengal), Rs 6,000 crore for energy projects, Rs 5,000 crore for port connectivity projects, Rs 3,000-crore loco and coach manufacturing units, Rs 3,000-crore logistics parks and Rs 2,815-crore private freight terminals and other freight schemes. A modified outlay of Rs 5.48 lakh crore has been proposed for the 12 {+t} {+h} Five Year Plan by the Ministry to Planning Commission for meeting the requirements of expansion, modernisation and safety. For financing this outlay, gross budgetary support, successful implementation of PPP in identified areas and mobilisation of internal resources through conventional and non-conventional means would be necessary. Indian Railways, it is learnt, is open to foreign direct investment (FDI) in PPP projects within the overall FDI policy framework.

The Minister of State for Railways, while replying to a question in the Lok Sabha recently, however, conceded that the completion of the projects might be extended up to 13 {+t} {+h} Plan.


Centre-State drama stalls Ahmedabad airport’s warehouse
The opening of Ahmedabad airport’s perishables warehouse has been postponed, it is learnt. The Airport Authority of India (AAI) is believed to have stalled the commissioning of Gujarat’s first perishable air cargo warehouse at the Sardar Vallabhai Patel International Airport because the State Government-controlled agency entrusted with running the complex has allegedly breached the contract by calling in a private enterprise to manage its operations. The AAI officials say Gujarat Agro Industries Corporation Ltd’s move to employ Cargo Service Centre India Private Limited (CSC) violated the terms under which it was allotted 3,600 sq. m at the airport for seven years. It is complained that Gujarat Agro never declared Cargo Service’ name earlier even though it had signed an understanding with the latter in June 2010 for the management of its operations at the new cargo complex and other places in the State. The rule also says that the basic condition for which the land has been allotted on lease can’t be changed. In this case, the condition was that the land could be used only for handling perishable cargo. The Gujarat Agro Managing Director has been quoted as saying, “CSC will only handle the cargo. They are not a beneficiary as claimed by the AAI. We have written letters to the AAI chairman in New Delhi on numerous occasions in the past one year, but they are delaying it.” Yet another example of Centre-State confrontation.


Idle fleet rising unusually since July
There are 400 per cent more containerships in the 500 TEU-plus range laid up at the end of July than there were at the end of July last year, reports Alphaliner, a Paris-based shipping consultancy agency. At the end of July this year, there were 216 units, aggregating 467,000 TEU against the end of July 2011 tally of 75 ships totalling 115,000 TEU, says a report quoting the agency. Hardest hit are non-operating owners whose share of lay-ups is 79 per cent by TEU and 82 per cent by number of ships. Only one out of five of the lay-ups are carrier-controlled as more carriers download surplus tonnage on ship lessors. Panamax ships of less than 5,000 TEU ships suffer most. The idle fleet has been gradually rising since the beginning of July, and shows a markedly different pattern from the past two years when the idle fleet only started to increase in August and September. Carriers are cutting back capacity much earlier due to the weak cargo demand especially in the euro zone areas, with the expected peak season cargo demand failing to materialise. Unlike recent years, no major new peak season strings have been announced so far on main head hauls.


(This article was published in the Business Line print edition dated September 3, 2012)