“The bulk sector is already better penetrated on rail, whereas there is more scope for deeper rail penetration in the container space. The growth in markets is being driven by the manufacturing sector, which again requires containerized movements,” shares Manish Puri, President, ACTO
How has been the business for private container train operators last year and through first half of this year?
The business has been healthy with some pick up in volumes on the import front for EXIM cargo and some increase in domestic business as well.
Sections of the Dedicated Freight Corridors are now operational. What efficiencies are the train operators experiencing?
The main benefit so far is in terms of transit times and rake turnarounds – while this has helped improve asset productivity, much needs to be done in terms of better coordination between DFC and existing IR networks, as there are still delays at the interchange points where trains move from one network to the other. Also, issues like delays on DFC network when trains are held up for maintenance related issues need to be resolved.
The Indian government is developing all the three modes – road, waterways and rail for connecting with Nepal and Bangladesh. What is the potential for cross border cargo movement through rail? What are the concerns that need to be addressed?
There is a strong potential for cross border movements. Nepal-Birgung is already open for all private rail operators, but there are some limitations for which operators can move to Bangladesh. Just as is permitted for Nepal, the Bangladesh market also needs to be opened to all CTOs. This is in fact a requirement of the MCA document that binds IR with the CTOs.
More of automotive manufacturers are opting for rail freight as a time and cost effective mode of logistics as compared to road. Which are the other commodities that can be diverted to rail?
Conventionally bulk commodities like coal, minerals, food grain, fertilizer etc. have moved on rail. The second set of commodities that are also moving already on rail but need to increase their footprint include higher value goods like steel, cement, specialized liquid chemical etc. Finally, the commodity basket emerging from manufactured goods is what needs to be attracted to rail. Only 2-3% of these goods move on rail today, and for the overall rail modal share to increase to 40-45% as is the target of the Government of India, the share of these manufactured goods moving either in containers or in special wagons designed for such commodities, must increase to at least 20-25% from the current level.
Shipping lines are operating block trains as part of their service integration process. How is this impacting the competitive landscape for container train operators?
Shipping lines are customers for CTOs as most of them do not operate their own rail services, but in fact use CTOs to run such block trains. While the operation of block trains does increase the collective bargaining power of lines and may impact CTO margins, it also provides committed volumes and fill factor to CTO trains so some form of trade-off is available in the process.
Where do you see more potential for volume growth in future – bulk cargo movement or containerised cargo? While the physical volumes of cargo will increase both in bulk and containerized cargo, the real growth potential is likely to come from the containerized sector. There are multiple reasons for this. First, the bulk sector is already better penetrated on rail, whereas there is more scope for deeper rail penetration in the container space. Second, the growth in markets is being driven by the manufacturing sector, and since the manufacturing sector requires containerized movements, there is likely to be more growth in this sector accordingly.
