'Domestic trade in containerised cargo is looking up'

Q&A: Anil Kumar Gupta, Managing Director, Concor

State-run container rail operator Container Corporation of India (Concor) reported a decline in business in the last financial year — the first in 20 years of operations. However, with international trade showing signs of recovery and domestic cargo traffic registering strong growth, Managing Director Anil Gupta tells Sharmistha Mukherjee the company is on track to accomplish targets and see better business in the next financial year. Edited excerpts:

Concor registered a fall in business in the wake of the slowdown last year. What is your outlook for the container rail business in the current year?
Frankly, the outlook is not good in view of the fact that the current year has seen over eight months of the effects of the global slowdown as against four months in the last financial year (December-March 2009). However, we still feel the overall position will be better than last year. We expect to make over Rs 3,800 crore in gross revenues.

Export-import container traffic has registered a fall of 5 per cent till November this year. How will you make up for the drop in revenues from the exim trade?
Domestic trade in containerised cargo is looking up. We have seen an 18.50 per cent increase in the segment over the last year. The country’s exports also posted a healthy growth of 18.20 per cent in November — the first in 11 months. The imbalance in traffic, with containerised exports lagging behind imports in 2009, had led to the accumulation of empty containers in the hinterland, which shipping lines were evacuating at their own cost. We hope exports will now increase further and bring down expenditure.

So, what targets do you plan to set for 2010-11 in terms of cargo handling and gross revenues?
We are monitoring trends. We have not determined targets yet. However, we feel once conditions normalise, the container rail industry will grow at 12-13 per cent CAGR (compounded annual growth rate) again. We, at Concor, will make ourselves ready for catering to even higher rates of growth in the next financial year.

Despite rail being a more environment-friendly and cost-effective medium of transport, why has container rail penetration remained low in the country?
First-mile and last-mile costs of container transportation are quite high. As a result, overall ‘door-to-door’ costs for rail operators turn out to be substantially higher than the direct ‘door-to-door’ costs being offered by road operators. This works against the railing of containerised cargo, especially if the commodities to be carried are light-weight commodities.

How does Concor intend to improve its market share?
We are working on the hub-and-spoke model to capture domestic traffic. Besides, we have picked up equity stake in ports to give a boost to our exim trade. We operate the third terminal at Jawaharlal Nehru Port (JNPT), which handles the maximum amount of exim containerised cargo in the country. The International Container Trans-shipment Terminal at Vallarpadam, which we are setting up with DP World, is likely to be commissioned in March this year.

15 container train operators have entered the market since 2005. What measures will you take to beat competition and further consolidate your position?
In the last two-three years that private players have commenced operations, our revenues have shown strong growth rates. Cargo volumes have also registered an average annual growth rate of over 10 per cent. Last year, the slowdown had an impact on business. We are not worried by competition. We will take advantage of our basic strengths to remain the market leader and consolidate our position further by initiating more customer-friendly measures.