Monday, November 23, 2009

Rail Freight Wagon Production Picks Up As Multi Modal Industry Grows Again

Push to Rail from Road Truck Shipping means New Investment Available
Shipping News Feature

INDIA – AUSTRALIA – FRANCE – As the drive to move more freight cargoes away from distance road haulage onto the rail tracks one industry at least seems to be turning the corner at last. The manufacture of rail freight wagons requires a lot of capital investment plus extensive raw materials so the news that Vadodara, an area of India traditionally viewed as essential territory for the coordination of railfreight, due to its location with Mumbai to the South, Madhya Pradesh to the East and its proximity to Ahmedabad, is being developed, has to be good. 

Montreal based Bombardier, the worlds premier railway train builder have set up a plant at Savli (having just this week started talks with SNCF to supply French railways with $12 billion of rolling stock) and fresh from deals clinched in China and Italy. Still in the subcontinents province Jindal Rail Infrastructure Limited (JRIL) constructed a stainless steel wagon building plant at Baroda and intends to produce anywhere between 2,000 and 7,000 units per annum, moving on to manufacture diesel and electric power units for locomotives in the next stage of the project. JRIL are a wholly owned subsidiary of Jindal Saw who also have development plans in the area. The company estimates the first wagons will roll off the line in February 2011.

Projects of this type do not always manage to accomplish their targets. Indian Railways have only produced 7,000 of the 18,000 rail wagons which was their aim for this year. Design delays and substantial changes and lack of raw materials are blamed.

In Australia, AWB, the grain trading and financial group, have just ordered 90 wheat carrying rail cars, each of which holds almost 70 tonnes of dry bulk goods. This more than doubles the group’s rail carrying capacity at a stroke. They will now own four complete trains and lease a further unit and say that the investment is a sign of the confidence in the continued growth of the industry and, with a good harvest anticipated with the higher yields now available, this is an opportune time to expand in a field which is proving a success for them. The equipment should be available in the next few months and will continue to be pulled by freight haulers El Zorro.

Not everybody in the wagon building game is having quite such a good time however. Neelie Kroes, EU Competition Commissioner is making the most of her extended term of office by threatening a suit against France for its illegal subsidy support of native speciality rail car builder Arbel Fauvet Rail, now the property of IGF Industries. In April 2008 the Commission ruled that the €2 million granted to the company by local government officers were at a preferential rate which the company could not hope to obtain on the free market. The French will face sanction before the European Court of Justice just as soon as Ms Kroes can get them there.