LONG TERM TARIFF CONTRACTS ; AGREEMENTS
Minister for Railways inaugurates key freight sector initiatives of Indian Railways.
Indian Railways Freight and Passenger Business Action Plan -2017-18 was launched today
Minister of Railways Shri Suresh Prabhakar Prabhu inaugurated following key freight sector initiatives today i.e. 02-03-17 at National Rail Museum, New Delhi:-
1. Policy of ‘Long Term Contracts’ with major customers.
2. Indian Railways Freight and Passenger Business Action Plan -2017-18.
3. Confirmation trial of Double stack Dwarf Container Train under wire- a New Delivery Model.
4. The demonstration run of Ro-Ro (Roll on – Roll off) service across the National Capital Region- A Pilot project of Indian railways for ‘ Green Transportation’ – to reduce road congestion and improve environment.
Chairman, Railway Board, Shri A. K. Mital, Member Traffic Railway Board Shri Mohd. Jamshed, other Railway Board Members, General Manager, Northern Railway Shri R. K. Kulshreshta and senior officials were also present on the occasion.
Speaking on the occasion, Minister of Railways Shri Suresh Prabhakar Prabhu said that over the years, Railways share in country’s total traffic has reduced substantially. Railways earns its two third revenue from freight only and primarily from the transportation of eight commodities. In the wake of Global slowdown, transportation sector is the biggest sufferer. It has affected Railway’s freight earnings. However despite these challenges, Indian Railways has done well to improve its freight loading. During the last two years, Ministry of Railways has been constantly changing its freight policies and rationalizing them in consultation with all stakeholders with a view to attract more freight towards Railways. For these changes, Indian Railways has adopted market oriented approach to make traffic policies. These landmark reforms in freight policy are in line with the budget announcements. Shri Prabhu called upon the stakeholders to respond to these changes and honor their commitments. He said that with the improvement in freight loading, everybody will be a winner, be it Railways, be it consumer or be it the whole ecosystem. He said that Railway is working in line with the Prime Minister’s broader development agenda. He said that the concept of Double Stack Dwarf Container train is also a good idea as it will save time and will be cost effective. Similarly, the concept of RO-RO services is also very useful from pollution point of view, public health point of view and for speedy transportation. He said that Ministry of Railways is addressing its transportation policy in a holistic manner. The Minister said that off late the Railway Ministry has taken various initiatives in the field of Non Fare revenue and in saving fuel cost. We have fixed up a target of savings Rs 41,000 Cr in next 10 years on energy front. Railways have taken massive plan of expansion & capacity augmentation, Shri Suresh Prabhu added.
Chairman, Railway Board, Shri A.K.Mital said that it is a big challenge to bring more traffic share to Railways. All stakeholders need to work together to achieve this objective. Member Traffic, Shri Mohd. Jamshed gave brief outlines of the Indian Railway’s Business Plan 2017-18.
On this occasion, Centre for Transportation Research and Management (CTRAM) organised an Eighteenth National Rail Transport Seminar with the theme : ‘Transforming IR’s Freight Services: Initiatives launched and the Road Ahead’ and the inauguration of ‘Key Freight Sector Initiatives’. The seminar consisted of two technical sessions. First technical session was chaired by Shri Ambrish Gupta, AM(Traffic), Railway Board and the speakers were Shri S.N.Prasad, Director Marketing, Coal India Ltd., Shri Raman, Director Technical, SAIL, Shri Shivaji,Executive Director, Sales & Distribution, Indian Oil Corporation Ltd, Shri Raghu Dayal, former Managing Director, Concor & presently in AITD. Second Technical session was chaired by Shri Sanjiv Garg, AM(Catering & Tourism), Railway Board and the speakers were Shri Kaliprasad, Chairman, Railway Co-ordination Committee, Dr P.S.Gahlaut, Managing Director, Indian Potash Limited, Shri Anil Gupta, Former Managing Director, Concor and Shri Sarbojit Pal, Consultant, TERI.Vote of thanks was proposed by Shri R.K.Tandon, Executive Director, CTRAM.
Salient Features of Key Freight Sector Initiatives
ROLL-ON ROLL-OFF (RO-RO)
- In the Railway Budget for 2016-17, Minister of Railways has announced that an Action Plan will be developed and implemented to expand the freight basket through either Containerization or new delivery models.
- ‘Roll-on-Roll-off’ is one such New Delivery Model which can provide multimodal transport mix.
- RORO services were started on KONKAN Railway and then proliferated to ECR and NFR successfully last year.
- The pilot project for Green Transportation across National Capital Region is the next such service being introduced on Indian Railways today.
- The pilot project across National Capital Region is the next such service being introduced on Indian Railways.
- There are 127 entry/exit points for NCR region. 9 major entry/exit points criss-crossing the region account for 75% of the commercial light and heavy duty trucks.
- Everyday around 66,000 trucks enter Delhi. Out of these around 38% i.e. 25000 in number are heavy trucks, of which around 60% i.e. 15000 in number are not destined for the Capital
- According to a study, conducted by Centre for Science and Environment, commercial vehicles entering Delhi spew close to 30% of the total particulate load and 22% of Nitrogen oxide load from the transport sector.
- This model would provide movement of trucks in day time also which was restricted earlier from 7 o clock in the morning to 11 o clock in the night.
- Queues at the entry points will get reduced and saving considerable amount of time besides providing adequate rest to truck drivers during Ro-Ro run.
- This model would substantially reduce the air pollution across NCR, which causes severe health hazards
- RORO services can provide an option to these heavy and light commercial vehicles to bypass Delhi.
- RORO envisions to decongest Delhi by loading these commercial vehicles onto railway flat wagons at railway terminals/PFTs outside Delhi and unload them after carrying them across the city.
Benefit to truck operators:
- Saving in 8-10 hours of transit time is expected as no commercial vehicles permitted inside NCR during day time.
- Saving of environment compensation charge (ECC) – around Rs. 1400-2600.
- Saving of toll tax to enter Delhi- around Rs 500 – 900.
- Saving of fuel & Reduction in turn round time
- Railway freight for such movement would be more economical than the cost incurred by road.
Benefit to Community
- Reduction in air and noise pollution
- Reduction in congestion on roads of Delhi
- Reduction in road accidents.
- Reduction in carbon footprint of transportation-Railways has least footprint of all modes.
Benefit to Railways
- Additional traffic
- A new model envisaging compatibility with road movement and Indian Railway’s participation in national efforts to reduce pollution in major metropolitan areas through Green Transportation.
- Indian Railway will also be earning Certified Carbon Credit with every run.
The first pilot project on NCR from Garhi Harsaru to Murad Nagar is being flagged off from Patel Nagar on 2nd March, 2017.
LONG TERM TARIFF CONTRACTS/AGREEMENTS
In compliance of announcement made by Minister of Railways in the Railway Budget 2016-17, it has been decided to launch the policy of Long Term Tariff Agreements/ Contracts with Railway’s key freight customers using pre-determined price escalation principle.
- Long term Gross Freight Revenue (corresponding to Minimum Guaranteed Quantity) commitments from customers at pre-determined price escalation principle.
- Grant of incremental Gross Freight Revenue (GFR) linked and absolute GFR (corresponding to gross volumes) linked discount to customers
♦The main features of the policy are :
- · Minimum Guaranteed Volume linked discounts on the basis of incremental growth in Gross Freight Revenue in return for commitment to provide Minimum Guaranteed Quantity of traffic.
° Discounts range from 1.5% to 35% as per the incremental growth in GFR.
° Customers are required to offer at least one million tonne traffic per annum.
° Minimum period of agreement shall not be less than three years and at stretch not more than 5 years.
° New customer will have to offer more than 3 million tonne traffic during the agreement period and one million traffic in the first year itself.
- In case of customers already offering more than 5 million tonnes of traffic discount would be granted on the basis of absolute GFR corresponding to the total volume of traffic offered by the company during the previous 12 months subject to the same GFR being maintained over the period of the agreement.
° The discounts range from 0.5% to 5% according to the volume of traffic.
° The customers already offering more than five million tonne of traffic can avail both discounts also subject to fulfillment of conditions.
- Excluded commodities: All commodities below Class-100, Coal & Coke, Military traffic and RMC.
- Under the pre-determined price escalation principle, any increase or decrease in freight rates will be implemented from the beginning of the next year of the agreement only.
- Discount in freight under this scheme will be given as refund within 45 days.
- Agreement will be signed at Zonal Railway level.
- In case of multi zone operations of a customer, the agreement will be signed with that Zonal Railway which deals with maximum traffic of that customer.
- Customer can opt for single zone or multi zone agreements or both.
- Key customers such as cement, fertilizers, steel industries etc.
- Stability and Certainty of long term tariff/freight rates to the customers
- Assured supply of wagons/rakes to the customers through preferential traffic order (PTO).
- Incremental guaranteed volume of traffic and GFR to Railways.
TRIAL RUN OF DOUBLE STACK DWARF CONTAINERS
♦ In the Railway Budget for 2016-17, Minister of Railways has announced that an Action Plan will be developed and implemented to expand the freight basket and recapture the traffic through either Containerization or New Delivery Models.
♦ Double Stack Dwarf Container Train is one such Innovative Delivery Model.
♦ Double Stack Dwarf Containers are designed with 6 feet 4 inches height to run under wire for maximum throughput with increased loadability.
♦ The overhead electric equipment in electrified territories on the Indian Railways acts as infringements to proliferation of ISO double stack containers (with conventional height of 8.5 ft and 9.5 ft.) on electrified section. All important routes are electrified.
♦ A single stack ISO 40 feet container has loadability of around 32 tonnes which can be increased to around 54 tonnes in Double Stack Dwarf Containers on electrified sections. Hence, the load-ability per BLC wagon can be increased by more than 55% by using this delivery model.
♦ In a BLC rake, 90 TEUs of conventional containers can be transported under wire while through dwarf containers, 180 TEUs can be transported in a BLC rake.
♦ The concept has been received with excitement by various groups of customers transporting commodities with low- weight- volume ratio.
♦ A preliminary trial run of Double Stack Dwarf Containers was undertaken in Jan 2017. After ensuring removal of Infrastructure constraints, a confirmatory trial run is being launched today, i.e. on 2nd March, 2017 by Minister of Railways between Ambala and Jamnagar (with run from Ambala to Ludhiana under wire) after which commercial runs will be started.
♦ The load-ability per BLC wagon under wire would increase by more than 55% thereby increasing throughput.
♦ Per unit cost of transportation would come down. Beneficial to commodities with low weight- volume ratio.
♦ The model envisages procurement of BLC rakes and development of Dwarf Containers by Container Train Operators and other stakeholders.
♦ Indian Railways is likely to regain lost modal share and capture new traffic in domestic segment like Petchem products such as Low Density/High Density Polyethylene, Plastic granules, white goods, PVC and Polyester fabric etc.
♦ Likely to attract additional traffic of around 3 Million tonnes in the initial year.
INDIAN RAILWAY’s BUSINESS PLAN 2017-18
♦ Subsequent to Railway Budget 2016-17- Several initiatives were launched in Passenger, Freight and Non-fare Business segments over the last one year after several rounds of interaction with stakeholders.
♦ The Business Plan 2017-18 is a continuation of our sustained efforts to make the journeys of our passengers more pleasurable and to make Indian Railway’s Freight Business more responsive to the needs of our customers.
♦ This Business Plan details 50 actionable initiatives covering the core business segments of Indian Railway’s Passenger and Freight Sectors as well as new avenues in Parcel and Non-fare business, that Indian Railways shall be focused on, in 2017-18.
Salient Features of Business Plan 2017-18
♦ Upgrading the Delivery System by initiatives like revamp of railway goodsheds through partnerships with stakeholders (Pilot for 10 goodsheds followed by policy for scaling up), New Delivery Models like Ro-Ro, Dwarf Containers (Being launched today), Road-Railers (Between Palwal and Melpakkam), new terminals (100 by end of 2017-18) .
♦ Better freight services and rationalized tariffs to expand the freight basket(more commodities like Bulk Cement, Steel Products etc. to be taken out of restricted list for Containerization), long term contracts with Freight Customers, End-to-End solutions (through partnerships at 10 goodsheds), Rationalization of weighment policy, Timetabled trains with premium on assured transit time (50 paths to be carved out in 2017-18) and procurement of specialized rolling stock for sectors like automobiles etc.
♦ Operational strategies to enhance throughput like procurement of 3000 25T BOXNS wagons in 2017-18, leverage IT and to improve asset utilization.
♦ International Freight Services under which a demo train run between Bangladesh and India and a meeting of CEOs of railways of concerned countries to boost intermodal regional connectivity is planned in 2017-18
♦ Transformation of ticketing by migrating towards cashless, paperless ticketing (6000 PoS machines and 1000 Ticket Vending Machines in 2017-18), Aadhaar -based ticketing and an integrated ticketing App by May 2017.
♦ Providing comfort and a pleasurable journey experience through induction of new LHB Rakes(about 2300 coaches in 2017-18), adding comfort features to coaches, improvement in Catering and converting 25 stations to Digipay mode in 2017-18 by digitizing entire station transactions.
♦ Fulfilling travel needs by scaling up the new train products like Humsafar (7 new services by 2017), Antyodaya (7 new services by June 2017), Tejas (3 new services by June 2017) etc., Meeting demands surges through adequate special trains and coaches, A new policy for rail tourism including development of Hill Railways through partnerships besides several new Tourist Friendly Packages.
New Business Avenues
♦ Enhancing Parcel Business through New partnership with the Postal Department to provide End-to-End solution in Parcel Traffic (further proliferation beyond the 3rd train inaugurated on 27th Feb), and leveraging IT to provide efficient Booking, Handling and Tracking including Rolling out of PLUTO- The new Parcel Tracking App, New Courier Service between Delhi and Chennai etc., Rolling out of Parcel Management Systems to leverage IT and provide efficient Parcel Booking, Handling and Tracking etc.
♦ Augmenting Non-fare revenues by monetization of Railways’ hard and soft assets through proliferation of Rail Display Network (RDN) at 408 A-1 and A class stations in 2017-18, New policy on Out-of-Home advertising to generate Rs 6000 Crores in 10 years, About 2000 new ATMs, Train advertising, Content-on-demand and Rail Radio besides monetized apps for complaints/feedback and Cab Booking.
The initiatives enlisted in Business Plan 2017-18 carry specific targets and timelines. These will form the roadmap for the transformative journey of Indian Railway towards its vision of becoming an ‘engine of growth’ for the Indian Economy.