The Hindu Business Line : Tata Steel to plead for status quo in rail freight

TATA Steel is to shortly appeal to the Railways not to enforce the minimum chargeable weight at the enhanced rates, as proposed in the Rail Budget for 2005-06.

The proposed rates, if enforced, will substantially push up the rail transportation costs of some of the company's products, particularly hot- rolled (HR) coils and wire rod coils, according to company sources.

The Railways proposes to charge a minimum freight equivalent of the carrying capacity of a wagon, no matter whether the wagon concerned can really load full capacity. For example, a wagon (flat or box N) used for transportation of HR coils can load a maximum of 54 tonnes, even though its declared carrying capacity is 60 tonnes. Under the proposed rule, Tata Steel will be required to pay for 60 tonnes per wagon irrespective of its loadability. This means the company will be required to pay for several tonnes of extra cargo per wagon without actually being able to carry that much cargo. Every month, Tata Steel despatches about 60,000 to 70,000 tonnes of HR coils by rail.

The wire road coil presents an even worse picture. A box N wagon, usually used for transportation of wire rod coils, can load a maximum of 45-46 tonnes only against the carrying capacity of 60 tonnes. In other words, under the new dispensation, Tata Steel will be required to pay for an extra freight of 14-15 tonnes per wagon. At an average freight of Rs 1,000 per tonne, the additional cost per wagon will be substantial. The company's monthly throughput of wire rod coils by rail is about 20,000 tonnes.

Tata Steel, if its appeal to the Railways for status quo goes unheeded, might be forced to switch over to road transportation. Already, more than a lakh tonnes of HR coils and an estimated 10,000-12,000 tonnes of wire rod coils are despatched by road.

However, there is one problem in stepping up the despatches of these items by road. The company has to mobilise a large number of specially designed high capacity vehicles of the capacity of 20-25 tonnes each. The Punjab Dala trucks, each with an average carrying capacity of 12 tonnes and now used for transporting the heavy-duty items, may not always be suitable for the purpose. Fortunately for Tata Steel, Tata Motors produces 20-25-tonne capacity goods vehicles.

The Railways, when contacted, conceded that the benefit of idle freight earlier enjoyed by Tata Steel might no longer be available to it. However, the detailed notification in this regard from the Ministry is still awaited, the sources added.

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