The Indian Railways has rolled back the rise in haulage charges for pig and sponge iron movers. In March, it had increased the rates of notified commodities 25 per cent and brought pig and sponge iron under this list.
The rollback would be effective from July 1 to June 30, 2013. Pig iron and sponge iron have been taken off the high-rated list of notified commodities.
Now, while other high-rate commodities would be charged a 20 per cent higher rate, rates for pig iron and sponge iron have been slashed by about 50 per cent.
The rate rise in March had almost doubled the cost of moving pig iron and sponge iron via container trains, while overall charges for five other notified commodities had risen 20 per cent.
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In April, containerised domestic cargo fell by 20,000 tonnes compared to April 2012. It also fell short of the target by 70,000 tonnes.
Ramesh Chandra Dubey, president, Association of Container Train Operators, said, “The reason for this shortfall can be attributed both to the sluggish rate of economic growth, as well as the rate rise.
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Over the last two years, the number of loading points (container rail terminals) is also on a decline.” He added with the doubling of the rates of pig iron and sponge iron, triangular circuits of commodity movement was turning unviable, as the deposition cost also had to be factored in.
For instance, a lot of traffic goes to the eastern parts of India and this has very little to offer, except raw materials like pig iron/sponge iron etc. The demand and consumption pattern in the country had led to the rate rise adversely impacting container train operators.
High rated commodity groups (notified commodity groups) now include cement (except white cement), slag, iron and steel, bricks and stones (other than marble and ceramic tiles), alumina and petroleum products and gases.
In the other category, or the ‘freight all kind’ category, the rates remain the same.
After the rate rise, container train operators had restrategised movement of cargo.
For instance, Arshiya Rail diverted its rakes from streams where it moved pig iron and sponge iron and used these to meet the requirements of big manufacturing houses, with which it had long-term tie-ups. The commodities in the high rated segment offer good margins and tend to be quite helpful if these are available on return legs.
Container operators have to pay a fee to the railways for running their trains on its network. The railways charges container class rates for notified commodity groups, while other commodity groups are charged ‘freight-all-kind’ rates, with the former about 90 per cent higher.
The railways had classified a few commodity groups as notified ones because it had seen clash of traffic with container train operators that carried high rated commodities of the railways.