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Railways impose 10 percent Busy Season Charge on container traffic, ET Infra

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MUMBAI: In a surprise development, the Ministry of Railways has brought container traffic under the so-called Busy Season Charge, imposing a 10 percent levy on this account.

The 10 percent Busy Season Charge on container traffic took effect from 1 October, according to a circular issued by the Ministry of Railways.

The existing policy guidelines issued in 2015 for levy of Busy Season Charge on different traffic had excluded coal, coke, container and automobile traffic moving in NMG, BCACM, BCCNR and BCACBM wagons from its ambit.

“The matter has been reviewed and it has been decided to levy Busy Season Charge on container traffic,” the 29 September circular issued by the Ministry of Railways said.

The Busy Season Charge will be levied from 1 April to 30 June and from 1 October to 31 March, it said.

Describing the 10 percent Busy Season Charge as “steep”, an industry official said that container train operators will have no option but to pass on the rate to the customers.

The move to levy a Busy Season Charge comes at a time when ocean freight rates for transporting containers have fallen off a cliff from the highs season during the pandemic as a capacity glut and lower demand for goods from Western nations facing stress takes a toll.

Efforts by global container carriers to raise rates during what is now the busy season to meet Christmas demand has not materialised as shippers call the shots in a depressed market.

The Busy Season Charge will result in a sudden jump in container rail costs, and also loss of business from rail to road, according to Container train operators.

“There is no separate busy season for containers as in the case of conventional rail traffic. This is the first time that containers have been brought under the busy season surcharge – this is essentially a back door means to raise rates without having to call this a haulage charge increase so close to the election process”, said Manish Puri, President, Association of Container Train Operators or ACTO.

“There is no such busy season surcharge on road, which is the main competition for rail – road infact usually witnesses discounts linked with off peak traffic or even linked to volumes at times. As road rates have actually been coming down, this 10 percent increase will result in a diversion of traffic from rail to road, which is exactly the opposite direction to the government’s policy to promote greater rail movement as an environmentally and cheaper means of transport”, Puri asserted.

” The price increase has come after a while, but the quantum of 10 percent is very high – trade has been talking of a transparent and predictable price regime where rates are adjusted linked to an index of sorts every couple of years. Such a high one time jump will effectively increase logistics cost and divert cargo away from rail “, he stated.

The circular was issued on 29th night and implemented from the 30th midnight – It is practically impossible for rail operators to adjust their own pricing so rapidly, as such a massive cost increase cannot be absorbed by anybody. For the period in which prices with end-customers can be re-negotiated, the direct hit will be on container train operators who are meant to be direct partners with IR in seeking to increase rail business, he added.

  • Published On Oct 3, 2023 at 11:13 AM IST

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