The Hindu Business Line : Hunt for new rail wagons spills to overseas market

Cost effective
The cost of transportation by rail is Rs 600 per tonne, as compared to Rs 2,000 per tonne by road.
With the entry of new players, Concor charges may come down.
Concor at present charges an average freight rate of Rs 17,000 per TEU.

Mumbai , April 14

The hunt for new railway wagons by the private container train operators is spilling over to foreign soil.

The Indian wagon manufacturing industry, which had shown a stunted growth all these years, suddenly finds itself virtually deluged with enquiries for new orders from the private operators. As the operators will have to wait for at least a year to get the new wagons from the domestic market, many of them are mulling import of wagons to cash in on the boom in the container freight market.

In no mood to wait

Gateway Distriparks Ltd (GDL), which is one of the 14 companies that have entered this business after the Government threw open the sector to private parties, is scanning the European market for wagons.

"We want to be in the business from day one. We have all the other infrastructure ready and once we have the wagons, we can immediately start operations," Capt. C.S. Verma, the company's new Chief Executive Officer, said.

Admitting that the company has to pay a premium for importing wagons, he, however, said it made economic sense to pay the additional costs involved and plunge into the business, rather than wait for the Indian market to supply the wagons. "We are willing to even have leased wagons, if there are any in the market," he told Business Line.

GDL plans to buy three trains of 45 wagons each and later expand the fleet to 10, which would require an investment of Rs 150 crore. "In the medium term, we plan to invest a total of Rs 500 crore in this business, which includes opening of new container freight stations (CFSs) and inland container depots (ICDs)," Capt. Verma said.

The company is sitting on cash surpluses after it raised about Rs 80 crore through an IPO and another Rs 365 crore through a GDR issue. Initially, it plans to concentrate on moving container trains between Mumbai, Mundra, Pipavav and its ICD at Gurgaon and later spread the operations to cover Chennai and Visakhapatnam ports.

"Each train has a carrying capacity of 90 TEUs, which means a combined carrying capacity of 900 TEUs with 10 trains. As we intend to move cargoes both ways, the total capacity for a round trip will be 1,800 TEUs. With four round trips a month, our capacity will be 7,200 TEUs a month," an official of the company explained.

Promising potential

The private operators see a lot of potential in this sector, which so far had been monopolised by the State-owned Container Corporation of India.

India's container traffic is estimated at 4.4 million TEUs , out of which about 30 to 35 per cent is moved by rail.

"The cost of transportation by rail is Rs 600 per tonne, as compared to Rs 2,000 per tonne by road. If the private operators can get even a small slice of this road traffic, all the players in this sector will have adequate business," an analyst points out.

Analysts feel that with the entry of new players, the freight rates charged by Concor may come down, especially as the new players have been given a free hand to decide on their tariffs.

Concor at present charges an average freight rate of Rs 17,000 per TEU.

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