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Railway Minister Suresh Prabhu Inaugurates Various Freight Initiatives

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 months.

 

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. Its 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 Freight Customers.

 

SALIENT FEATURES OF VARIOUS FEATURES LAUNCHED:

Long 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 traffic.

Rebate ranges from 1.5% to 35% based on incremental growth in revenue and 0.5% to 5% on the total volume of traffic.

Contract under LTTC will be for min 3 years and max 5 years period.

Eligibility:

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.

New 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 route.

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.

 

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