Railways comes out with Heavy Discounts in Empty-flow direction, announces ‘Automatic Freight Rebate Scheme’

Move targeted at grabbing more traffic from road sector.  Railways to utilise empty freight rakes by offering rebate to customers. Move aims at garnering additional revenue from freight traffic. There will be no delays, no processing and no waiting. It will be as easy as hailing an auto-rickshaw on the road.

New Delhi: Taking the cue from flash sales by airlines to sell off their empty seats, Indian Railways has decided to utilise the 46,000 rakes that run empty every year after dropping off the freight.

Starting from Thursday, railways will start a freight scheme offering incentives to customers to carry load in the traditional empty flow direction. Railway officials said it is a simple scheme whereby automatic rebates will be offered to customers over-the-counter. Everything is computerised.

In order to optimise and garner additional revenue from freight traffic, the ministry of railways has come out with a new scheme called Automatic Freight Rebate for Traffic Loaded in Traditional Empty Flow Direction.

According to a recent circular, the ministry is going to provide automatic rebate from the computerised FOIS (Freight Operations Information System) to customers offering traffic in traditional empty flow direction (inter-zonal and intra-zonal), which will come into effect from June 25.

There will be no delays, no processing and no waiting. It will be as easy as hailing an auto-rickshaw on the road. It will be completely transparent,” said an official of the traffic directorate.

Except for commodities like mineral and ores, coal and coke, POL traffic, RMC traffic, military traffic and commodities falling under class LR2 and LR3 all other commodities including new commodities will be charged at class-LR1 (low rated traffic lines) for trainload traffic and at base class 100 for wagonload traffic irrespective of the terminal, commodity and customer.

The scheme will garner additional revenue for the railways. “It will add to the railways’ bottom-line. Each rupee earned is a bonus. The rakes are anyway moving in the empty flow direction, using up the fuel. Now they will carry load and earn revenue,” he said. Added benefit will be, reducing the carbon footprint of railways, he said.

About 40% of freight rakes move empty, waste fuel and infrastructural capacity. “This scheme will not only help the customer to carry freight at cheaper rates and target new markets, it will also help in bringing down the cost of commodities like cement, jute, fertiliser, iron and steel, white goods cargo and food grains, benefiting the consumers. It is going to be a game-changer,” another official said. Cargo that can be used include covered, open and flat wagons. Almost 50 per cent of Railway rake capacity is unused as it moves empty after carrying cargo back from its destination, or due to lack of cargo.

The users will be offered a discount that could go up to 30% of the normal freight rates. “The discounts could be as much as Rs.400 per tonne of freight, carried at a distance of 800 km. In simple terms, a bag of cement could be cheaper by Rs.20,” he said.

The traffic directorate worked out the scheme after detailed surveys of rakes running empty in what it calls “back haul freight”. The effected sectors and commodities were studied before devising the scheme. Efforts were made to ensure ease of business for customers, and many of the existing norms were relaxed.

A wagon, for example, can be loaded with a single or multiple commodities. Railways have also reduced the minimum load size carried from 2,400 tonne to 1,200 tonne. “Entry barriers for users have been reduced. The scheme will help existing customers target new markets, it will allow new customers to come in and also open up new geographical market,” a senior railway board official said.

“We want to compete with the roadways. This scheme will bring down the cost for transporting commodities like cement by 32%, iron and steel by 42% and fertilizers and food grains by 27%. We are expecting an additional flow of 10 million tonne by the end of this financial year and hopefully an added revenue of around Rs.700 crore,” said a source in the ministry.

“Proper data analysis has been done and we have made sure that the Indian railways will be able to monetize on these schemes in spite of giving such heavy discounts,” he added.

In order to be eligible for this scheme, the customer will have to offer half rake of the permitted goods and should be transporting the goods for more than 200kms. The permitted wagons for this scheme are open wagons (BOXN group), Covered wagons (BCN and BCNHL group) and Flat wagons and mixed steel rakes (BRN group, BOST group and CONCORD). In addition to the commodities which are not eligible for this scheme certain commodities are not permitted to be transported between designated inter-zonal and intra-zonal divisions.

Other freight incentive schemes like Incentive Scheme for Loading Bagged Consignment in Open and Flat Wagons, Incentive Scheme for Traditional Empty Flow Direction, Incentive Scheme for Incremental Traffic have been discontinued.

The Railways had run a pilot of this scheme in North Frontier and Southern Railways. In the North Frontier Railways, an additional 15-17 rakes were loaded a month, while in the Southern zone, an additional two rakes were booked a month.