Indian railways take right step towards commodities
Monday, 28 December 2009
NEW DELHI, Dec 27 (Commodity Online): Very soon your freight charges will be directly related to price index of the commodities you dispatch. Indian Railways has taken the first step towards this step, which includes various other factors as well including that of prices on the derivatives exchanges.
Essentially this means a higher demand makes higher freight charges and lower the demand, the index will automatically come down lowering the freight as well.
Indian Railways is one of the biggest carrier of basic commodities in India and its freight rates puts a lot of difference to the way prices will now be determined. 833 million tonnes of freight was carried during 2008-09 earning more than Rs 500 billion (50,000 crore).
Iron ore, food grains, cement, petroleum products are just some of the important price index commodities Railways carry.
Initially, calculation will be a little ambiguous but Railway sources say, this will be centralized and put into software, which will calculate automatically taking live index benchmarks.
It is yet to ascertain whether this dynamic pricing will be detrimental to growing freight movements on rails since road transportation is another alternative dispatchers may opt for if freight charges are not competitive.
But all said and done - whether this move fails or succeeds - the public utility service has shown that it is open to change, and change for good.
Essentially this means a higher demand makes higher freight charges and lower the demand, the index will automatically come down lowering the freight as well.
Indian Railways is one of the biggest carrier of basic commodities in India and its freight rates puts a lot of difference to the way prices will now be determined. 833 million tonnes of freight was carried during 2008-09 earning more than Rs 500 billion (50,000 crore).
Iron ore, food grains, cement, petroleum products are just some of the important price index commodities Railways carry.
Initially, calculation will be a little ambiguous but Railway sources say, this will be centralized and put into software, which will calculate automatically taking live index benchmarks.
It is yet to ascertain whether this dynamic pricing will be detrimental to growing freight movements on rails since road transportation is another alternative dispatchers may opt for if freight charges are not competitive.
But all said and done - whether this move fails or succeeds - the public utility service has shown that it is open to change, and change for good.