Supply constraints hit Indian railways’ induction of freight wagons



Source: FINANCIAL EXPRESS

The Indian Railways (IR) is not getting as many freight wagons as required to replace its older stock and deploy new rakes owing to supply constraints. During the last financial year, the transporter got 560 wagons per month on average compared with a demand of 2,000 rakes per month to meet the increasing requirement.

As on April 1, 2018, the order backlog with the industry was 18,000 wagons and the railways is planning to place a fresh order of 22,000 wagons. “We expect the industry to scale up production of wagon manufacturing,” said minister for railways and coal Piyush Goyal on Tuesday.

The low induction of wagons comes at a time when the railways is expecting goods transportation demand to remain high. “The power demand is not going to go down, in turn keeping the demand for coal high, which is good for the railways. Railways may be required to carry at least additional 60 mt (million tonne) of coal in the current year,” said Mohd Jamshed, member-traffic, Railway Board.

Coal contributes around 50% to the railways’ freight volume. During April and May 2018, 50% of the total freight loading of 200 mt came from coal. Overall, IR transported a record 1,162 mt of freight in 2017-18 compared with 1,109 mt the previous year. The freight loading target for 2018-19 is 1,216 mt.

However, the low induction of rakes is a challenge. “Despite being an opportune time for rail freight, the industry is unable to meet the demand,” said Jamshed. Private wagon manufacturers include Titagarh Wagons, Texmaco Rail and Engineering, Jupiter Wagons, Modern Industries, Hindustan Engineering and BESCO, among others.

Currently, the railways has a 2.5-lakh wagon fleet. A 22.9-tonne axle load wagon costs `20-21 lakh, compared with `25 lakh for a 25-tonne axle load wagon.

The demand for wagons on the manufacturers is expected to go up given that IR’s general-purpose wagon scheme has attracted interest from the likes of Ultratech, Tata Steel and Vedanta. Under the general-purpose wagon scheme, private investors can invest in wagons that will be run by IR on pre-approved specified routes. In return for investments, investors will be given rebate on freight charges.

“We have received letters for 35-40 rakes already,” said Jamshed, adding that bigger players such as Coal India will eventually also join the scheme. Though the the whole process of getting rakes and making them operational by private investors will take around a year, it will likely increase the demand for wagons and put pressure on the industry.

Source: FINANCIAL EXPRESS