The state-owned Container Corporation of India Ltd (Concor) has reduced its tariffs by about 35 percent for the transport of import containers disembarking at the ports of Visakhapatnam, Haldia and Kolkata to Nepal. This follows the entry of private operators into the segment.
The move, in addition to triggering an industry rate war among container train operators, will impact Concor’s bottom line by up to 120 crore per year, people with knowledge of the matter said.
The tariff cut by Concor follows a June amendment to the rail services agreement signed between India and Nepal, which also allowed “freight train operators licensed by Indian railways or Private rail cars approved by Indian Railways under any rail operator or rail car investment program between the two nations.
The previous agreement of 2004, only authorized trains operated by Indian Railways or Concor to run in the area. After the privatization of the container train operation sector by the government in 2006, private companies that obtained licenses to operate trains applied for an amendment to the RSA, in order to obtain authorization to operate at destination. and from Nepal.
The amendment was approved on June 28 of this year. On average, 5,000 to 6,000 containers move between the two counties each month.
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In addition to running trains to Nepal, Concor also operated a large Inland Container Depot (ICD) at Birgunj, the only dry port connected to rail in Nepal. The Birgunj DCI is Nepal’s main customs facility for processing imports from third countries and is also seen as the lifeline for the landlocked nation’s commerce and industry.
The ICD Birgunj contract ended last year, and the new operation and management contract was awarded by the Nepalese government in a tender to a small Indian rival, who also holds a license to operate container trains. The new O&M contract is for five years, which can be extended for five years.
This gave the new ICD operation and management subcontractor Birgunj a distinct advantage in managing both the ICD and the container trains.
“As a result, the industry expected Concor to lower prices and start a price war between carriers,” an industry source said.
On September 15, Concor revised rail freight rates for the movement of third-country import containers from India to Nepal and empty containers on the return trip, reducing rates by around 35%.