Fourteen container train operators (CTOs), including railways undertaking Container Corporation of India, have asked the railway board to review the rise in haulage rate. The increase the rate is likely to take away 15 to 20 per cent of the CTOs’ domestic businesses.
The rise in haulage rate was despite the fact that lately, CTOs did not record good business. The issue was raised at a recent meeting of railway board officials with CTOs. “We asked the board to review the haulage rate increase and the notified commodity list. Otherwise, the domestic market would become more elusive for CTOs. We have also sought a clarification for some of the commodities,” Ramesh Chandra Dubey, president, Association of Container Train Operators, told Business Standard.
The rate increase in March has almost doubled the cost of moving pig iron and sponge iron through container trains, while the overall charges of five other notified commodities has risen 20 per cent. The railway board is reviewing the list of notified commodities.
Container operators have to pay a fee to the railways for running their trains on its network. The railways charges haulage rates either on the container class rates (CCR) model or the freight all kind (FAK) rates model, with the former about 90 per cent higher. With the latest changes, six notified commodities being charged through a CCR model, while the remaining are charged at FAK rates.
“The demand and consumption pattern in India is such that this rate increase will adversely impact us. For instance, there is lot of traffic that goes to the eastern part of India, and this has very little to offer, except raw materials like pig iron/sponge iron etc. With the 100 per cent haulage rate increase for pig iron and sponge iron, the customer would have to pay for the cost of the empty container’s return trip, and the prices would shoot up,” said a CTO executive.
The list of notified commodities now comprises cement, bricks and stones, iron and steel, alumina and petroleum products and gases (which were there earlier as well) and pig iron/sponge iron (moved from FAK commodities to CCR commodities, with a 100 per cent haulage rate rise). For other commodities in the notified list, the rise in the haulage rate is about 20 per cent.
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