According to the latest circular issued by Indian railways for levy on Busy Season Charge, railway freights will go up by almost 15% w.e.f Oct 1, 2013. This extra burden on freights will be applicable till Mar 31, 2014.
Circular reads, “In super session of Board's Rates Circular No. 12 of 2013, sanction of the Central Government is hereby accorded to levy of Busy Season Charge at the rate of 15% on all commodities, except container traffic and automobile traffic moved in NMG, BCACM, BCCNR & BCACBM wagons.”
What is Busy Season Charge
According to Indian railways, Busy Season Charge is a part of dynamic pricing policy, which is charged during a period when railways have high loading, i.e. from 1st October to 31st Mar'14. It might vary based on demand. It is charged on Net Traffic Rate (NTR), which is comprised of base fare and other various demand management charges, which are covered under dynamic pricing policy.
How will it impact domestic freight charges
With levy of busy route charges, freight for Iron ore in domestic market will go up by INR 80-150/MT based on distance and freight for coal will go up by about INR 40-100/MT. Manufacturers feel that it will not impact to large extent and can be absorbed by the market.
How will it impact Iron Ore exports
With exports of Iron ore picking up in India, will get a hit after busy route charge. Freight for exporting Iron ore will go up by INR 300-400/MT. This will severely hit the margins. Exporters believe that, this will certainly reduce Iron ore loading for exports. Chances are high that truck freights will go up in line with this.
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