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Rlys move to wean road cargo

Hema Ramakrishnan

THE Railway Ministry has introduced some major changes in the norms on station-to-station (STS) rates to wean away core-commodity traffic from roadways. The steps are considered important in view of the current economic slowdown impacting the railways' f reight movement.

The rail movement of petro-products, cement, iron and steel and a couple of other commodities will become cheaper under the new arrangement, which allows General Managers (GMs) to offer concessional rail tariffs such that these are more competitve than t he road rates. Coal, washed coal and lignite have, however, been excluded from the list of commodities qualifying for STS rates in view of the revenue implications.

The norms finalised recently make a distinction between STS rates to be quoted for new traffic and on incremental traffic, although in both the cases the underlying principle is to generate extra revenue.

New traffic implies traffic offered by a new party or by an existing party moving a new product by rail. Such traffic would be categorised as new for a period of three years from the start of its movement. The STS rate will be applicable for the entire t raffic offered by the new party or for the entire traffic in the new product offered by an existing party.

For existing rail customers, the STS rate would apply only on incremental traffic offered by them on rail. This is a major departure from the earlier system where STS rates applied to the entire traffic hauled, with a rider that the consignor would guara ntee a certain minimum volume.

A freight concession of up to 10 per cent can be offered on commodities such as iron ore, dolomite, gypsum and limestone -- having a classification from Class 105 up to Class 140. Cement and pig iron, categorised as Class 140 up to Class 180, will q ualify for a higher concession -- up to 15 per cent.

The major beneficiaries would be consignors moving petro-products and iron and steel -- Class above 180 -- as GMs have been empowered to offer a rebate of up to 20 per cent. The Railways is, in fact, keen on retaining at least the existing POL traff ic, given the fact that such traffic would eventually move on the extensive pipeline network being built in the country.

GMs have been given the flexibility to grant graded freight concessions linked to specific quantity slabs offered under the STS rate facility.

For instance, on commodities offered by new consignors qualifying for a concession up to 10 per cent, a rebate of, say, six per cent can be granted in the first slab -- that is, on quantities up to 25 per cent of the committed quantity. The re bate could be progressively higher on other slabs.

According to Railway Board officials, although the Railways has targetted a freight movement of 500 million tonnes during this fiscal to mop up an estimated Rs 25,235 crore, no specific targets have been set either for the STS or volume discount schemes on the extra revenues to be generated.

The slab system will operate on a monthly basis and the target fixed should be converted to a monthly target in terms of rakes. The STS rates cannot be quoted for a period less than three months or exceeding 12 months.

The new norms also stipulate that STS rates shall be quoted against written commitment by the existing consignor to offer additional traffic. New consignors would be required to give a similar undertaking of offering an appreciable level of traffic. GMs have also been asked to undertake a quarterly review of the rebates offered in order to ensure its financial viability.