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Ch. R. S. Sarma
Santanu Sanyal

Steel Product Movement

The Visakhapatnam-based public sector steel company Rashtriya Ispat Nigam Ltd (RINL), with the help of Seaways Shipping and Visakha Container Terminal Private Ltd (VCTPL), recently made a trial shipment of 1,000 tonnes of steel from Visakhapatnam to Kolkata by the coastal route, with the possibility of another such shipment of the same volume being undertaken on the Visakhapatnam-Chennai sector, most probably in April.

The shipment, according to informed sources, has not proved, at least for now, to be highly cost competitive vis-a-vis road movement between Visakhapatnam and Kolkata.

The company was exploring an alternative because a recent Supreme Court judgment prohibited plying of trucks with payloads of more than 10 tonnes, and that had made movement by road very costly.

While shipping freight has been reasonable, accounting for barely 25 per cent of the total transport cost on the coastal route, it is the inland haulage charges, both for loading and unloading, which have made all the difference. Multiple handling, with consignments moved by road from the stockyard to the container freight station (CSF) and again from CFS to the port terminal, too added to the cost.

Long-term gains

But, then, as the sources point out, the cost may not necessarily be the immediate consideration for RINL to opt for the coastal movement. The steel PSU may be looking at long-term gains. Also, there may be other compelling reasons, such as the rail and road bottlenecks. RINL, it is learnt, needs at least three rakes a day to evacuate its output but finds it hard to get them regularly.

On the other hand, despite the advantage of door-to-door delivery, road movement is expensive with detentions en route because of bad roads, unfavourable weather, frequent checking by various government agencies and other factors adding to the cost.

Inquiries reveal that the East Coast Railway, which serves RINL, clamps restrictions on allotment of rakes from time to time depending on the detention time in the steel plant. A couple of months ago, the average detention period of a rake was as high as 30 hours forcing the Railway to go slow on rake allotment for the plant. With the average detention period having dropped to 22 hours now, the Railways too has started placing the required number of rakes.

The trial coastal shipment, therefore, could be to examine the operational constraints, if any, and the scope for a further reduction in cost at any point on the entire transport chain.

The reduction in port charges appears a remote possibility because as it is the coastal cargo, as per the government policy, gets 40 per cent concession on both cargo- and vessel-related charges.

Further rationalisation therefore is ruled out. The total transport cost in coastal shipping, according to informed sources, can hope to come down only on volume growth, that is, as and when the cargo inducement will be adequate to warrant regular sailings to achieve economy in costs.

Volume, the key

According to Mr H. S. Chhatwal, Director (Commercial) of RINL, since the volume of the shipment, of 1,000 tonnes, was small, the company had had to pay about Rs 500 a tonne more than usual. Usually, long products are sent by rail. However, once the coastal route gets established and volume increases, the cost should drop by 15-20 per cent per tonne, he thinks.

But he conceded that the coastal shipment would take time to stabilise. Many issues remained to be resolved. "It is to be seen whether coastal movement is causing any deterioration in the quality of steel products due to probable corrosion by sea water, etc.," he said.

"Also, port-related problems, the most important being the availability of containers, have to sorted out." He was not sure if the present exercise on coastal shipment would prove economically viable.

RINL would try with Kolkata port first and, depending on the level of success, consider sending products to Chennai, Kandla and other ports. RINL, it is learnt, is in touch with private operators with licence from the Railways to run container trains. A couple have already started operation, with most others set to begin operations shortly.

More Stories on : Steel | Shipping | On the move | Roadways

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