Triggers rate war among container train operators on the sector

State-owned Container Corporation of India Ltd (Concor) has cut rates by some 35 percent for hauling import containers landing at Visakhapatnam, Haldia and Kolkata ports and bound for Nepal. This follows entry of private operators into the segment.

The move, aside from triggering a rate war on the sector among container train operators, will impact Concor’s bottomline by as much as ₹120 crore a year, said people with knowledge of the matter.

The rate cut by Concor followed a June amendment to the Rail Services Agreement signed between India and Nepal that also allowed “authorised cargo train operators licensed by Indian Railways or privately-owned wagons approved by Indian Railways under any train operator or wagon investment schemes” to ply between the two nations.

‘Segment opened up’

The earlier agreement of 2004, allowed only trains run by Indian Railways or Concor to operate on the sector. After the container train operation sector was privatised by the government in 2006, private firms who secured licences to operate trains, pushed for an amendment to the RSA, to secure permission to operate to and from Nepal.

The amendment was approved on June 28 this year. On average, 5,000-6,000 containers move between the two counties every month.

Besides running trains to Nepal, Concor was also operating a key inland container depot (ICD) at Birgunj, the only rail-linked dry port in Nepal. The ICD at Birgunj is Nepal’s key Customs facility for handling third country imports and is also considered the lifeline for the landlocked nation’s trade and industry.

New operator

The ICD Birgunj contract ended last year, and the new operation and management contract was awarded by the Nepal government in a tender to a smaller Indian rival, which also holds a licence to run container trains. The new O&M contract is for five years which can be extended by another five years.

This gave the new operation and management contractor of the Birgunj ICD a distinct advantage in running both the ICD and container trains.

“Hence, the industry expected Concor to lower the rates and set off a rate war among operators,” said an industry source.

On September 15, Concor revised rail freight rates for the movement of third-country import containers from India to Nepal and empty containers on the return leg, cutting rates by about 35 per cent.

Source : The Hindu Business Line