Peanuts from a rail bridge

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Krishna Kumar K.E.
A Rs362-crore project, completed in record time, but yielding not even half of the expected revenue? That’s the story of the rail connectivity with the Vallarpadam International Container Transshipment Terminal.

The calculations of the railway authorities on the anticipated revenue through container freight using the expensive rail link to the terminal seem to have gone horribly wrong.

The project has the longest elevated bridge (4.62 km) in the whole of south India but the returns are peanuts with the railways miserably failing to win freight orders, resulting in rail infrastructure worth crores lying almost idle.

“Rail connectivity from Edapally to Vallarpadam — around eight kilometres — was set up solely for the purpose of container transport. The project costing Rs362 crore was completed in two years time in 2009. We encountered a host of problems like land acquisition and rehabilitation of islanders. But the same was finally commissioned in February 2011,” an official of the New Delhi-based Rail Vikas Nigam Ltd, which implemented the project, told DC.

Despite offering around 40 per cent less on rates compared to road transport, business has been very poor. Instead of the anticipated six to seven rakes per day, the railways can hope to get just a single rake container freight order per week.

“We are encountering teething problems as commercial activities based on Vallarpadam are less. We are trying to work out a solution from various angles – the government, department, and direct talks with Dubai Ports World,” a top official of the Trivandrum division of Southern Railways said.

So, what exactly is the reason behind the poor commercial performance of the railways? Is it due to the below-par growth of the `3,200 crore terminal, or is some lobby working against the railways?

“Despite the recession, the terminal still handles enough containers, which are now mainly transported by road. The main centres of transport are the land port in Coimbatore and Bengaluru. A lobby working from these centres is preventing the railways from bagging the business and are ensuring that the containers are transported via road,” the official said.

Faced with the prospect of costly infrastructure lying idle, resulting in huge losses to the railways, railways brass including the Trivandrum divisional railway manager Rajesh Agarwal are pressurising the ICTT officials and exporting firms to give them a share of the container transportation.

Currently the rail-approved agencies like CONCOR and Arshiya International are running the freight services only once or twice a week and therefore less haulage charges to the railways.

Also choking is the negative growth of the terminal due to cabotage law that stipulates that only Indian feeder vessels can move cargo from one Indian port to another.

“In our talks with the DP World authorities, they cite less in-flow and out-flow of containers due to the cabotage law. According to them, few mother vessels anchor at the port as the law doesn’t allow foreign shipping lines to carry cargo between Vallarpadam and other Indian ports.

They assure us that once the government relaxes the regulation, more foreign vessels would call at the port and business will increase, giving us a bigger role in container transport,” the rail official said.

Global crisis may derail Vallarpadam’s growth plans

Ports across the globe have begun to feel the pinch of the financial turmoil. In the country, most of the ports have seen a drop in activities which is expected to reflect in their bottomline some time before the end of this year.

But the crisis before the international container transshipment terminal at Vallarpadam, which has seen an investment of more than Rs3,000 crore, can be even worse.

The country’s first ever terminal was commissioned more than a year ago as more than 40 per cent of the country’s container traffic is transshipped at ports like Colombo, Dubai and Singapore. According to rough estimates, the additional expenditure for transshipping a container terminal from a foreign port is around Rs10,000.

But a year down there is little reason for the port or the terminal operator DP World to cheer. For the fiscal 2010-11, the port achieved a mere 12 per cent growth in the financial year 2011-12 crossing the 20-million tonnage mark.

It also had a throughput of 20.1 million tonnes, with a growth rate that was the second highest among the country’s major ports. Container throughput showed only a meagre six per cent increase.

And sources in the port admit that despite the fact that a host of strict rules and regulations has stifled growth prospects of the port and the terminal, the shadow of a financial crisis has made the situation worse, spreading a pall of gloom till the situation improves.

But officials at the terminal say from the day the rail service was introduced there has been a flow of trains, though not on expected lines. And they add that it was a new service and any rail container movement was a pointer to growth.

Efforts are on to launch a few container train services like the one from North India which in its return leg could take rubber at competitive rates. Also, the prospect of container services from Tirupur-Coimbatore belt would be beneficial to business there, said a senior official of the terminal.

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