Indian industry is upbeat about the railway’s plan to have long-term tariff contracts with consumers in cement, steel and fertiliser sectors, with many companies now willing to bring in more freight traffic to the national carrier.
Companies like UltraTech Cement Ltd and ACC Ltd and industry body Cement Manufacturers’ Association (CMA) are already in talks with the national transporter to enter into long-term contracts. The new plan is likely to bring back the traffic that the Railways lost in the recent years. The national carrier is expecting an increase of 6 per cent in its freight traffic to 1,165 million tonne (MT) in 2017-18, compared to 1,093.5 MT in 2016-17. Over a period of 60 years, the share of railways on total freight traffic has declined from 89 per cent to 30 per cent, with majority of the traffic moving towards road.
Pushed by long-term contracts, the segments in which the railways is expecting a major rise in traffic in FY18 include container services (9.9 per cent), pig iron and finished steel (7.52 per cent), coal
(6.7 per cent) and iron ore (6.7 per cent). “This (the discount
scheme) is a clear effort from the railways to bring back its lost traffic. As of now, about 65 per cent of cement sector traffic is through road and 30 per cent is through rail route, while the remaining five per cent is by water. The new incentives offered may help the cement sector and will bring in additional traffic to railways,” said a CMA
official who did not want to be named.
The railways is targeting 113 mt traffic from the cement sector following the new scheme. The national carrier had set a target of 110 mt for FY17, but due to decline in infrastructure activities because of demonetisation, it is expected to be in the range of only 90-100 mt. While coal
constitutes 45 per cent of the railways’ freight
traffic share, cement makes up eight per cent, while foodgrain and steel constitute seven per cent each. According to the Revised Estimates for 2016-17, revenue from freight
traffic will be Rs 1,08,900 crore. The railways expects it to rise by 8.5 per cent to Rs 1,18,157 crore in FY18, primarily through an increase in cargo volumes. Freight
loading is expected to fall marginally to 1,093.5 mt in FY17 from 1,095 mt in FY16.
However, consumers are concerned if the scheme would affect the availability of rakes.
While welcoming the move, Rakesh Kapur, IFFCO joint managing director and Fertiliser Association of India chairman, said: “Any such new commitments for cargo movement should not be at the cost of the availability of covered rakes for evacuation of fertiliser from fertiliser plants, which operate round the clock. Of late, fertiliser plants have been facing constraints in timely availability of rakes.” About 80 per cent of fertiliser movement take place through the railways, which rakes in revenue of about Rs 7,000 crore annually. Read More…
Credit By : Business-standard.com
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