Mumbai: The government’s efforts to privatize the operation of container trains in an effort to increase freight traffic as well as accelerate movement of goods to and from ports have hit a barrier.
The Container Corporation of India (Concor), the state-owned company that once enjoyed a monopoly over this business, has decided to charge private firms in the business a huge sum of money to use infrastructure that it has built. Several companies that have secured a licence from the government to run container trains said they were reviewing their strategy.
At best, the situation could result in a delay in the launch of these services that most firms had planned for May. At worst, some of them could exit the business altogether. “We are facilitating running their trains. So, we are asking for a share of the revenues,” said a Concor official who did not wish to be identified.
The infrastructure for which Concor wants to charge private container train operators is its network of 58 rail-linked inland container depots (ICDs), present all over the country. Goods being shipped out of the country arrive in these depots. There they are cleared by the customs department, then packed into containers and shipped on trains to ports. And when the goods arrive in containers at various ports in the country (by sea), the containers are shipped by train to ICDs where they are unpacked, cleared by customs, and then shipped out, by rail or road to their eventual destinations.
Concor wants private firms in the business to pay an access charge for using ICDs. The amount it has decided on, according to the recently formed Association of Container Train Operators, is Rs3,500 for a twenty-foot equivalent unit (TEU). The standard size (length) of a container is 20ft and TEU is an accepted measure of capacity on the business. The only non-Concor owned ICD in India is run by state-owned Central Warehousing Corporation, and is located at Loni in Uttar Pradesh.
An official of the association, speaking on condition of anonymity, said the profit on a container train from Tughlakabad near Delhi to Mumbai’s Nhava Sheva Port is around Rs5,200 per TEU. “Out of this, if we pay Rs3,500 per TEU to Concor as access charges, then we are left with only Rs1,700 per TEU. From this, we will have to recover our capital costs, provide for maintenance, staff and marketing. We will lose money on every train we run.”
That would work to the advantage of Concor, which is still 63% owned by the government. Even after paying access charges for using its ICD network, if Concor has its way, the private operators will not be allowed to compete with Concor for the existing container traffic of its customers.
They can only ship containers arising from increased traffic from existing customers or new customers.
“Private operators will not be allowed to poach on my traffic. They cannot take my box traffic and move it on their trains. They will have to bring in additional traffic,” said the Concor official.
Private firms that have secured licences from the government to run container trains on various routes are almost ready to start operations; 15 firms, including Concor, paid a total of Rs590 crore as licence fees. Some new container operators had banked on using Concor’s ICDs for the first few years till they built up enough traffic to warrant creating ICDs; others, citing high real-estate prices, had planned on continuing to use Concor’s facilities.
“Competition improves service levels, and efficiency and lower costs are good for the Indian economy and exporters and importers,” said the association official.
He claimed that the cost of moving one TEU over one km by Concor is 50% higher than what it costs to move a TEU over the same distance in the US. “This will make Indian exporters and importers uncompetitive,” he added.
Private container trains were expected to create competition and attract cargo from road to rail. Currently, 80% of the cargo traffic moves by road and 20% by rail.