Announcing price stability for one full year – a strategy unique to CONCOR, the logistics major has taken its customers by surprise. Kalyana Rama, CMD of this PSU further reveals plans to foray into distribution logistics, expand infrastructure and improve connectivity to neighbouring countries
Q You have announced the freeze of tariff price for one year, what is the strategy and how it is received by the trade?
It’s not a big strategy, it is basically what we have been doing for the last two and half years empowering the customer, first we brought in know your container location (KYCL), and we have implemented this across all our depots, so that the customer knows where his container is. Then we connected this with our tracking mechanism onboard and we provided continuous cargo visibility, and it is well received by the customers and running very well. From the time cargo is handed over to us either in exports or imports, we have been providing 100 per cent cargo visibility to our customers for the last one year. We have implemented this for our domestic cargo also. Further, we have also brought in 45 days by 90 days free time, taking away all the mental worries of our importers and exporters.
There is always some uncertainty among customers whether there may be some increase in charges. We want to give clarity and peace of mind to the customers and announced that there will not be any price hike till one full year. It is a unique step by CONCOR, because till now no PSU or any private limited company has so far not announced that price will not change for one full financial year. We have assured our customers that till 31st March 2020 not only freight charges even all other charges including handling, and warehouse charges will not be increased for one full year. It is very well received by the customers, and some of them are not even able to believe or digest our announcement of freeze of tariff price for one year. Our decision empowers customers, and it is nothing but a kind of ease of doing business.
Q What it is to CONCOR in terms of CONCOR perspective?
If you look at it at this pricing model there may be a pressure on our margins, but what we are seeing is we are continuously growing. We are picking up at least 10 to 12 per cent extra over previous year. In the last two years our handling has gone up, and our originating traffic has gone up around 11 per cent in the previous year, and in the last year it grew around 8 per cent. This year we will grow at least 10-12 per cent, may be because we are giving this price stability. A big player will always try to work with CONCOR. Customers across India are talking of a lot of cargo availability and they wanted to do with us including domestic and export cargo. Whatever may be the pressure on our margins, I am sure we can get out of that. If we grow more than 10-12 per cent we may increase our profits. This is our strategy.
Q You recently forayed into coastal shipping business. How is it faring?
It’s a very new business we started this on January 10, 2019. We are seeing occupancy of around 70 to 80 per cent, but backhaul we are not getting. We are not in favour of getting involved in price wars. We believe in providing quality service at a reasonable price. In coastal we are facing some competition, where in some other operators I was told that they are having some understanding and reducing their prices. But even then we are able to pick up around 70 per cent of our capacity utilisation, and we are now planning to connect east coast, once we connect this and connect Bangladesh also we can see a lot of potential. The strength of CONCOR is different from other coastal operators in that we can connect hinterland seamlessly.
Q Are you facing any issues relating to first mile and last mile connectivity?
We are not facing any issues with first mile and last mile connectivity. We are providing seamless connectivity.
Q What about return cargo issue?
We are talking to shipping lines and we are working with them, and we are also looking at some backhaul return cargo which will be available once we start moving on to east coast ports and Bangladesh. There is a lot of backhaul return cargo available in east coast. In coastal cargo we provide bulk break-bulk, and container transport, as far as rail is concerned it is limited to container transport only. We will connect the bulk, break bulk and container transport to normal railway wagons.
Q You have been talking about distribution logistics for the last two years, how will this fit into coastal shipping and do you think this will complement your existing business?
Yes, it will complement our main existing business which is container logistics with 83 terminals currently running and adding another eight to ten more this year. Our target is to achieve 100 terminals by next two to three years. We have already started coastal shipping business. Now this distribution logistics will be merged into container and coastal and will create seamless connectivity. We are creating distribution logistics centres to hold them all, maintain their inventory, manage their inventory, and distribute it. Till now we are transporting box as a whole, now we are looking inside the box, we are bringing out the cargo we have started handling the cargo.
Q What are your plans for growth of cargo in our neighbouring countries Nepal and Bangladesh? We have already connected Nepal to Visakhapatnam in addition to Kolkata. Growth of cargo from Visakhapatnam to Nepal is very good, last month we did 25 trains, this month we are targeting to touch 30 trains, and I have given an internal target of 60 trains. Further to that we are also handling bulk cargo and break-bulk cargo at Birgunj depot. We are also providing some transportation to domestic cargo from India to Nepal such as steel and other items. There is a new depot opened under Nepal- India agreement at Batna, we are also operating from there. We have already run one rail service there and now it will regularly start. We are working with other agencies including Land Port Authority of India and other interested private operators and Nepal government to start something at Batna.
To Bangladesh we ran one trial run after that there were some issues as the infrastructure is not sorted out. So we are waiting for the Bangladesh government and railways reaction to make it a regular thing. Very low value commodities are allowed and we are requesting Bangladesh Customs to allow more commodities.
Meanwhile coastal will be an alternative route. We are thinking of connecting with Krishnapatnam or Haldia Ports. Instead of taking cargo through rail, we will connect by rail to the port and from port we will reach to the country. Bangladesh rail too cannot access more than three trains a day. Rest of the cargo waiting to enter into Bangladesh can enter only through coastal shipping.
Q Do you have any plans to add more rakes?
Today we own 307 high speed rakes and around 36 vfkh rakes totalling 343 rakes. Now our programme is we will add around 270 high capacity rakes in the next four years. We have already given tender for the first time to private companies for manufacturing 60 rakes. We are giving manufacturing orders to private companies as well as to railway workshops. We are expecting the first rake will start treading out in September this year. We are expecting to add about 35 to 40 rakes this year.
Q Do you have any other initiatives or future plans?
We are looking at bulk transportation of commodities in containers, like cement in bulk in containers using flexi bag technology. If we see the consumption pattern of cement in India, out of the total consumption 80 per cent is required in bulk and 20 per cent in bags. But, today in India as bulk transportation is not available, only 10 per cent is going in bulk, while 90 per cent is transported in bags, so bagging, again consumption and debagging and a lot of pollution is happening.
Today available method is bulk cement can be done only in specialised wagons, but backhaul will always be a problem. What we are working on is to try to find a solution to do in normal containers so that in backhaul we will use containers for some other cargo and for cement we will use flexi. This method is already available in other countries, but what we are trying to find is a cost-effective solution in India. Once it is brought in it will give huge benefit to the industry. It will be useful for cement, food grains, slag, and several other types of bulk container cargo transport.
Keeping this in mind, last year we got 8,000 new containers for domestic sector. This year from April we have added 4,000 more containers. A tender for 10,000 containers we are processing. We are adding rakes and containers, and if we find a solution for bulk we will add more containers.
