Steeling the railway

"Why should it cost $50 to transport a tonne of steel from Jamshedpur to Mumbai over rail, a distance of 1700 kms and $34 to move the same tonne, from Rotterdam to Mumbai a distance of 6800 kms? A report, referring to the statement of a steel industry executive, further states that for every tonne of steel produced, three tonnes of raw material needs to be transported. The problem becomes worse as most of the steel plants are landlocked and depend for 80% of their transportation requirements on railways.

Steel and coal are among those commodities, which majorly depend upon railways for their logistics needs.

Transportation by road almost costs double. Further frequently wagons earmarked for iron ore are diverted for coal transportation which takes priority over requirements of steel industry whenever coal stocks dwindle in thermal power plants, who target to maintain a coal stock for around 14 days consumption working at full capacity. Movement through slurry in pipelines or waterways have not become established in India.

Waterways, otherwise the most eco-friendly transportation system, suffer in India from pontoon bridges, low draft and have not emerged in india as dependable means for bulk transport.

Higher transportation costs is becoming a handicap for the Indian steel sector.

Indian Railways (IR) segregates commodities through a classification table for tariff purposes resulting in different rates for different commodities for same tonnage and distance.

Commodities like food grain, salt, fertilisers costs less while transportation of some some others like oil/coal/ steel cost more.

So while cost for transporting 1 ton of salt over 1000 km costs R931, for oil/steel it will be R670 per tonne, for coal it will be R891, in comparison, road transportation rates are fixed for an identical truck load between same destinations.