CONCOR expanding fast
In a candid conversation, P. Alli Rani, Director-Finance, CONCOR, highlights how the company is striving to reduce logistics costs on a par with international standards.
What trends do you see for the coming year?
The GST bill is expected to change the scenario in the logistics sector. This tax is targeting the domestic trade. Movement of goods within the country is a problem because interstate issues are not only due to taxation but other reasons also. GST will bring changes. Credit mechanism will get introduced. In current times, the states and centres levy their own taxes altogether. Tax layers have been formed and there is no credit facility. After the bill, tax layering will end. It makes the product easier to move inside the country.
Today, the distribution is directly through retail warehousing but after GST, there will be hub warehousing. With GST there will be huge demand of multimodal logistics parks, especially rail connected Multimodal Logistics Parks (MMLP). CONCOR provides this. Three years back, we did not have terminals to accommodate the demand but in the last three year tenure, we have created rail connected MMLPs on terminals which are 10 times larger than the
size we used to construct. What made you say ‘no’ to rail connected warehouses three years back? We didn’t say no. But at that point of time, land was an issue. As a PSU, we find land acquisition now is more organised with clearer rules and procedures.We are successful in getting land at strategic locations which are suited for rail connected warehousing.
Moreover, the state government has become development oriented in the last three years and they have shifted their focus on infrastructure creation. We have increased our capital expenditure (capex) four times. We have invested our surplus in taking land for setting up rail connected warehouses.
We have increased our capital expenditure (capex) four times. We have invested our surplus in taking land for setting up rail connected warehouses
How is DFC going to help the trade, particularly CONCOR?
We are looking forward to DFC because the major constraint is less number of tracks, especially on a route which generates most demand for our services. The route which connects the western port of Container Corporation of India (CONCOR) and Continental Warehousing Corporation (Nhava Sheva) (CWCNSL) have signed an agreement where CONCOR rakes have been provided exclusive access at the three rail connected terminals of CWCNSL at Panipat, Jawaharlal Nehru Port (JNPT) to hinterland. Today, the major portion of international trade is dealt with the western port, mainly the JNPT, and new ports such as Pipavava and Mundra Port. Any connectivity to the hinterland for goods is best done by railways. On a longer lead, railway is 30 per cent cheaper than road. But there are other essential factors which international trade derives by opting for rail. They are cost, speed and security of cargo. If cargo has to go in a sealed container then the container, weight has to be carried by road which makes it expensive. Secondly, there is no custom examination at the port. A person who is 1,000 km away in his factory need not go to the port for clearances either for import or export. The sealed Lakhwada and Thimmapur. The synergies between the companies are likely to give a much needed boost to the movement of both EXIM and domestic containerised cargo by rail in the catchment areas of these three terminals. With this agreement, trade container continues its journey on a train right to the doorstep. The dry port will do all the clearances for them. It’s the third comfort. The sealed container is very essential for the exporter. For example, if we talk about exporting garments on hangers, it has to go hung on a shelf. Hence, it is best if it goes on a sealed container to make it perfect for selling by the time it reaches the destination. Today, all the exporters are unable to get rail services because we don’t have enough tracks in the country to run many container trains. We get to run only specific amount of trains, through which we can cater to maximum 30 per cent of the requirement of international trade. The DFC will change the entire story. will derive huge benefit from reduced first and last mile connectivity costs as well as from 24x7 access to these terminals. Moreover, the transaction cost of imports and exports is likely to come down once the operations start. How much growth do you expect with DFC?
With DFC, there will be a huge difference in volume. Today, a train with 45 wagons can carry 90 TEUs; this train will make a trip from the hinterland to the western port may be in a period of 48-60 hours depending on the circumstances.