A large number of private sector container train operators (CTOs) inducted by Indian Railways (IR) in intermodal business in January 2006, then touted as the first revolutionary public-private partnership (PPP) initiative in rail operations taken by IR, ?are feeling without steam?, says a senior executive of one of the licensee operators. What began as a euphoric response from several renowned Indian and overseas firms in the shipping & logistics sector seems to be sputtering out.
Most among the 16 CTOs who paid licence fees ranging from Rs 10 crore to Rs 50 crore each for being registered with the IR perceived the container train operation business to be a virtual El Dorado. Although the concession agreement between IR and CTOs was signed in January 2007 after prolonged debates and discussions for a full year, several issues remain unresolved. The industry has particularly referred to important aspects such as service guarantees, rating & pricing policy, maintenance of rolling stocks, commodities which railways do not permit in containers, and most of all, difficulties in acquiring land for intermodal terminals.
CTOs are also concerned at the lack of clarity on some of the basic issues, for example, the use of railway terminals and private rail sidings for carrying domestic traffic. A prominent spokesperson for CTOs has been irked by bureaucratic delays by the ?multiple agencies in the railways? handling approval of terminals? which take ?six to nine months?. Another common CTO refrain is that IR itself administers the concession agreement, is the regulator as well as the owner of Concor, besides also being the price setter.
For transporting empty containers, IR charges at 65% of the rate for loaded containers and for empty wagons at 60% for loaded wagons. IR charges for full composition of a train even if a CTO train runs under-capacity load. Additionally, IR realises Rs 13,500 as parking charges for CTO wagons and Rs 13,000 per day for stabling of a CTO train set (rake). IR has also notified a schedule of access charges it would realise from CTOs to utilise IR-owned freight terminals at Rs 34,000 per rake, in addition to Rs 100 as detention charge per wagon per hour and an amount up to Rs 4,500 per rake per hour as ground usage charge at such terminals.
CTOs complain that IR provides no service guarantees in terms of transit time or fixed schedule container train services. One of them, Innovative B2B Logistics Solutions, for example, emphasised that ?what a customer wants is on-time, delivered in full?. They also underline the acute problems of wagon maintenance. As facilities for the maintenance of container freight cars are available only at few places, the train sets have to visit these locations even if those are far remote from the traffic routes. This results in infructuous movement and add to transport costs. Hind Terminals Pvt. Ltd says: ?The capacity of the railways is not adequate for overhaul of wagons, even though it takes 5% overhaul charges from us. Each rake that is sent to railways for overhaul is suffering detention of at least 15-20 days.?
Only a few of the CTOs have developed their own inland container depots (ICDs). Some 15 new terminals have been contemplated by CTOs, but their construction appears remote. Moreover, development of a separate ICD or multimodal logistics park by each operator in the same zone of influence is liable to lead to sub-optimal use of facilities.
IR?s Vision 2020 aims to grow the container business from 25 million tonne at present to 210 million by 2020. As a strategic step, IR has sought PPP for enabling development of intermodal infrastructure in the hinterland and provision of multimodal services. That served as the genesis of private sector participation in container train operation. Not that the scheme has been only a whimper. A significant inroad is gradually being made by these operators in tapping the domestic container volumes.
The scheme has yielded revenues in terms of the licence fee from CTOs to the extent of Rs 640 crore. The IIM-Ahmedabad estimates that IR at the current stage itself earns about Rs. 585 crore per annum by way of haulage charges for CTO trains. The three quarters of the current fiscal April-December 2009-10 shows CTOs garnering 20% share of all IR?s container traffic throughput, compared with only 12% share that the CTOs could muster in 2008-09. Some of the CTOs have moved ahead with confidence and committed to an investment in excess of Rs 3,000 crore on wagons, terminals and equipment.
Currently, Concor has an aggregate tally of over 190 rakes, each with 45 rail flat cars of 90 TEUs capacity. Private sector CTOs have so far added 115 train sets of their own. Procurement of wagons is not without problems. Industry sources predict a 12-15 month timelag for the delivery of wagons, key constraint being the shortage of wheels and axles.
Evidently, IR needs to do a lot more to inspire confidence among CTOs to let them feel that they are partners in the quest to make some exponential increases in the intermodal business in the country. IR has to think and act afresh, frame its operational and tariff policies to induce high growth. For example, IR?s countrywide network of private sidings, if treated as potential intermodal terminals and encouraged to handle containerised cargoes for multiple users, will optimise their use for domestic and export-import traffic.
CTOs, too, need to consolidate and build the infrastructure for efficient and cost-effective services so that large quantities of general consumer goods are containerised and transported by rail. IR appears confident that as, post-economic slowdown, industrial and economic activity gathers momentum and CTOs build their infrastructure, containerisation will gather steam in respect of export-import traffic and, more importantly, in the sphere of domestic container transport. IR exhorts CTOs to build up the momentum and canvass myriad consumer goods businesses for containerisation and look beyond bulk commodities like sponge iron, pig iron, cement, etc., items which have traditionally been the mainstay and staple business for IR.
?The author is former MD, Concor
