Railways open door to private shippers

Concor monopoly comes to an end.

The government today took the wraps off a policy that will allow private companies in container transportation by rail, bringing to an end Container Corporation of India's (Concor) long-held monopoly in the business.

All companies, including Concor, will now have to pay a one time registration fee of Rs 50 crore to ply on all routes and Rs 10 crore if they want to run on a specific route, Railway Minister Lalu Prasad said in a Press conference today.

"With container traffic expected to double over the next five years, there is scope for more than one player. Thus, in accordance with our Budget announcement, we have decided to permit private companies to run container trains for export, import and domestic traffic," Prasad said.

Prasad added that the scheme was open to all Indian companies or joint ventures with a minimum annual turnover of Rs 100 crore. The validity of permission will be for 20 years which may be extended by another 10 years, if the operator performs well.

Several companies including Reliance Industries Ltd, Maersk Lines, P&O, Gateway Distriparks Ltd, Central Warehousing Corporation, Rajeev Chandrasekhar's Hindustan Infrastructure and Adani Ports have evinced interest in the business. Around 40 companies had participated in the preliminary discussions when the container policy was being framed.

However, some experts said there would be no immediate rush into the sector. "The entry barriers for new entrants will be huge. Concor is an established player and has built up a large infrastructure over several years," Professor G Raghuraman of Indian Institute of Management, Ahmedabad, said.

Senior railway ministry officials told Business Standard that the new policy was unlikely to impact Concor's revenues. The Concor stock rose 3.2 per cent on the Bombay Stock Exchange today to close at Rs 1,471.80.

The container policy has divided the rail routes into four categories: JNPT/Mumbai Port to the National Capital Region; JNPT/Mumbai Port to the hinterland other than NCR; Pipava, Mundra, Chennai, Visakhapatnam, Kochi to the hinterland; and Kandla, New Mangalore, Tuticorin, Kolkata, Paradip and Mormugao to the hinterland.

According to the policy, the rakes will be allocated on a first-come first-serve basis and the operators can run any number of trains.

The policy says that there will be no revenue-sharing and the companies will have to pay haulage rates specified by the railways that will apply to all companies.

The operator will be able to charge his customers for rail haulage, terminal handling and ground rent on market rates.

A company that already has a contract to ply container trains will be allowed to exit the market or transfer its permission to another operator provided the latter fulfils the criterion laid down by the company.

Applicants seeking permission to run container trains will be required to have an access to rail linked internal container depot (ICD). Else, they will have to give an assurance of constructing their own rail linked ICD within three years.

Companies will also be required to procure their own rolling stock. The Railways may consider allowing use of surplus railway land for construction of ICD and multi-modal logistic parks.

The ministry will call for applications for a month every year. For this year, the applications are expected to be called for this month only.

The frontrunners

Reliance India Ltd

Maersk Lines

J M Baxi group

P&O

Gateway Distriparks Ltd

Central Warehouse Corporation

Adani Ports

Hindustan Infrastructure