In an effort to expand the freight basket and achieve
competitive edge over the road transport, the Railways has entered into long
term tariff contract with select customers using the predetermined price
escalation principle to develop a long term contract with industrial customers.
The move implemented on July 14th is part of the budget announcement
in the Lok Sabha this year.
The railways have signed an agreement with Tata steel
(South Eastern Railway) and India Cements and Ultra Cements with (South central
railway). Another ten proposals are in the pipeline with different zonal
railways and it is expected they will be implemented in the next two to three
The Railways also announced haulage charges for smaller
height, double stack containers which will be seventeen per cent lower than
that of the conventional ones. The move will allow smaller containers to be
used for commercial purposes. The new freight charges will be applicable on all
routes apart from those where the normal double stack containers are moved. The
cheaper rates will be valid till March 31st next year.
A trial run of double stack dwarf containers was conducted
on the Jamnagar Ludhiana route in March this year. The Jamnagar-Vapi section
has also been identified for running this service.
Speaking on the occasion, Railway Minister Mr Suresh Prabhu said that Indian Railways is focusing
on providing better freight facilities to the trade. It’s a win win situation
for both customers and Railways.
The Railways has reformed its Freight Policy to make it
customer friendly ensuring the growth of volumes of traffic.Double Stack
Containers is another win-win proposition for Railways and customers in Freight Sector. Indian
Railways is committed to maintain and cherish their relationship with its
SALIENT FEATURES OF VARIOUS FEATURES LAUNCHED:
Term Tariff Contracts (LTTC)
Minister of Railways in
Budget speech 2016-17 announced that IR shall enter into Long Term Tariff
Contracts (LTTC) with key-customers using Pre-determined Price escalation
Principle, to develop a long term commitment.
The LTTC was finalised after
a process of structured dialogue, “SAMVAD”, with key customers.
Under LTTC, IR shall be
assured of Long Term Freight Revenue commitment from customers at
pre-determined price escalation principle as the customer shall commit Minimum
Guaranteed Gross Freight Revenue (MGGFR) for each year of the contract period
at a minimum of 5% increase over previous year.
Customers shall stand to
benefit from freight rebates.
Freight Rebate is linked with
incremental growth in Gross Freight Revenue and as well as absolute volume of
Rebate ranges from 1.5% to
35% based on incremental growth in revenue and 0.5% to 5% on the total volume
Contract under LTTC will be
for min 3 years and max 5 years period.
The Existing Customer who
offered minimum 1 million tonne of traffic in previous year (previous 12 months)
is eligible for Long Term Tariff Contract. The New customer has to make
commitment to offer at least 3 million tons of traffic during the agreement
period; and at least 1 million tonne in first year itself. Agreement will be
signed by the Zonal Railway with customer/s. In case of traffic from multiple
terminals, agreement can be signed with the Zonal Railway having maximum share
of traffic (in the total traffic).
Today, three LTTC agreements
are being signed with: Tata Iron &
Steel Company (TISCO) with South Eastern Railway, India Cement with South
Central Railway, Ultratech Cement with South Central Railway. Around 10
proposals are in pipeline on different Zonal Railways and it is expected that
these will be finalized in next 2 to 3 months.
Tariff Policy for running of double stack dwarf container
Minister of Railways, in Railway Budget
2016-17, announced the introduction of
new delivery model and expansion of freight basket with the aim to achieve
competitive edge over road traffic.
In compliance of the same,
the freight basket for container traffic was expanded and around 45 commodities
have been de-notified from the notified list and included in FAK rates, which
are 30 per cent lower than the notified tariff rates. The commodities which
have been de-notified and are likely to be attracted to container traffic
include: Bricks and Stones, Sanitary Wares, Stone Pillars, Polished Granite
slabs, White Cement, Asbestos, Cement
Blocks, Cement Plasters, Fly Ash, Chemical Manures, Clay and Sand, Flours and
Pulses, Iron and Steel, Cable Wires, Fish Plates, Ingots, Pipes All Types,
Wheels, Iron & Steel Pipe Cuttings, All types of metal and steels scrap,
Salt, Soap, Sugar and many more. In
addition, over 50 other commodities are being added to railways freight basket.
Double Stack Dwarf Containers
are designed with 6 feet 4 inches height to run under wire on electrified
routes. DSDC shall, therefore, run on routes where only single stack of ISO
container could run. Huge potential for
DSDC as it can be run under wire all over the Indian Railways, A trial run of
double stack dwarf container was launched and was conducted successfully
on March this year on Jamnagar-Ludhiana
Jamnagar-Vapi section has
also been identified for running of DSDC. Today,
a new tariff policy for Double Stack Dwarf Container trains is being issued. A
DSDC can carry 50 tons as against 26.50 tons in a single stack conventional
container; i.e. an increase of 89 per cent. At normal haulage rate, DSDC
can generate more than 50 per cent revenue as against single stack conventional
container. This is a unique case where even after granting a rebate of
over 15 per cent, the profitability of both IR and the customer shall increase
by 25 per cent each. Hence the new Freight structure for DSDC. The new
concessional freight structure will bring down the overall logistics cost in
the country significantly. The flats are available with CTOs and Industry shall order
Dwarf Container Rakes as per requirement for running on IR.