In a bid to increase utilization of its freight services, the railway ministry has announced plans to enter into long-term service agreements with industries that are significant customers.
According to a senior railway official, the railways will enter into agreements with companies with a whole basket of goodies like dedicated rakes for movement of cargo. “We plan to offer them dedicated wagons during peak season, even if there is a shortage,” a senior Rail Bhawan official said.
“The railway ministry has approached companies with a proposal to enter into a long-term contract for five years. Under the agreement, companies will get dedicated wagons and better (lower) rates for assured tonnage that companies move on rail,” said a spokesperson of steel maker Ispat Industries Ltd.
“Logistics is a key cost component for many companies and if that is fixed for a certain time frame, it can help to manage costs more efficiently,” he added.
“The railways had asked us for data. We usually move our products on rail if it has to go beyond 500km.
“Now they (Indian Railways) are trying to get us move our products below 500km as well,” said Sanjeev Bafna, deputy chief financial officer, Grasim Industries Ltd.
“We are also bringing in new BCN HL wagons (boxed wagons with a higher capacity), which can carry around 3,200 tonnes of commodities for a 58-wagon rake as opposed to 2,500 tonnes in the present wagons,” says a senior railway official on the condition of anonymity.
A rake of BCN HL wagon (a 22.9-tonne axle load covered wagon) can increase the carrying capacity of cement per wagon by 36%, foodgrain by 31.6% and fertilizer by 21.5%, in comparison to the rakes used currently.
The companies that sign the long-term contracts with the world’s largest railway system may also get a preference in using these higher-capacity wagons, where available.
The Indian Railways is among the most efficient ways for moving goods across the length and breath of the country due to the wide network and lower cost, greater certainty of reaching in time and lower risk of pilferage than other modes such as road.
But the rakes are typically in short supply in a number of places.
“We are working with the cement manufacturers to finalize their logistics policies. Because of our concessional policies, the whole of cement industry is relooking at its logistics,” added the Rail Bhawan official.
The Indian Railways had 682.38 million tonnes (mt) of freight traffic in 2005-06. The target for freight loading in 2007-08 has been kept at 785mt.
The incentives have been formulated with an aim to increase the cement and steel freight on rail up to 200mt by 2011.