The Hindu Business Line : Differences over freight rates hit road traffic of iron ore to Paradip

THE road movement of iron ore from Barbil mines to Paradip port for exports has virtually come to a halt due to differences between the shippers and the road transport operators over the freight rate.

The shippers feel that the freight should not exceed Rs 1,000 a tonne in view of the drop in the f.o.b. price of ore to less than $40 a tonne from the earlier $70/80. However, transport operators are not prepared to accept it and insist on Rs 1,600 a tonne, the rate they charged during the boom period. Interestingly, the Railways charges around Rs 500 a tonne for covering the same distance.

It might be noted that the bulk of ore for exports through Paradip arrive at the port by road — an estimated 60 per cent of the total throughput of about nine mt (in 2004-05). The suspension of road movement has brought down the ore throughput. There has been a rise in rail movement of the mineral, from three rakes to five rakes a day on an average, but the increased throughput by rail is certainly not enough to compensate fully the loss of traffic caused by the suspension of road movement.

Paradip port used to release about 1,700/1,800 iron ore trucks every day while three times the number waited outside the port with the traffic. The picture is entirely different now: hardly 10 per cent of the normal movement is taking place now with the result the road to the port is totally free from any congestion.

The f.o.b. price of ore for export to China, it is felt, is unlikely to improve much due to various reasons. First, various Chinese ports are believed to be holding ground stocks of 35-40 mt of ore due to not-so-satisfactory evacuation. The stocks must reduce by half before the demand picks up. Next, the Chinese authorities are believed to have imposed several restrictions thus slowing down the imports.

The throughput of thermal coal at the port for coastal shipments to Ennore to meet the requirement of TNEB too has dropped due to not-so-satisfactory arrival of the mineral from the Talcher mines of Mahanadi Coalfields Ltd.

In the first two months of the current fiscal, the shortfall of two lakh tonnes a month on an average from the linkage of eight lakh tonnes a month was recorded.

The situation in the current month, if the trend so far is any indication, is unlikely to be very different.

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