Rlys raises terminal access fee for container operators

Move likely to hit private container operators, as these use railway container terminals

After just about a month of the rise in the haulage rate for container train operators (CTOs), the railways has increased the terminal access charge for all CTOs by about 35 per cent.

The move is expected to hit private container operators, as these primarily use railway container terminals for their domestic business. With this, the margins in domestic business are expected to drop further. Assuming terminals at both the ends of a journey are owned by the railways, the revised rates are Rs 2, 21,540 a rake, up from Rs 1, 62,000 a rake earlier. If a terminal at one end is owned by the railways, while that at the other is owned by a private operator, the revised terminal charges are Rs 110,770 a rake, compared with Rs 81,000 a rake, said a railway notification.

The increase in access charges will not impact the railways-owned Container Corporation of India, which mostly operates out of its own terminals.

With this change, the railways would charge about 12 per cent more from private container operators, compared with Rs 80 a tonne charged to non-coal and iron ore customers of goods traffic, provided both the terminals are owned by the railways. According to the model concession agreement signed between the Indian Railways and CTOs in 2006, private container operators are barred from carrying iron ore and coal.
 

THE PICTURE NOW
	*Both terminals owned by railways	*One terminal each owned by railways & a PCO
Current rate for PCOs (Rs /rake)	1,62,000	81,000
Revised rate for PCOs (Rs /rake)	2,21,540	1,10,770
Revised terminal charges for container traffic (Rs /tonne)	90	45
Existing terminal charges  for goods traffic (Rs /tonne)	80	40
*One origin terminal and the second destination terminal; PCO: Private container operator Source: Ministry of Railways

Sajal Mittra, chief executive, Arshiya Rail Infrastructure, said, “Considering the railways’ weakening financial position, such substantial rate rises were on the cards for container train operators. The increase in the terminal access charge of 35 per cent would impact all CTOs, especially those in the domestic segment.”

CTOs have been at the receiving end since privatisation, due to frequent revisions in haulage and other rates. The railways is expected to earn Rs 3,621 crore from container services in 2012-13.

Considering the already constrained margin levels, the operators will have no choice but to pass on the rate hike to the end customers. However railway needs to acknowledge the fact that such frequent rate hikes will make rail movements costlier and drive away traffic to other inefficient modes such as roads, he added.

A senior railway official said, “The private container operators have invested very little and too late for building their own terminals, the move should compel them to focus on building their own terminals.” The nature of this logistics business is such that the growing volumes of business can be captured only if there are terminals to handle the traffic, he added. Six years since private container operators entered the business, they have put up only seven terminals and about 20 terminals are in pipeline.

The Ministry of Railways had sanctioned Private Container Train Operators to access railway owned terminals (good sheds, railways sidings, unused railway lines etc) in 2009.

The CRTs provide common user facilities for handling container trains to all PCOs. All PCOs have access to any CRT on a non-exclusive basis on a ‘first come first served’ basis.  However, the handling of railway rakes get priority over container rakes.