Logistics

Concor defers rate hike to October

P Manoj Mumbai | Updated on July 09, 2020 Published on July 09, 2020

Concor had picked Vishwa Samudra Coastal Lines Ltd to launch the Western coast service last year through a tender   -  Getty Images

State-run rail hauler Container Corporation of India Ltd (Concor) has deferred a planned rate hike to October, citing weak market conditions triggered by the pandemic.

The rate hike, in the range of ₹500-1,000 a container, was earlier planned to take effect from July 1.

The revised rail freight tariffs for movement of export loaded dry and reefer containers will now be implemented from October 1, a trade notice issued by the company said.

“We are looking at the situation very closely. Because of Covid, we don’t have the courage to put extra burden on exporters and importers,” a Concor official said.

Concor is India’s top rail hauler of containers and in the export-import segment, it has a 78 per cent market share. Concor earns much of its revenue from EXIM movement.

Land license fee

Concor has come under pressure to raise rates after the Ministry of Railways altered the calculation of land license fee it levies from the company for running terminals built on Railways’ land.

Till FY20, 41 of the rail hauler’s 84 inland container depots (ICDs) including its flagship facility at Tughlakabad near Delhi were running on land leased from the Railways for which it paid a land license fee of ₹1,175 per loaded twenty-foot equivalent unit (TEU).

From April 1, the annual land license fee will be calculated at the rate of 6 per cent per acre of the industrial land value where the terminal is located, according to a circular issued by the Railway Ministry.

Concor’s land license fee pay-out is estimated to jump from the FY20 level of ₹110 crore to about ₹900 crore with the revision in charges.

The extra cost will have to be recovered from the customers to maintain a 15 per cent margin, in accordance with a government policy.

 

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Published on July 09, 2020
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