The Hindu Business Line : CCTL, Concor cut terminal costs — Chennai-Tughlakabad rail freight slashed

Mr Adrian S. Soff, Senior General Manger, Concor, said that the current rail freight differential between Chennai-Tughlakabad and Mumbai-Tughlakabad was Rs 7,111 per TEU, which would be now reduced by Rs 4,240.

CHENNAI, June 16

THE Chennai Container Terminal Ltd (CCTL) and Container Corporation of India (Concor) have come together and reduced some of the terminal costs in Chennai container terminal by Rs 1,690 per TEU (twenty-foot equivalent unit).

Further, Concor would reduce its rail freight between Chennai harbour and Tughlakabad ICD (inland container depot) by Rs 2,550 per TEU to Rs 19,300, and by Rs 5,400 to Rs 38,300 per FEU.

Through the reduction, the overall cost to a shipping line would reduce by Rs 4,240 to Rs 22,695, and Rs 8,255 for a FEU (forty foot equivalent unit) to Rs 43,915, Mr Ganesh Raj, CEO, CCTL, told Business Line.

The CCTL has waived Rs 1,050 per TEU and Rs 1,575 per FEU as container yard charges, while Concor has reduced its charge at the port by Rs 640 to Rs 1,196 per TEU to Rs 1,196, and Rs 1,280 to Rs 2,317 per FEU, he said.

The reduction would provide competitive rail services from North India to Chennai. ``We may lose heavily in the beginning. However, the loss would be offset with the surge in container volume between North and Chennai," he said.

At present, about 3.50 lakh TEUs move through JNPT/NSICT for/from eastern destinations including Singapore, Japan, China, Austrailia and the US West Coast. The actual number of containers moving via the east may be even larger. Even if 50 per cent of this traffic was to shift to Chennai, it represents a ready volume of 1.75 lakh TEUs per annum, with a conservative estimate of 15 per cent plus annual growth, he said.

Mr Raj said that the Delhi - Navi Mumbai rail corridor was extremely congested with freight and passenger traffic, while the Delhi-Chennai rail corridor was less congested. Further, the demurrage and detentions on the Delhi - Navi Mumbai corridor represents a hidden cost, which is not accounted for by the Railways and Concor, he said.

The shippers and shipping lines, which actually control the movement of containers and determine the ports from where the containers are cleared, have no operational problems in dealing with containers at Chennai. The problem, however, was a commercial one created due to the longer distance of Chennai as compared to Navi Mumbai from North India - Chennai-Delhi was 600 km more, he said.

Currently, there is a difference of over Rs 7,000 between a Delhi-Navi Mumbai and a Delhi-Chennai haul. This difference was primarily due to the difference in rail tariff charged by Concor for this movement. Concor said that its rating was based on the charge payable to the Indian Railway, which charges on a flat per TEU/kilometre basis. As a result, the freight for the longer haul is proportionately higher. ``This makes Chennai an uncompetitive cargo gateway compared to Mumbai,'' said Mr Raj.

The current market situation in the shipping industry is such that ocean freights from Navi Mumbai and Chennai for locations such as Singapore, Port Klang, Tanjung Pelepas, China, Japan and Korea are almost identical. On the other hand, the inland freight costs of moving cargo via Chennai are considerably higher than Mumbai, he said.

``This is just the beginning and both, (CCTL and Concor) of us plan to take up the rebate with the trade to attract more volume through Chennai. We may also tie up with some of the shipping lines,'' said Mr Raj.

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