Close to a year after the Railway Ministry implemented a policy that almost prohibited some cargo from being moved in domestic containers, the loadings in the segment have shrunk by over 15 per cent.
In October, container train operators together moved 0.76 million tonnes of cargo, a drop of 15.6 per cent over the same month last fiscal.
POLICY
With effect from Dec 1, 2010, Railways virtually barred domestic containerised movement of cement (except white cement), stone (other than ceramic tiles), iron and steel, alloys and metals, and petroleum products.
The Indian Railways did this by introducing steep hikes in haulage charges for these commodities, which is the amount paid by container train operators to Railways for using the rail network.
Concor earnings
Container Corporation of India (Concor) – the only container train operator that discloses data on domestic cargo – has seen a continuous decline in earnings in the domestic segment since then.
For the half-year ended September, Concor's domestic segment registered a 38 per cent drop year-on-year in the profit before tax and interest, which is an indicator of operating profit.
Concor's dependence on export-import traffic has grown, with earnings from export-import segment increasingly accounting for a larger share of total earnings.
Gateway Rail - the container train operations subsidiary of another listed firm Gateway Distriparks – is also increasing its focus on the export-import segment and relatively premium refrigerated container movement.
For the quarter ended September, domestic containers accounted for nine per cent of volumes handled by Gateway Rail, down from over 20 per cent levels in the same period last year.
DIFFICULT TIMES
But, multiple industry sources declining to be identified, say that the going has become tough, particularly for many entrants that had a fairly high dependence on domestic cargo.
The operators with higher focus on domestic segment include Arshiya Rail, BoxTrans, Delhi Assam Roadways, Inlogistics and Kribhco Infrastructure.
The Dubai-based ETA Group recently (October 28) even exited the container train operations segment by selling its subsidiary Freightstar to Vikram Logistics, a subsidiary of London's AIM- listed, Infrastructure India Fund.
The extent to which Railways has hit the operators could also be gauged from the fact that two operators Arshiya and Kribhco have moved to the Competition Commission of India against the Railways.
This is termed as a “harsh move” by many in the industry given that all operators need the Indian Railways support to continue doing their business.
Those in relatively better position are those container train operators that are backed by shipping lines; and those with a good terminal network to handle export-import cargo. Hind Terminals, for instance is backed by MSC; India Infrastructure and Logistics has a majority ownership by APL.
RAILWAYS PERSPECTIVE
However, the Railway Ministry also has its own side of the story. It maintains that it liberalised container train operations four years ago hoping to get more cargo from the road to the rail network. But, many of the container train operators actually started eyeing and moving heavy cargo that was traditionally moved by Indian Railways, which irked many Railway officials.