costing and pricing. issues in transport sector

8/12/2019 Costing and Pricing. Issues in Transport Sector

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DISCLAIMER

Views expressed in this lecture are that

reflect the official views of either

Commercial Directorates of Railway

oar or o e n s ry o a ways.

Tuesday, September 06, 2011 INDRA GHOSH, Adviser/Rates Slide No. 2


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Outline of the Lecture

Indian Railway Act. Functions of Rates Branch.

os o serv ce a ue o serv ce.

Traditional Freight Structure. .

Freight rates for different classes.

Container Train O erators.

Passenger Fares.



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Passenger Fares.



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Indian Railway Act.



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Indian Railway Act

Railway Act 1989. Chapter VI deals with Fixation of Rates.

ec on

The Central Government* may ,

by general or special order fix,

for the carria e of assen ers and oods,

rates for the whole or any part of the railway.

Different rates may be fixed for different classes of

goo s, an

specify in such order the conditions subject to which


.


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Indian Railway Act

Section 30 (2). The Central Government may by a like order,

x e ra es o any o er c arges nc en a o or

connected with such carriage, ,

for the whole or any part of the railway, and

s ecif in the order the conditions,

subject to which such rates shall apply.



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Indian Railway Act

Section 31 The Central Government shall have power to :

a c ass y or rec ass y any commo y or e

purpose of determining the rates to be charged for the.

(b) increase or reduce the class rates and other

char es.



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Indian Railway Act

Section 32 Notwithstanding anything said in this Chapter, a railway

a m n s ra on may,

in respect of the carriage of any commodity, and

(a) quote a station to station rate,

(b) increase or reduce or cancel a station to

station rate,

(c) withdraw, alter or amend the conditions

attac e to a stat on to stat on rate, an

(d) charge any lump sum rate.



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Indian Railway Act

As per Section 32, power of the Zonal Railway islimited only to quoting of station to station rates.

owever, no ng n e a way c preven s e

Central Government from delegating any of the powers, .

Either some or even all of them can be delegated.*

Its different matter that Zonal Railwa s dont want

these powers to be delegated.*

Central Government means Ministry of Railways.

Ra way Boar s a separate ent ty.

Discharging of dual function.*


. Example of other countries.*


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Indian Railway Act

Section 70.A railway administration shall not make any or give

any un ue or unreasona e pre erence or a van age

to,

description of traffic in the carriage of goods.



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Indian Railway Act

Section 71 (1).*The Central Government may if it is of the opinion

a s necessary n e pu c n eres o o so,

by general or special order, direct any railway



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Indian Railway Act

(a) to give special facilities for, or preference to,

carriage of such goods or class of goods consigned by

or o

the Central Government or the Government of any,

of such other goods or class of goods.

(b) to carr such oods or class of oods b such

route or routes and at such rates;

(c) to restrict or refuse acceptance of such goods

or c ass o goo s at or to suc stat on o carr age,

as may be specified in that order.



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Indian Railway Act

Section 71.

(2) Any order made under sub-section (1) shall cease to

ave e ec a er e exp ra on o a per o o one year

from the date of such order, , ,

time for such period not exceeding one year at a time

as ma be s ecified in the order.

(3) Every railway administration shall be bound to

comply with any order given under sub-section (1), and

any act on ta en y a ra way a m n strat on n

pursuance of any such order shall not be deemed to


.


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Indian Railway Act

Section 72.

(1) The gross weight of every wagon when loaded to its

max mum carry ng capac y,

shall not exceed such limit as may be fixed by the.

(2) Subject to the limit fixed under sub section (1),

ever railwa administration shall determine the normalcarrying capacity for every wagon.*



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Indian Railway Act

Section 73.

Where a person loads goods in a wagon beyond its

perm ss e carry ng capac y as ex e ,

a railway administration may, in addition to the,

recover from the consignor, the consignee or the

endorsee, as the case ma be,charges by way of penalty at such rates, as may be

prescribed, before the delivery of the goods.



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Indian Railway Act

Section 78.

Notwithstanding anything contained in the railway

rece p , e ra way a m n s ra on may, e ore e

delivery of the consignment, have the right to ,

consignment;

recalculate the frei ht and other char es; and correct any other error or collect any amount that may

have been omitted to be charged.



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Indian Railway Act.

Functions of Rates Branch.



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Functions of Rates Branch

The first exception is in case of giving station to stationrates by zonal railways.

e secon excep on s n case o g v ng o re a es

under specified laid down schemes, where powers have*.

In second case, maximum upper limits have been laid

down for ivin of rebates.* Zonal railways as also our customers prefer it to be that

way.*



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Rebates/Surcharges can either be across the board for allzonal railways, or

ey cou e or a par cu ar zone.

Rebates/Surcharges can be :

commodity.*

The could be either for a s ecific eriod* or couldbe of a permanent nature*.

They could be either for certain distances or across all

stance oun ar es.

For certain streams of traffic.


Ministry of Railways.


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Conducting specific studies on commercial matters inline with reports of various committees such as

a way are an re g omm ee an

Rail Tariff Enquiry Committee etc.

received from other Ministries for revision of rates in

res ect of s ecific commodities. Formulation of Budget Document Proposals for

adjustments in Freight Rates and Passenger Fares in the

Ra way Bu get.



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Subject list of TC/R branch are as follows :

Freight Incentive Schemes.

ypes o re g concess ons.

Classification of goods. .

Miscellaneous charges.

Char es related to Port Trust.Transport of relief materials to affected areas.

Chargeable weight for commodities.

Tra n oa ene t.

Distance for charge, Inflation in distance for charge.


.Clubbing of consignment.


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Subject list of TC I branch are as follows :

Free time and demurrage and wharfage rules.

ng un ng c arges.

Through distance freight. .

Notified stations.

All India En ine Hour cost.PCO in CRT.

Railway Rates Tribunal Rules.

Agreements re at ng to Port Trust.

Commercial aspects regarding Indo Pakistan, Indo


.


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Rules for payment of freight Paid, To Pay,Prepayment conditions etc.

u es or e very o goo s.

Undercharges in freight. .

Penalties for overloading of wagons etc.

Wa on Re istration Fees.E Payment of freight.

Working of goods sheds.

Ru es or carr age o angerous goo s.

Notified stations.


.


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Indian Railway Act.





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Cost of service & Value of service

There are two principles which mainly decide thefixation of railway rates namely :

os o serv ce an

Value of service.



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In addition to above, rates must be fixed in advancebefore the service is rendered, and

cos can e nown on y a er e serv ce as een

rendered; .

Another problem is the system of joint costs.*

Since the railwa s stem is used for diverse oods andservices, it is similar to a plant that makes multiple

commodities and requires joint costing.*

It s mposs e to ase ra way rates on t e pr nc p e o

cost of transportation alone.


for pricing.


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Following are some of the factors that used to be taken

into consideration in determining the cost of service :

oa a y.

Susceptibility of the commodity to damage and .

Special handling or special type of wagons

re uired. Extent to which the commodity may cause damage

to other commodities.

Qua ty an regu ar ty o movement.

Empty haulage involved in providing transport.



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Since alternative means of transportation is available torail users,

a ways canno c arge up o e p ys ca m o e

rail user can bear; but .



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It is the principle of joint costs which justifiesdiscrimination by the railways.

ommo es c ass e a g er c asses are ma e o pay

not only their approximate share of general costs, but in,

that share of the joint cost which the low rated

commodities cannot afford to a . Similarly, higher class passengers pay more because

they can afford to pay more, and

t w ena e ra ways to carry secon c ass

passengers at lower fares.



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Following are some of the factors that are taken into

consideration in determining the value of service :

a ue o e commo y a e es na on as

compared with the value at the originating station. .

Potential competition from new sources of

roduction and new markets. Classification of comparable and related

commodities.



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Studies in traffic costing and cost difference shows that

Average haulage cost per km. declines with distance.

emen o erm na cos rema ns e same

irrespective of whether the traffic is short distance or.

These two factors together prove that the principle of

telesco ic rates is most scientific and is ustified on thebasis of the fact that

Rail user has limited capacity to pay for long distance

tra c.

It costs less to the railways to carry traffic for longer


.


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Indian Railway Act.



Traditional Freight Structure.



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Traditional Freight Structure

Country wide uniformity in tariff. Uniform telesco in of rates for all commodities.

No regional, directional, seasonal or segmental

sensitivity.

Tenuous linkage with input costs.

Cross subsidization across various commodity groups. .

Driven by imperatives of revenue generation.

Ad ustments in tariff arduous and time consumin . Averse to business decisions and steeped in straitjacket.

Oblivious to market conditions and business


opportunities.


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Ad hoc tariff adjustments with no comprehensive longterm view.

Unable to respond effectively and timely to customer

demands.



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From the traditional freight structure IR gradually triedto move to more commerciall based frei ht structure.

Introduce integrated tariff and incentive structure custom

tailored for each major business stream present and

potential.

Tariff should be based on input costs and leverage .

Reduce cross subsidization amongst commodity groups.

Eliminate tariff lines o eratin below cost.* Move towards FAK rates as far as possible with only

limited exceptions.



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Quantum of cross subsidization of passenger businessfrom frei ht se ment should be ex licit and trans arent.

Comprehensive recasting of tariff for military, postal

traffic etc.

Long term goal for tariff structure rationalization should

be spelt out.



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Institutionalization of mechanisms for seasonal,re ional, directional and other variations.

Introduce differential pricing in the bulk segment to

drive revenue growth.

Promote long term arrangements with corporate clients.

Promote growth of business volumes through negotiated.

Promote cargo aggregators and other new business

streams as otentiall hi h revenue se ments. Enabling mechanisms for revenue maximization from

idle assets and under utilized capacities with speedy


offer of rates.


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Miscellaneous charges.Inflated distance for char e.

Charges for Port Trust Railways.

Charges for haulage of engines.

Surcharge for To Pay traffic.


li f h


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Cl ifi i f G d


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Classification of Goods

All commodities have been classified into 16 differentclasses for the purpose of charging of freight.

ase c ass s c ass .

Lowest class whose freight is cheapest is LR 4. .

Highest class whose freight is maximum is 200 for

Petroleum roducts.* All other commodities come somewhere in between.

Over the years railways have gradually reduced the

num er o c asses rom 59 to 15.

It has been attempted to fit all commodities into one of


.

Cl ifi i f G d


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Along with reducing the number of classes, the totalnumber of commodities which have been so classified

ave a so een re uce .

Over the years railways have reduced the total number

groups.

An over ridin clause sti ulates that if an commoditdoes not figure in the list of commodities which have

been classified,

t en t s ou e c arge at t e g est c ass rate.

Type of wagon wise classification.*


Cl ifi i f G d


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Logic given was that railways are simplifying the freightstructure and will be easier for customers to*.

This reduction in number of commodities has beenincorrect. ter a 4000 num er o commo t es were e ng

transported by railways earlier,

commodities are likely to be transported. There may have been some reduction in commodities

ue o oc ra e movemen ,but such reduction would have been maybe 20%

30% at the most.


It cannot justify such drastic reduction.


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Cl ifi ti f G d


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As of today the following classes exist :

LR 4 Bamboos, Coffee, Tea, Coir, Cotton.

LR 3 Charcoal, Paper.

LR 1 Jute, Organic manure, Timber.

, , .

Class 110 De oiled cake, Sugar, Salt.

ass ay, ca e an ee s, y as .

Class 130 Fertilizer*, Foodgrain*, Steel Pipes,


Wire rod coils.

Cl ifi ti f G d


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Class 140 Caustic Soda, Slag, Edible Oils.

Class 150 Cement*, Coal & Coke*, Clinker,

Molasses, Gypsum, Sand & Stones.

Class 170 Bitumen.

*,

Metals, Iron & Steel, LPG.

ass

Class 200 Acids, Alcohol, Petroleum products.


Cl ifi ti f G d


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Chargeable carrying capacity was made uniform witheffect from 1.4.2005, and

m n mum we g con on was one away w .

Consignments carried in any type of wagon will be

of that type of wagon.*

For exam le, earlier bamboo bein a li ht commoditwas charged for a minimum weight of 22T.

As per the revised PCC, consignment of bamboo was

c arge or t e u carry ng capac ty o t e BCN wagon

at 63T.


paid for such light weight consignments.

Cl ifi ti f G d


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In order to compensate for the idle freight and reduce thesame to a large extent,

e c ass ca on o g we g commo es was

reduced in number of cases, .


Cl ifi ti f G d


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Previous/revised chargeable weight and class :Previous Revised

Commodity MWC Class PCC Class

Bamboo 22 145 63 LR 4

arcoa

Jute 30 160 63 LR 1


O tli f th L t


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Freight rates for different classes


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Railway Board publishes a freight rate table which givesclass wise freight rate,

per onne,

for different distance slabs.

immemorial.*

Over the ears it has under one onl minor cosmeticchanges,

without any major changes having been attempted.

T ere s a taper w t ncreas ng stance,

which is the same for all commodities in that class.




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100 120 140 160 180Freight/tonne for different classes and distance slabsDistance/Class

201 210 147 176 205 235 264

301 310 202 243 283 324 364

401 410 258 309 361 412 464

801 825 494 593 692 790 889

1501 1525 887 1064 1241 1419 1596


1801 1825 1033 1240 1446 1653 1859



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Rates for different classes are modified based onwhether the rate is to be increased or decreased.

e marg na a us men s are one epen ng on

whether same has been increased or reduced in the,

our perception of what the traffic can bear.

o exercise has been done of makin an ab-initioanalysis of the cost of operation and for fixing of rates

accordingly.*

In most cases t s not on y cu t ut mposs e.

Cost of hauling a foodgrain rake and a cement rake is


,

but they cannot be charged equally.*



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There are two ways of changing the freight rates. 1st method is to change the base freight rate of class 100

a s ance s a ms.

Thereafter base freight rate of class 100 across all,

as per the distance multiplication scale.

This is Static Ratin .* 2nd method is change the freight rate of a particular

commodity without disturbing the freight rates of other

commo t es.

This is Dynamic Rating.*




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Theoretically, there are two ways of changing the freightrate of any commodity.

n case re g ra e o a par cu ar commo y s o e

increased, then the same can be done ,

in which case freight rate of all commodities in

that class will be uniforml increased; or alternatively, the classification of that particular

commodity can be increased,

so t at t e c ange oes not e ect any ot er

commodity.




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Each class has an exact relationship to base class 100. Hence, it is not possible to tinker with the class rate of a

par cu ar c ass, say c ass , w ou s ur ng a

exact relationship. ,

commodity can be increased,

Therefore, the onl wa of chan in the frei ht rate of aparticular commodity is by changing its classification.*

With reduced number of classes, even change of one

step rom c ass 100 to c ass 110 mp es an ncrease o

10%, and


5.26%.



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This is the main drawback of reduced number of classes. Logic given was that railways are simplifying the freight

s ruc ure an s eas er or cus omers o un ers an .

No customer deals in fifteen different commodities.

.

Most of them deal with select few commodities and they

are aware of the classification of their own commodities. Similarly, their traffic does not go all over the country to

hundreds of destinations.

t ere are se ect ew est nat ons to w c t e r

consignment is despatched, and


destinations.



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Another reason given was that by simplifying the freightstructure it will be easier for field staff to understand.*

en a cus omer comes o oo s cons gnmen e

CGS first checks up Goods Tariff, Part I (Vol. II), which

verify the class of that commodity;

let us sa the commodit class is 140. Thereafter the CGS will calculate the distance from the

originating to the destination station,

us ng t e t roug stance an

the junction distance tables.


.



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CGS will lastly open the freight rate table and check upthe freight rate per tonne for class rate 140 at the

s ance s a o ms. s ance.

The freight rate at Class 140 for distance of 763 Kms.

. . .

Having obtained the freight rate/tonne he finally

multi lies the frei ht rate/tonne with the total load of therake to arrive at the total freight.

Let us say the total weight of the consignment comes to

2450 tonnes.

So the total freight is worked out as


. . . , , -

This is the complete cycle.



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In this entire cycle the following activities are commonirrespective of whatever may be the class of the

commo y;

Goods Tariff, Part I (Vol. II).

,

Junction distance table.

Frei ht rate table.* Even in this he has to finally consult a table,

Whether there are 15 columns in that table or 30

co umns s mmater a . The CGS has to see one column and one row in that


.



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As far as the CGS is concerned his workload remains thesame.

ngs ave now ecome muc eas er.

No CGS deals in fifteen different commodities.*

are aware of the classification of their own commodities.

either do the deal over var in distances. Traffic booked from specific goods shed does not go all

over the country to hundreds of destinations.

t ere are se ect ew est nat ons to w cconsignment from each goods shed is despatched.


.



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By reducing the total number of different commodities,which have been classified, from 4000+ to 21 groups,

an

by reducing the overall number of classes from 59 to

Railways have made it practically impossible to change

the frei ht of an individual commodit without chan inits classification.

Perhaps the officials who undertook that exercise did not

rea ze t e mp cat ons o t e r act on. Wanted to gain easy kudos.*




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Comparison with the Wholesale Price Index (WPI)which measures the annual inflation gives a good idea of

e c ange n re g ra e v s- -v s e .

Data has been collected for displaying changes in freight

.

The commodities selected are :

Food Grain.Fertilizer.

Coal.

HSD.Cement.


.

Other Goods, which is basically a mixed basket.

Increase in Foodgrain freight (1177 kms)


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g g ( )

259

300

196206

216

229

227 227 227

246

ease>

141 145

156 161

167176

166 166 166

185

%

Incr

100

113122

127

109 109

142 149 149

155 155 155

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Foodgrain

Increase in Fertilizer freight (825 kms)


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g ( )

259

300

196206

216

229

227ease>

141 145

156 161

167176

166 164 164 164175 175 175

%

Incr

100

113122

127

135 135 140 142

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Fertilizer

Increase in Coal freight (611 kms)


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g ( )

259

300

196206

216

229

ease>

141 145

156 161

167176

167 167 170 170 170

182

%

Incr

100

113122

127

112

123

142 142 148 151

154 155 155

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Coal

Increase in HSD Freight (640 kms)


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g ( )

259

300

196206

216

229

ease>

141 145

156 161

167176

%

Incr

100

113122

127

113121

133

149 149 155

148 148 148138

132126

157

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI HSD

Increase in Cement freight (561 kms)


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g ( )

259

300

196206

216

229

ease>

141 145

156 161

167176

168%

Incr

100

113122

127

109

117

129

144 141 147 150

154 154148

154 154 157 157 157

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Cement

Increase in I&S Freight (1006 kms)


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g ( )

259

300

196206

216

229

ease>

141 145

156 161

167176

%

Incr

100

113122

127

114125 128 126

131 133 136

130124 124 124 126 126 126 126

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Iron & Steel

Increase in Other Goods (830 kms)


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259

300

196206

216

229

ease>

141 145

156 161

167176

%

Incr

100

113122

127

112

123

138 138 143

150 155 152 152 152 152 155 155 155 155

100100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Other Goods



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Traditional Freight Structure.

.




Container Train Operators


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In 2006 running of container trains was thrown open toprivate sector.

rospec ve opera ors were requ re o reg s er

themselves with IR and pay a licence fee. .

50 Crs. for operating between NCR and JNPT.

10 Crs. for other sectors. Licenses were granted to 14 Private Container Operators

(PCOs) for running their own trains

y pay ng au ng c arge to ra ways. In 2007 another 2 operators took new licenses.




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p

Idea was that they would contribute towards cargoaggregation, and

r ng ac par o e p ece mea ra c a was

lost as a result of block rake movement.

moved in containers, either by

CONCOR, orby road.



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81/125

p

Haulage charge is worked out based on a spread sheetcalculation.

e o ow ng are nc u e n e ca cu a on o e

haulage cost. .

Documentation etc.

Line haul cost. Provision and maintenance cost.

Total Direct Cost.

Fu y D str ute Cost. 10% for loss of path to other trains.


.



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p

Basic data :Type of wagon.

e o wagon.

Number of wagons.

.

Pay load.

Tare wei ht.Lead.

Wagon turn round.

Empty return rat o.NTKM.


.

No. of terminals.


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84/125


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86/125

p

Provision and Maintenance Cost :Cost of repair and maintenance.

n eres on cap a cos o wagon.

Depreciation element.

.



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88/125

p

Provision and Maintenance Cost :Cost of repair and maintenance.

n eres on cap a cos o wagon.

Depreciation element.

.

Total Direct Cost (sum of all of above)

General overheads.*Central charges.*

Escalation for 2008 09 over 2005 06.

Fu y D str ute Cost FDC . Reduced FDC for Special Wagons.




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Add 10% loss of path to trains. Profit Margin of 20%.

a e per ra n m.

Maintenance charge at 5%.

.

Reduced FDC per TEU.Dynamic Pricing.xls




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As per IRs agreement with PCOs,They were required to develop their own terminals

w n years.

Have been permitted use of Railway Goods Sheds

.

Group III Handling < 7 rakes per month.

Grou II Handlin < 12 rakes er month.Group I Handling > 12 rakes per month.

Terminal Access Charge of Rs. 34,000/- per terminal per

oa ng un oa ng o eac ra e. Being extended on a year to year basis.*


.



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They could be permitted Hub and Spoke system ofoperation on case to case basis.*

as ca y or e purpose o cargo aggrega on.

Commitment regarding increase in volumes.

.

Rating of Container Trains transferred to Rates branch

from Traffic Trans ortation Directorate. Application from one particular CTO.

Running of Exim traffic although they had taken licence

or omest c sector on y.




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CTOs is a powerful lobby. Market is not big enough for 16 players.

ecess on as expose e r so un er e y.

10% increase in haulage charges for domestic cargo had.

Subsequently, from July 2009, this 10% increase was

finall im lemented. Roll back was also demanded for 10% increase in

haulage charges for exim traffic.*

Dont want to o ar e wor .




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Moving steel traffic from steel plants.* Wanting to move cement in loose in bulk.*

equ remen o sma er ranspor a on pac e s rom e

customers point of view. .

Haulage charge for container traffic is much less than

our class rate for the same t e of traffic. Haulage charge for loaded containers is equivalent to

class rate of around 90.*

Hau age c arge or empty conta ners s equ va ent toclass rate of around 65.*


.



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Loss of revenue. Loss of line capacity.*

u re g o e c arge as per e c ass o ra c

moved cement (class 150), steel (class 180) etc. *.

Profit margin of CTOs.

For mini rakes and two oint rakes of IR wa ons,surcharge of 5% is being charged in busy season.

This will not be charged in case of container trains.

Extra c arge or oor to oor va ue a e serv ce. Their profit margin can out of this and also by diverting


.



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Loss of line capacity will get compensated by loadedmovement of container trains in both directions.

ona ra c can ge genera e or me um s ance

bulk traffic which is being road bridged at one end.* .

This will not be permitted from siding to siding.

Onl from Sidin to oods sheds.




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Container Train O erators. Private Train Operators.


Private Train Operators


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Ever since the container sector was opened up forprivate container train operators,

ere ave een pers s en eman or open ng up e

sector for private train operators for other types of.

Private operators will own and maintain their wagons,

IR should merel char e haula e cost. Their profit margins will have to come out of IRs profit

margins,

our ottom ne w re uce. We cannot afford to let go of our bulk traffic which is


What is your view?



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IR has been having different types of privately ownedwagons for years.

wagons or ranspor ng um na.

BTCS wagons for transporting Caustic Soda.

bulk.

Permitted for end users onl . In all the above cases rebates were worked out on a case

to case basis,

w t out ta ng nto cons erat on empty au age. Recent addition of Special Type of wagon for


.

3rd Party ownership.*


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These Special Purpose Privately Owned Train (SPPOT)is meant for transporting commodities which are either

mov ng n ow vo umes y ra ways or no mov ng a a .

Category I (Light weight category) .

Category II (Low volumes)

Fl Ash.Chemicals.

Petrochemicals such as Carbon Black.*

Mo asses.Caustic Soda.


.



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Category III (Break bulk in loose)Cement in loose in bulk.

er zer n oose n u .

We want to go a bit slow on this category III.

and not to 3rdparties.

At later sta e based on our ex erience o enin u ofthis particular stream to 3rdparties can be decided.




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Granting of licence to an operator does not mean that IRwill not move that traffic on their own.

s an .

SPPOT will operate between private terminals.

for handling such trains.

Maintenance of wa ons ma be undertaken b IR onpayment, or

Privately maintained as per extent policy.




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Most important question of freight rebate. In class 100, 35% of empty haulage is already built in

e re g ra es.

Category I .

Loaded freight at 55% of class 100.

Em t frei ht at 35% of class 100.For 60 tonne weight per wagon.*

Railways generate additional traffic.

A equate pro ta ty s ensure to SPPOTO.




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Category II.Generally empty haulage is 100% even in railway

owne wagons.

Full freight at public tariff will be charged with.

Empty movement of > 100% will be charged for empty

haula e at 50% of class 100. Rebate :

15% rebate for wagon ownership, as against 10% for

IR. For every 2% increase in throughput beyond 5%


, .

Subject to total rebate not exceeding 20%.*



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Category III.For cement wagons cement and fly ash can be moved

n wo egs o e same ra e,

thereby generating high volumes and huge rebate.* ,

inducting new technology of wagon design.

Ever 2% increase in throu h ut be ond 5% increase,additional 1% rebate will be granted.

Subject to total rebate not exceeding 20%.*




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Commodities moving in volumes less than 1MT. Maximum would be 20MT for all such commodities

com ne .

If this traffic can go up to 100MT, IR gains, SPPOTO.

New design of wagon will ensure reduction in unit cost

of trans ortation.




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Container Train O erators. Private Train Operators.

Passenger fares for different classes.


Passenger Fares for different classes


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Passenger fares are decided more or less on the basis ofpolitical compulsions rather than for administrative

reasons.

While some of the upper class services are priced on the,

our sleeper class fares, and

eneral second class fares are under riced. IRs Monthly Season Tickets (MSTs) and Quarterly

Season Tickets (QSTs) for suburban services are

pro a y t e c eapest n t e wor .




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In case of most commuters using IRs suburban services,the cost of their MSTs/QSTs are being reimbursed by the

organ za ons w ere ey wor .

Today a passenger spends more in traveling by Auto,

than what he spends on his sleeper class ticket from

New Delhi to Lucknow.Despite knowing all this we are not willing to

increase passenger fares.

W e some marg na ncreases ave ta en p ace y wayof reservation charges, Tatkal Seva etc.,


for quite some time.


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Spread between the highest and the lowest fares needs tobe reduced.

u ur an ares s ou e n exe o npu cos s.

MST fares should be increased from 15 journeys to 25 in.

Second Class Mail/Express fares to be increased @ 5%

er ear to eliminate losses. No subsidy to Second Class Ordinary Fare.

Suburban subsidy to be limited to MSTs only by way of

percentage scount o are er ve rom Secon C assOrdinary fares.


from popular trains.*



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Non suburban business must be self sustaining. Fares for Second Class Ordinary and Sleeper Class need

o e n exe o npu cos s o e m na e osses.

Suburban business may continue to need partial and.

Subsidy to suburban business must be capped in

financial terms for trans arenc . Suburban fares should be indexed to fuel costs.*

Products and prices need to focus sharply on the target

segment.



113/125

Increase in 2 AC fares (781 kms)


114/125

259

300

196206

216

229

eas

e>

141 145

156 161

167176

183 183 183

195 195 195 195 195 195 195185

%

Incr

100

113122

127

110121

133

149

100

100 100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI 3 AC

Increase in 3 AC fares (858 kms)


115/125

259

300

196206

216

229

ase>

141 145

156 161

167176

187

183 183 183

195 195 195 195 195 195 195185

200

Incr

100

113122

127 133

121

133

149

100 100

1993

1995

1997

1999

2001

2003

2005

2007

2009


WPI 3 AC

Increase in Sleeper class fares (751 kms)


116/125

259

300

196206

216

229

eas

e>

141 145

156 161

167176

%

Incr

100

113122

127

111 117

126

138 138 138

150 150 150 150 150 150 150144

100

100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Sleeper Class

Increase in Second class fares (349 kms)


117/125

259

300

196206

216

229

eas

e>

141 145

156 161

167176

%

Incr

100

113122

127

112 112 112 112119 119 119 119 119 119

111100

100

1993

1995

1997

1999

2001

2003

2005

2007

2009

Years


WPI Second Class

Review


118/125

Indian Railway Act.






Passenger Fares.


Costing & Pricing Issues


119/125

Anyquestions

p ease


Thank You


120/125



121/125

COSTING

&

IN

TRANSPORT SECTOR

By INDRA GHOSH,ADVISER RATES/RB,

Tele : +911123382868


EMail : [email protected]


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123/125

Indian Railway Act.






Private Train Operators.

Passenger Fares.




124/125

Indian Railway Act.







Passenger Fares.


Review

di il A


125/125

Indian Railway Act.







Passenger Fares.

costing and pricing. issues in transport sector

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