Saturday, November 14, 2009

Indian Rail Freight Consolidators Receive Incentive Boost As Foreign Investors Watch

Discounts on Bagged Goods Rates and Groupage Intended to Increase Profitability
Shipping News Feature

INDIA – After our recent report on the investment opportunities being taken up by Western investors a major sub-continental rail freight group have moved to cut empty running time across India. Indian Railways, who as we reported last week boosted profits 16.5%, are offering discounts between 20 and 30% for bagged goods on popular commodities from fertilisers, cement, grain to urea and fly ash. These last two will receive the higher discount rate.

The state run company's policy is directly aimed at taking traffic from the country’s truckers and consists of stages when goods are carried over 500 kilometres. Higher mileages will result in even bigger rebates and there are separate incentives for freight forwarders to operate consolidation services. Up to 40% of rail wagon mileages in India are simply to reposition empty flat cars.

Tonnage for rail freight carried is rising steadily in the country, up over 7% to above 500 million tonnes in the past six months. There is a price however for this rate of expansion in a continent where sometimes life is cheap.

With serious rail accidents numbering an average of 150 a year, many Western countries will baulk at an association with the carnage and will demand more stringent health and safety policies. Six people died yesterday to add to the fourteen earlier this month and the twenty two in October. Many of these fatalities are caused by driver error or equipment failure and European and US investors will simply not tolerate this, assuming they are made aware of the shortcomings.