Concor has felt the impact of lower exports in certain segments (i.e. 35-40% of Concor's export cargo is meat to far East countries like Vietnam). Exports witnessed some recovery in July 2019. Imports, to company's surprise, stayed subdued.
Container Corporation of India (Concor)’s management meetings over the past week highlighted the excitement of the management over the new initiatives of distribution logistics and coastal shipping undertaken by the company. While Ateli to Phulera junction of dedicated freight corridor (DFC) is set up for commissioning in CY20, the management is leaving no stone unturned to capture not only the business opportunities presented by DFC, but also create alternative business lines wherever possible, and in the process, continues to invest `750-1,000 crore annually. We upgrade to ‘buy’ from ‘hold’ post the recent correction.
Concor has felt the impact of lower exports in certain segments (i.e. 35-40% of Concor’s export cargo is meat to far East countries like Vietnam). Exports witnessed some recovery in July 2019. Imports, to company’s surprise, stayed subdued. Indian railways allows notified hub and spokes in its network to avail telescopic benefits (reducing freight with increasing distance travelled), if the hubs are at a distance of 750km or more and the distance between hub and spoke is 100km or more. However, the zonal railway authorities have discretion to relax minimum distance norms between hub and spoke, barring terminals which are at NCR. Concor has taken this into consideration while setting up two main hubs in the North West section — namely Kathuwas and upcoming Swaroopganj.
Most of the benefits quoted are often repeated such as i) axle load benefits with 68te wagons allowing additional loadability of 8-10te; ii) transit time guarantee, as the management highlighted export cargo has a small time window to enter the port to avoid detention charges which can be made possible post DFC; iii) significantly reduced transit time — from current average speed of train operations at 18kmph and iv) significantly higher double stacking from the current run rate of 750 trains per quarter as both Swaroopganj and Kathuwas ramps up to potential.