Railways cuts charges for moving containers

In a surprise move, the Railways has decided to charge less for moving some categories of containers.
After deciding, in November 2012, to raise haulage rates by up to 31 per cent in two instalments — in December 1, 2012, and February 1, 2013, the Rail Ministry has now decided to lower the rates by five per cent in two segments — 10-20 tonne cargo in twenty feet equivalent unit (TEU) containers, and 20-40 tonne cargo in forty feet equivalent (FEU) containers.

This follows a plea by the Association of Container Train Operators. The charges for movement of empty wagons will be cut by 13 per cent. The cuts become effective April 1.

Both Container Corporation of India (Concor), the largest container train operator with over 70 per cent of the market, and Gateway Distriparks Ltd (GDL), a listed firm, plan to cut tariffs. For the operators, haulage rate accounts for 65-70 per cent of operating cost.

According to Concor Managing Director Anil Kumar Gupta, “We are planning to pass on the benefit to customers. We will rework the tariffs.”

Sachin Bhanushali, Deputy CEO, Gateway Distriparks, explained: “In segments where we were losing our competitive edge with road transporters, the Ministry has reduced haulage rates by up to 8 per cent. GDL plans to pass on the benefits to its customers for loaded containers.”

The move is also good for other container players such as the shipping lines backed APL India Infrastructure and Hind Terminals.

Some of the other moves aimed at increasing containerised cargo movement are a 25 per cent reduction in rates for fruits and vegetables moved in containers by the National Horticulture Board and the Agriculture Ministry.

The Railways moved 37.24 million tonnes of container cargo in 11 months of this fiscal, registering a 7 per cent growth year-on-year.Before 2007, Concor, a listed subsidiary with a majority stake by Railways, was the only player in the segment.

By opening the market, the Railways allowed container train firms to invest in flat wagons that carry containers and book cargo from customers. However, investors accused Railways of increasing charges steeply and frequently making it difficult for them to operate.

The Railways, on its part, has maintained that instead of developing new markets to attract cargo from road to rail, many container train operators tried eating into Railways traditional customer base by targeting heavy cargo movement.