The Hindu Business Line : Logistics needs steeling up to tackle SAIL traffic

Are the Railways, ports and other agencies concerned really geared fully to handle the additional volume of traffic of coking coal and metal production for SAIL.

BERTH AT Haldia to handle coking coal for SAIL... Geared to cope with the additional volume of traffic?

Preliminary estimates suggest that the Steel Authority of India Limited (SAIL) will be required to import about 11.5 million tonnes (mt) of coking coal in 2006-07 through three east coast ports of Visakhapatnam, Haldia and Paradip compared to the actual import of about 9.9 mt in 2005-06. The port-wise break-up will be Visakhapatnam 4.5 mt, Haldia 5 mt and Paradip an estimated 2 mt. In 2005-06, SAIL imported 4 mt of coking coal through Visakhapatnam port, 4.37 mt through Haldia and about 1.52 mt through Paradip.

SAIL's hot metal production, it is estimated, will rise to 15.2 mt in 2006-07, up from 14.4 mt in 2005-06. As a result, the requirement of coal will be an estimated 15.83 mt in 2006-07, comprising 11.5 mt of imported coal and 4.32 mt indigenous coal.

Two zonal railways — the South Eastern Railway (SER; head office Kolkata) and the East Coast Railway (ECOR; Bhubaneswar) — handle the imports almost entirely. According to tentative plans, the SER will be required to handle 5.05 mt of imported coal on SAIL account in 2006-07 compared to 4.33 mt in 2005-06, up an estimated 17 per cent while the ECOR an estimated 6.44 mt (5.3 mt) or up 22 per cent. Together the increase will be about 20 per cent.

Several questions naturally arise in this context. Are the Railways, ports and other agencies concerned really geared fully to handle the additional volume of traffic?

RAILWAYS

If coking coal imports on SAIL account rise by an estimated two million tonnes (from 9.9 mt to 11.5 mt or so), then the requirement of BOX-N wagons, normally used for transportation coal from ports to the plants, will rise by two additional rakes or roughly around 100 wagons a day.

To organise an additional 100 BOX-N wagons daily, it would appear, may not be too difficult a job for the Railways. But, then, SAIL has to compete not only with other steel plants but also other industries, whose requirements too will rise, to get these additional rakes. For example, Haldia and Paradip ports handle imported coal not only for SAIL but also for others such as Tata Steel and Nilachal Ispat. With so many new steel units coming up in Orissa, it is only natural that the volume of imports will rise through Paradip and with it the demand on the Railways for more wagons.

The Visakhapatnam port handles imported coking coal not only for SAIL but also for RINL whose requirement is set to rise with the increase in production as projected by the management. Then there are unscheduled movement. For example, Paradip had to rush a couple of lakh tonnes to Bhilai Steel Plant, and the Visakhapatnam port a few thousand tonnes to Durgapur Steel Plant.

There is another point. The demand on the Railways for additional wagons will rise also to transport imported thermal coal from the ports to several thermal power plants. In 2005-06, the total import of thermal coal by power plants was 10 mt, projected to rise substantially in coming years.

PORTS

So the next question is: Are the ports really ready to handle the projected increased volume of traffic. It must be remembered that port facilities presuppose not only berth facilities but also various other things such as backup storage facilities, quick evacuation facilities which by train mean also availability of adequate number of locos and loco pilots, full rake loading facilities, the importers ability to charter right kinds of ships and their arrivals at the right time to prevent probable pre-berthing congestion.

Let us take, for example, the storage facilities. Although, the imports of coking coal by SAIL in 2005-06 were 9.9 mt, the actual dispatches from the ports to the plants were 9.7 mt. Now imported coking coal for steel plants has to compete for storage in ports with so many other commodities such as iron ore for exports, imported thermal coal for power plants, thermal coal for coastal shipments.

The issue of storage and unloading facilities at the plant levels too is critical. Most SAIL units being old have archaic transportation and handling system within the plants. The concept of modern logistics is virtually unknown to them. Fortunately, the SAIL authorities have accordingly appointed RITES to undertake separate studies for each plant, identify the problem areas and suggest remedial measures. RITES has already submitted its reports for most plants. But it will be some time before the suggestions contained in the reports can be fully implemented.

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