Financial Daily from THE HINDU group of publications
Friday, Feb 17, 2006
Supply Chain Management
Logistics - Railways
Pvt operators entry in Rly container sector Container movement likely to shift from road to rail
Mumbai , Feb 16
A SIGNIFICANT slice of containerised cargo movement in India is expected to shift from road to rail, in the light of the encouraging response from private players to the invitation of Indian Railways to enter this sector.
It was so far dominated by the Government-controlled Container Corporation of India.
Industry players feel that this sector will also be seeing significant investments from the private operators, leading to quicker and smoother transportation of containerised cargoes to and from the Indian ports. A total of 14 companies have submitted bids to the Indian Railways, offering rail container services.
In the light of the sharp growth in the country's container traffic and the bottlenecks in rail container movement, the Government had decided to throw open this sector to private participation.
"This is a significant milestone for us. We have been preparing for this moment for quite some time. We believe that our existing rail linked ICD at Garhi Harsaru, Gurgaon will give us a head-start in the rail container transportation business," Mr Gopinath Pillai, Chairman of Gateway Distriparks Ltd (GDL), said.
GDL, which submitted its application in the Rs 50-crore registration fee category, plans to initially move containers between its existing rail-linked ICD (Inland Container Depot) at Garhi Harsaru, Gurgaon and the ports at Mumbai, Pipavav and Mundra.
The company is planning to add more rail linked ICDs at various strategic locations, apart from developing a national network of CFSs and ICDs, catering to movement of both exim as well as domestic containerised cargoes across the country.
The company, which raised $85 million through its maiden GDR offering in December last, is also evaluating various options to set up rail linked ICDs at strategic locations across India.
The interest of the private players in this sector is understandable in the light of the sharp growth registered in India's container traffic. At present, over 30 per cent of the container cargoes in the country are moved by rail. An indication of the prospects involved in this sector can be had from the growth in Concor's rail traffic during the last few years - it increased from 1.04 million TEUs in 2000-01 to 1.72 million TEUs last fiscal.
At present, the Jawaharlal Nehru Port complex is the most important rail cargo transfer centre in India, even though the recent incidents of congestion have prompted shippers to look for alternative ports such as Mundra, Hazira and Pipavav.
Industry analysts feel that with the decision to end Concor's monopoly in this sector, innovative services and cheaper tariffs involved in movement of containers by rail could be expected. The first public-private partnership in this sector emerged with the formation of the Pipavav Rail Corporation Ltd, which has the authority to operate container block-train services to/from Pipavav.
The entry of private players in this sector is expected to bring down transportation costs, which at present is high when compared to most countries.
Some figures quoted by Tata Steel recently place the tonne/km costs for rail in India at three times those in China. While the cost of rail transportation in India was put at US cents 7.9 per km, it was cents 5.5, cents 3.7, cents 2.6 and cents 2 in France, Japan, China and Canada respectively.
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