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In
terms of the overall balance of trade in
containers, India exported 5.1 million TEU
while it imported 4.2 million TEU during
2014-15. Three major hinterlands in India
- the northwest, west and southern clusters
- account for 90 per cent of container volumes.
The
northwest cluster is the farthest from the
coastline and is the largest, generating
3.7 million TEU in 2014-15. It has the greatest
impact on the overall logistics cost of
container movement. It lies at an average
distance of 1,087 kilometres from the Gujarat/Jawaharlal
Nehru Port cluster.
The
Gujarat-Maharashtra port cluster comprising
Mundra, Kandla, Pipavav and Jawaharlal Nehru
Port handles 70 per cent of India's EXIM
traffic, while Chennai handles another 14
per cent. Other ports on the east coast
- Haldia, Vizag and Tuticorin - account
for the remaining container traffic. Seventy-eight
per cent of the container traffic from the
east coast ports is trans-shipped through
Colombo, Singapore and Jebel Ali.
Mundra
and Pipavav are the only ports whose primary
hinterland (cargo catchment area) lies outside
the state where they are located. Also,
a significant portion of the total traffic
from the hinterlands of the national capital
region (NCR) and Punjab is handled at Jawaharlal
Nehru Port even though they are closer to
the Gujarat port cluster.
With
respect to the modal mix for container movement
from the hinterland to the ports, roads
have an 82 per cent share while rail accounts
for 18 per cent.
The
average distance between manufacturing hinterlands
and ports in India is 700-800 kilometres
compared with 150-300 kilometres in China.
Even though India fares better than China
in the transportation cost for a comparable
distance, longer hinterland to port distance
leads to higher costs for exporting/importing
a container in India as compared to China.
Higher
rail haulage charges due to cross-subsidisation
(unlike in China) make exports/imports expensive
in India.
Due
to the freight charges on road and rail
and handling cost involved, rail in India
is currently viable for exporters-importers
only for a transportation distance beyond
1,000-1,300 kilometres .
This
makes the northwest cluster the primary
hinterland where rail becomes viable for
inland container transport. But the cost
differential between road and rail remains
minimal even beyond a distance of 1,000-1,300
kilometres . Due to this, only 38 per cent
of the total volume from this cluster moves
by rail.
Assuming
a scenario where Indian Railways charge
only the cost incurred to transport containers
without any mark-up, the viable distance
for exporters-importers to use rail reduces
to 600-700 kilometres. This implies many
routes from the north-western hinterland
to the ports will not shift from road to
rail because of the economics involved.
Rationalising
rail rates for containers can reduce the
cut-off distance for the viability of rail
from 1,000-1,300 to 400-500 kilometres.
This will enable changing the modal mix
from road to rail, especially for the northwestern
hinterland to increase trade competitiveness,
decongest roads and port gates.
For
the immediate future on whether any progress
can be made on this issue will resided for
the time being with Railway Minister Suresh
Prabhu. But one thing is clear, India must
do something to rectify its overland situation
or be left behind.
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