CONCOR move to avoid empty train running

Container Corporation of India Ltd is operating its trains on a triangular route of Tughlakabad-Mundra-Pipavav unlike to-and-fro earlier between Tughlakabad and the two minor ports in Gujarat to reduce its empty running and improve asset utilsation, said an Axis Capital report.

CONCOR is now operating trains from Tughlakabad to Mundra with export volumes and limiting empty running by picking up volumes by moving the same train to Pipavav to pick up import volumes back for Tughlakabad.

“North-based exporters prefer Mundra over Pipavav due to lower lead distance and relatively better facilities and services. Consequently, Mundra’s container volumes are skewed towards exports. Pipavav has higher import volumes while JNPT has relatively balanced mix,” said Ankur Periwal, AVP – logistics, Axis Capital in his report.

While tough times for container train operators like CONCOR and Gateway Distriparks Ltd unlikely to last, Periwal believes that the current volume growth is lack-lustre due to adverse macro and capacity constraints at major ports, while margin is facing pressure due to high empty running.

The recent order by Tariff Authority for Major Ports to cut terminal charges between 12-44% from port-to-port in their respective tariff has restricted the major ports to increase their throughput, resulting in lower volumes and shift towards minor ports in Gujarat.

However, Indian container volumes are expected to grow at two times cargo volumes growth in long term, as container penetration in India is low at 21% of aggregate cargo compared to 60-70% global average, Periwal said.

Over the past 15 years, India’s cargo volumes have grown at half the rate of nominal GDP CAGR of 13.1% while container cargo growth has been double the rate of cargo growth – thus equivalent to India’s nominal GDP growth. The growth in container volumes also stems from the additional capacities at JNPT and Chennai, which account for 75% of container volumes at major ports.

DP World expects to build the mini-terminal at JNPT in the next 18 months with further plans to add 4.8 million TEU capacity to take the total capacity to over 10 million TEUs in long term.

Similarly, Kattupalli terminal at Chennai with a capacity of 1.2 million TEUs is set to address the infrastructure bottlenecks at Chennai’s existing terminals. This terminal is expected to be fully operational by January-March 2014.

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