Saturday, October 15, 2011

Indian Rail Freight Costs Jump 15% in Ten Month Cargo 'Busy Season'

Shippers Burdened with Costs for Fear of a Passenger Backlash
Shipping News Feature

INDIA – To the foreign observer it sometimes appears that officials in sub continent decide rail freight tariffs by the turn of a card or the roll of a dice. From today Indian Railways will impose an across the board ‘Busy Season’ surcharge of 10% which will only exclude container borne cargo and automotive products shipped in certain types of rail wagons. The charge is in addition to a rise in the ‘Development Surcharge’ first introduced in 2007 at 2% to replace a ‘safety surcharge’ and which will now jump to 5%.

It seems the rises are part of a ‘Dynamic Pricing’ policy, often referred to using more colourful adjectives by the country’s ore producers who bear the brunt of the surcharges. Objectors point out that the bulk of railway profits come from the freight sector whilst passengers are subsidised. They too have official ‘busy periods’ in the case of passengers a three month stretch from April to July followed by a further four months from September but no surcharges are imposed on this sector.

The off peak season for cargo however is just two Summer months yet Indian Rail officials insist, in line with budget regulations, the extra 15% in surcharges does not represent a freight rate increase and point out they have not passed on increased fuel costs! Shippers also must beware transgressing by misdeclaring consignment details or overloading wagone for fear of even stiffer financial penalties in the form of further surcharges.

Indian Railways reasoning seems to be that they must raise more revenue, particularly if they are to drag the system screaming into the 21st century but that passengers simply will not accept higher ticket prices. The freight customers upon whom they rely, and who have no real alternative practical means of transport in many cases, are therefore once again the soft target when it comes to raising revenue.

Photo: OK, maybe you can see their point about passenger fare increases.