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Business Standard

Container rail freight rates set to rise 31%

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(IR) is going to increase haulage rates by up to 31 per cent for (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 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 ().

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, , 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.”

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