In a sea change, FCI uses ships to transport grain

Written by Sandip Das | New Delhi | Updated: Oct 4 2014, 06:07am hrs
With logistical bottlenecks to on-land transportation a huge dampener, the Food Corporation of India (FCI) is increasingly relying on waterways to take PDS grain to various parts of the country, including far-flung areas, some with rough terrain.

Just a few weeks ago, FCI struck a deal with Bangladesh to transport subsidised grain from Kolkata to Tripura via the neighbouring countrys Ashuganj port along the Padma river. Now, it has started transporting grain via ship from Andhra Pradesh to Kerala too.

The corporation has contracted Mumbai-based Shreyas Relay System to transport 20,000 tonne of rice a month from the Kakinada port of grain-surplus Andhra Pradesh to Keralas Vallarpadam container terminal in the process, reducing the overall cost significantly.

On the face of it, while there is not much difference in terms of cost between the rail/road and sea routes, sources say, the latter helps FCI save on demurrage to the railways. Shreyas Relay System is transporting rice from Kakinada to Vallarpadam at R3,000 per tonne, which is comparable to the railway freight.

Corporate India has often opted for the sea route for ferrying raw materials like iron ore and coal to not only tide over poor rail/road infrastructure, but also make substantial savings in terms of central sales tax, octroi and entry charges.

This reasoning doesnt apply for FCI, though, as grain don't attract these levies.

Officials acknowledge that labour shortage in Kerala often forces FCI to retain rail wagons carrying grain beyond the stipulated time of nine hours after they arrive at the designated place. Railway charges around Rs 150 per wagon per hour for any delay in unloading.

The acute labour shortage in Kerala is largely sidestepped in case of grain transported through the sea route. Besides, the quality of grain remains intact because of large containers used for transportation; Railways, on the other hand, uses rakes, an official told FE.

Further, loss in transit is lower. Shreyas Relay System directly delivers rice at six FCI depots in Kerala Kochi, Alappuzha, Arkulam, Mavelikkara, Chingavanam and Angamally. The destination spots will be increased after a year, the official added.

FCI has already transported 60,000 tonne of rice to Kerala through the sea route. The state requires 70,000-80,000 tonne/a month of boiled rice for distribution through PDS.

The decision to ferry grain from Kolkata to Tripura via Bangladesh was taken in view of the rough geographical terrain, vagaries of nature and insurgent groups blockades along the on-land route. A truck must negotiate more than 1,650 km to carry grain from Kolkata to Agartala through Guwahati a distance which can be slashed to 350 km if the Bangladesh route is used. While India hopes to save significantly in terms of transportation costs, the Bangladesh economy will benefit from port charges and job creation.

FCI has been moving grain mostly wheat and rice between grain-surplus states like Punjab, Haryana, Andhra Pradesh, Madhya Pradesh and Chhattisgarh to other states through the road and rail routes to meet the monthly requirement under the PDS.

FCI transports 3-3.5 million tonne of grain every month across the country for PDS. The idea is to diversify the transportation mode by using the sea route, wherever viable, for cost optimisation, FCI sources say, adding that this would also have help reduce the food subsidy bill to an extent.

SETTING SAIL

FCI has contracted Mumbai-based Shreyas Relay System to transport 20,000 tonne of rice a month from the Kakinada port of grain-surplus Andhra Pradesh to Kerala, reducing the overall cost significantly

On the face of it, while there is not much difference in terms of cost between the rail/road and sea routes, sources say, the latter helps FCI save on demurrage to the railways