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Rlys must steel for piecemeal cargo

Santanu Sanyal

REPORTS have it that the Member (Traffic) of the Railway Board has constituted a task force to examine steps to boost transportation of, among other items, finished steel by the Railways, preferably by enticing a portion of the steel traffic now being mo ved by the road sector.

The Railway Board's anxiety is understandable. In 2000-01, the total production of finished steel in the country, both by integrated steel plants (SAIL, Tata Steel, IISCO and RINL) and the secondary producers (those not using iron as the input), was arou nd 29 million tonnes and the consumption a little over 26 million tonnes. However, only 11.5 million tonnes (including pig iron) were moved by the Railways during the year against 12.39 million tonnes in 1999-2000.

True, the figures are not strictly comparable. The Railways concentrates only on the main producers and the originating loading figure of the Railways, therefore, includes the loading of intermediaries (slabs/ingots), inter-plant transfer, finished steel and pig iron of these producers. The secondary producers, on the other hand, have remained virtually untouched by the Railways. Also, pig iron is an important component of the Railway despatches but the finished steel figure does not include pig iron.

Nevertheless, the Railways now realises that over the years it has perhaps not paid enough attention to the steel sector which provides the backbone to its traffic. After all, transportation of one million tonnes of finished steel yields over Rs 100 cror e of revenue to the Railways. Together with the transportation of raw materials for the production of hot metals, the steel sector accounts for nearly 15 per cent of the total traffic of the Railways.

Steel traffic has a very high lead (1,000 km, next only to foodgrains) and also its class is high, thus attracting high average freight (230 at one point, subsequently brought down, next only to petroleum products).

The Railway Board's anxiety is all the more because road despatches of finished products by steel plants are on the rise. Thus, in 2000-01, Bhilai, Rourkela and Bokaro together increased road despatches from 14.3 per cent in 1999-2000 to 15.6 per cent, R INL from 39.7 per cent to 42.8 per cent and Tata Steel from 44.7 per cent to 48.4 per cent.

There are several reasons why this has happened. First, the Railways' total concentration on integrated steel plants. Traditionally, the products of steel plants were designed to fit into railway wagons. The shearing line was fixed less than 13 m and the railways wagons too were manufactured to suit the requirements of products of the integrated steel plants. Every steel plant set up till 1990 has an extensive rail transportation system within its complex, with links to respective zonal railways for uni formity in handling.

Such total dependence on integrated steel plants subsequently proved costly for the Railways, particularly with the abolition of the freight equalisation scheme and the advent of the general economic liberalisation. The freight equalisation scheme had ma de the Railways an automatic choice for the steel plants. With the dismantling of the scheme, as the transportation cost came to be factored into the delivery cost, the choice ceased to become automatic and, consequently, the Railways lost its position o f strength. Precisely for the same reason, the transportation of steel to stockyards became costly and sale through them unattractive.

As the figures above show, even integrated steel plants are now opting for road movement, wherever feasible, as a means to cut delivery cost. Unfortunately, it took long for the Railways to realise the full import of this development and gear its machine ry accordingly.

Second, liberalisation brought in its wake several other developments such as removal of licensing restrictions (1991), removal of pricing and distribution control (1992), thrust on export of iron and steel (1993), discontinuation of the Steel Developmen t Fund (1994) and international price reimbursement scheme (1995).

The implications of these changes were far-reaching in respect of rail transport of finished steel. Customers began insisting on products made to specific requirements, on reduction in lot sizes, shorter order-to-delivery time and scheduled, reliable and timely delivery, and better services in the form of proper packaging, labelling and other services. The Railways responded to these developments slowly.

Third, the Railways has always ignored the secondary producers, comprising nearly 800 re-rollers, 15 mini-blast furnaces and three major units such as Ispat India's Dolvi plant near Mumbai (capacity three million tonnes), Essar Steel's facility near Sura t (2.4 million tonnes) and Jindal's Vijaynagar plant (1.2 million tonnes). In 2000-01, secondary steel producers accounted for over 16 million tonnes of finished steel out of the total production of 29 million tonnes. The growth in the production of fla t products, especially of HR coil, in the last five years from 3.95 million tonnes in 1995-96 to 8.6 million tonnes (mt) in 2000-01 is attributed to the increase in production by secondary producers. Yet, the Railways, for whatever reason, never tapped t his sector for traffic. The task force, it is therefore hoped, will pay attention to this sector while examining the scope to boost finished steel traffic.

It will be wrong to presume that the Railways has remained a mute spectator all these years when the economy was undergoing so many changes. Some proactive measures were taken, such as reducing the lot size, improving packaging, removing route restrictio ns, reducing the chargeable capacity of some products and rationalising train loading charging and reducing the classification (from 230 to 200). But these were not enough.

What the task force will suggest and what the Railways will do is, of course, anybody's guess. But one thing appears to be crucial: The Railways must shift its emphasis, targeting the piecemeal cargo more than ever before, particularly when the Joint Pla nt Committee is trying its best to promote the retail consumption of steel across the country. In that context, the domestic movement of steel items in containers and therefore a combination of rail and road movement hold out a big promise.