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Concor cuts cargo rates by 8% between Punjab, west coast ports

Concor cuts cargo rates by 8% between Punjab, west coast ports
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First Published: Tue, Jan 13 2009. 10 23 PM IST

Updated: Tue, Jan 13 2009. 10 23 PM IST
Bangalore: Increased competition and a global slowdown has led Container Corp. of India Ltd (Concor) to cut rates by 8% to carry cargo containers between Ludhiana in Punjab and ports on India’s west coast.
State-run Concor, the country’s biggest rail hauler of cargo by fleet size and revenues, slashed rates from 1 January after two private firms recently began services on this route, with another to follow from February.
“It is a strategic decision to lower rates,” a Concor executive said on condition of anonymity. “It is partly due to competition and partly due to recessionary conditions.”
India privatized container rail freight services in 2007, ending Concor’s monopoly. The government has since allowed 13 private operators and three state-owned firms—Concor, Central Railside Warehouse Co. Ltd, a subsidiary of Central Warehouse Corporation, and Krishak Bharati Cooperative Ltd—to run container trains on various routes.
A Concor spokesman confirmed the rate cut, but declined to elaborate.
Concor was the lone operator on this route so far, running trains from its inland cargo terminal at Dhandari Kalan near Ludhiana to Jawaharlal Nehru Port, India’s busiest container harbour near Mumbai.
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However, firms such as Hind Terminals Pvt. Ltd and DP World Ltd have recently started services on this route. Private container train operators say they will be forced to follow Concor’s cuts. “Concor is the market leader in this business. So, when Concor reduces rates, I will have no choice but to lower my rates also,” said an executive at Hind Terminals. He did not want to be named.
Ludhiana is the second largest hub where container cargo for India’s overseas trade originates, after the national capital region, according to industry estimates.
The district is also the second biggest market for secondary steel in India and a big producer of bicycle parts and automotive components.
Ludhiana accounts for an estimated 200,000 containers a year as hosiers, foodgrain traders, and auto, machinery and cycle parts makers ship products in steel containers to global destinations. Ludhiana also imports metal scrap in large quantities.
On 9 January, Gateway Rail Freight Ltd, a subsidiary of Mumbai-listed logistics firm Gateway Distriparks Ltd, opened a new rail-linked logistics park on 50 acres at Sanehwal near Ludhiana, from where it will operate container trains to ports.
“Gateway Rail Freight plans to run a daily service from the new logistics park to JN Port and bi-weekly services to Mundra and Pipavav ports,” said Sachin Bhanushali, the company’s president.
Mundra and Pipavav ports are located in Gujarat. The company is currently waiting for the customs department to notify the logistics park as a custom-bonded area, he added.
This essentially entails customs opening a field office at the park to clear goods meant for international trade.
Since May 2007, private and state-owned operators have started plying some 60 new rakes in addition to the roughly 200 rakes owned by Concor. One rake comprises 90 twenty-feet equivalent units (TEU’s), the standard size of a container. But, a slowdown in global trade has led to idle rakes. “About 12 rakes, or one-fifth of the total fleet owned by private firms, have been stabled since November due to lack of demand,” said R.C. Dubey, president of the Association of Container Train Operators.
“Private operators are suffering losses and trying to capture whatever container cargo they could by giving concessions and rebates to customers just to keep the fleet running.”
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First Published: Tue, Jan 13 2009. 10 23 PM IST