Growing demand in the cement sector has evidently made a mark on its logistics providers. Cement deliveries are the second largest revenue source for the Indian Railways, contributing US$ 1.3 bn per annum in freight revenue in FY17-18.
However, cement and clinker loading in the first five months in the current FY18-19 has been growing at a slow pace of 2.44% mainly due to a shortage in rake availability. Since freight and forwarding costs account for about 20% of the production cost of cement, logistics becomes a significant factor to reckon with.
To make railways an attractive option for cement transport, the Government offers several schemes including
- Long Term Tariff Contract Scheme;
- Freight Incentive Scheme for loading bagged consignments in open and flat wagons;
- Incentive Scheme for Auto Traditional Empty Flow Directions;
- General Purpose Wagon Investment Scheme.
Last year, several cement manufacturers signed long term freight contracts with the Indian Railways to receive preference in allotment of rakes and also to reduce operating costs.
The Indian Railways recorded its highest ever total cement and clinker loading of over 114 Mta and highest ever incremental loading at 9.6% in FY17-18.