Railway Ministry launches new initiatives for Freight Movement

Posted by Daily Shipping Times on 17-07-2017        Tweet

NEW DELHI: Minister of Railways Shri Suresh Prabhakar Prabhu inaugurated some of the new Freight Initiatives like :- Long Term Tariff Contracts (LTTC) along with New Tariff Policy for running of double stack dwarf container

Long Term Tariff Contracts (LTTC)

Minister of Railways in Budget speech 2016-17 announced that IR shall enter into Long Term Tariff Contracts (LTTC) with key-customers using Pre-determined Price escalation Principle, to develop a long term commitment.

The LTTC was finalised after a process of structured dialogue, “SAMVAD”, with key customers.

Under LTTC, IR shall be assured of Long Term Freight Revenue commitment from customers at pre-determined price escalation principle as the customer shall commit Minimum Guaranteed Gross Freight Revenue (MGGFR) for each year of the contract period at a minimum of 5% increase over previous year.

 Customers shall stand to benefit from freight rebates. Freight Rebate is linked with incremental growth in Gross Freight Revenue and as well as absolute volume of traffic.

Rebate ranges from 1.5% to 35% based on incremental growth in revenue and 0.5% to 5% on the total volume of traffic.

Contract under LTTC will be for min 3 years and max 5 years period.

Eligibility:

The Existing Customer who offered minimum 1 million tonne of traffic in previous year (previous 12 months) is eligible for LTTC.

The New customer has to make commitment to offer at least 3 million tonnes of traffic during the agreement period; and at least 1 million tonne in first year itself.

Agreement will be signed by the Zonal Railway with customer/s. In case

Of traffic from multiple terminals, agreement can be signed with the Zonal Railway having maximum share of traffic (in the total traffic).

Three LTTC agreements are being signed:

•             Tata Iron & Steel Company (TISCO) with South Eastern Railway

•             India Cement with South Central Railway

•             Ultratech Cement with South Central Railway

Around 10 proposals are in pipeline on different Zonal Railways and it is expected that these will be finalised in next 2 to 3 months.

New Tariff Policy for running of double stack dwarf container Minister of Railways, in Railway Budget 2016-17, announced the introduction of new delivery model and expansion of freight basket with the aim to achieve competitive edge over road traffic.

In compliance of the same, the freight basket for container traffic was expanded and around 45 commodities have been de-notified from the notified list and included in FAK rates, which are 30% lower than the notified tariff rates

•             The commodities which have been de-notified and are likely to be attracted to container traffic include: Bricks and Stones, Sanitary Wares, Stone Pillars, Polished Granite slabs,  White Cement, Asbestos, Cement Blocks, Cement Plasters, Fly Ash, Chemical Manures, Clay and Sand, Flours and Pulses, Iron and Steel, Cable Wires, Fish Plates, Ingots, Pipes All Types, Wheels, Iron & Steel Pipe Cuttings, All types of metal and steels scrap, Salt, Soap, Sugar and many more.

•             In addition, over 50 other commodities are being added to railways freight basket.

•             Double Stack Dwarf Containers are designed with 6 feet 4 inches height to run under wire on electrified routes.

•             DSDC shall, therefore, run on routes where only single stack of ISO container could run.

•             Huge potential for DSDC as it can be run under wire all over the Indian Railways

•             A trial run of double stack dwarf container was launched in the presence of Hon’ble MR and was conducted successfully on 2nd March 2017 on Jamnagar-Ludhiana route.

•             Jamnagar-Vapi section has also been identified for running of DSDC.

•             Today, new tariff policy for Double Stack Dwarf Container trains is being issued.

•             A DSDC can carry 50 tonnes as against 26.50 tonnes in a single stack conventional container; i.e. an increase of 89%.

•             At normal haulage rate, DSDC can generate more than 50% revenue as against single stack conventional container.

•             This is a unique case where even after granting a rebate of over 15%, the profitability of both IR and the customer shall increase by 25% each. Hence the new Freight structure for DSDC.

•             The new concessional freight structure will bring down the overall logistics cost in the Country significantly.