Gateway Distriparks would like to win the volume of CONCOR’s flagship ICD

The Delhi-National Capital Region is an important market for export-import and inland freight and Gateway Distriparks Ltd, one of the country’s leading private logistics and container train operators, aims to steadily increase its market share through the use of its two main inland container depots just outside of Delhi.

The company’s strategy is to target volumes from Tughlakabad ICD in south-east Delhi, the largest in India, operated by state-owned Container Corporation of India, a competitor and industry heavyweight.

“If you look at ICD (Tughlakabad) which is located within Delhi, we also plan to address their volume as there is a problem of transporting cargo inside and outside of Delhi. So customers are looking for options outside of Delhi and we have the first mover advantage that we have two terminals outside of Delhi, one in Gurgaon (Gurugram) and one in Faridabad, which brings many benefits to customers,” Rajguru said Singh Behgal, President, Rail-Vertical, Gateway Distriparks Ltd.

The Company currently operates double-stack container trains from its flagship ICD in Garhi Harsaru, Gurugram and plans to do the same from its ICD in Faridabad, which will help improve volume pick-up.

Gateway Distriparks anticipates a disadvantage Tughlakabad ICD is facing. Heavy-duty vehicles entering Delhi must pay environmental compensation fees. The entry of commercial vehicles into the capital is also restricted during the rush hours of the day and only allowed around midnight.

Behgal stressed that the services provided by Gateway Distriparks through its two ICDs located outside of Delhi will enable customers to carry out cargo movements throughout the day and will not incur any environmental tax, giving them a cost advantage.

“We already have a 17% market share (Delhi-NCR). So this market is very important for us because if you talk about the industry, there’s the automotive industry…then we have apparel exporters. So what we are seeing is a massive size of 1 lakh TEU per month and we plan to increase our market share,” said Behgal.

CONCOR currently plays a dominant role in container train transport with a market share of over 60% in domestic rail container transport. The company’s ICD in Tughlakabad is India’s largest dry port, handling approximately 300,000 TEU (20-foot equivalent unit) annually.

Gateway Distriparks’ strategy could well work. According to a recent report by brokerage firm ICICI Securities on May 21, CONCOR is losing its market share mainly in Western Market (Mundra) and Delhi-NCR Market.

“It (CONCOR) is also losing its market share due to the pricing strategy of the competition
Competition from the road transport sector,” says the report.

GATEWAY’S EXPANSION PLANS

Gateway Distriparks’ ICD at Gurugram is a 90 hectare facility with an installed capacity of 250,000 TEU. The Company’s other ICDs in North India include Ludhiana, Kashipur and Faridabad. The ICD in Jaipur is expected to be operational in the current fiscal year.

“…lots of new investments near NCR being made around our terminals. If you look at one of our biggest customers like Maruti, they are thinking about a new plant that is very close to our facility. Then there are areas closer to our facilities, near Neemrana, Bhiwadi-Bawal and Manesar, where new investments are coming in,” Behgal said.

The company’s portfolio currently includes five container freight stations and five rail-bound ICDs. Another ICD in Jaipur is under construction. Post that the company is planning to manufacture two more ICDs that will connect the North West Corridor and will be located in North or Central India.

“We want to expand in the ICD industry. We just completed the acquisition of Kashipur, we are building Jaipur…we see UP, Rajasthan and Central India as key areas where we want to expand,” said Ishaan Gupta, Joint Managing Director of Gateway Distriparks.

Gupta added that expansion of cold storage and dry storage is also planned.

GATI SHAKTI TERMINAL POLICY

In December 2021, Indian Railways unveiled the Gati Shakti Terminal Policy, which aims to encourage the development of rail freight terminals and increase the rail freight share from 27% to 45% by 2030.

The Directive allows both private and state operators to set up common user facilities or terminals for handling rail freight.

The policy has two components: the development of common user facilities on private land or land owned by the railways. Gateway Distriparks management emphasized that as a full-fledged container train operator, there is still limited business potential for the establishment of shared user terminals on railway premises, where the operator will not own the terminal site and this will be a shared user opportunity for as well other operators.

The lack of exclusivity for terminal use and train operations will result in limited potential for operators such as Gateway Distriparks as they derive 70% of revenue from train operations.

“If you build it on the railroad property you have to make it a common user terminal, which means anyone can bring their train and you can’t say no if they pay the nominal train access fee.” For us, 70% of our container turnover is accounted for rail transport, so we don’t just want to be in the ICD business… the return doesn’t justify the investment. So we’d rather hope someone else moves in and builds these Gati Shakti terminals on the railway site and we’ll bring our trains there and work on that model,” said Samvid Gupta, joint managing director of Gateway Distriparks.

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