Railways offers sharp discounts on freight rates in ‘empty flow direction’

Consumers opting to move freight in empty flow directions (where the Railways does not get cargo to move) will get sharp discounts from Thursday.

With an eye on grabbing more traffic from the road sector, the Railway Ministry will now levy a tariff that will be one of the lowest for such routes. The tariffs to be extended will be “below the breakeven base rate of 100”, according to Railway Ministry officials. These rates are usually offered with a social perspective for light-weight products, such as bamboo and timber.

The Railways, through this scheme, also hopes to capture cement, foodgrains, fertiliser, iron and steel and white goods cargo, official sources told BusinessLine . Cargo that can be used include covered, open and flat wagons. Almost 50 per cent of Railway rake capacity is unused as it moves empty after carrying cargo back from its destination, or due to lack of cargo.

However, there are some riders to the scheme. Goods have to be booked for at least 200 km. Commodities excluded from the scheme include coal, coke, and petroleum products.

“We have analysed the data of cargo flow between various divisions to arrive at this scheme. So, there are specific routes, where some of the cargo already moving in the empty flow direction are excluded, as mentioned in the circular,” said an official.

Called the automatic empty flow freight rebate, the scheme will be in place till March 31, 2016 and will be reviewed in January.

“We are using the marginal costing principle to arrive at this tariff,” said the source, adding that the proposal got a push from Railway Minister Suresh Prabhu, who has a finance background.

The Railways had run a pilot of this scheme in North Frontier and Southern Railways. In the North Frontier Railways, an additional 15-17 rakes were loaded a month, while in the Southern zone, an additional two rakes were booked a month.

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