IR in talks with eCom Cos for on-board sales of their merchandise in Reserved Coaches
New Delhi: At a time when e-commerce giants such as Flipkart and Amazon are contemplating offline stores to expand their reach, on-board sales in trains could provide them access to 500 million passengers, many of whom are still not on internet.
The Indian Railways is in talks with e-commerce companies like Flipkart, Amazon, Snapdeal and Paytm for on-board sales of their merchandise in reserved compartments.
Online buying and online purchasing of services and products has now become the newest trend in the web industry. It is commonly known as E-Commerce. Many business owners whether small business or large business are indulging in this kind of industry. For they find it cost-effective and convenient for possible consumers who are highly active in surfing the internet. Even Indian Railway the largest employment generation sector of India is also contributing a lot in E-Commerce, or we can say it is the largest contributor to India’s e-commerce. With the Indian Railway Catering and Tourism Corporation pushing electronic booking of tickets and scores of online travel portals entering the business, the share of tickets sold online in the total ticket revenues of the railways is increasing day by day.
The railways may turn out to be a lucrative market for the E-Commerce players as the number of reserved passengers on trains is more than 500 million a year, higher than the entire internet users. Indian Railways, the world’s fourth largest network, is looking to cash in on India’s booming $4 billion e-commerce industry to boost revenue from its freight operations.
Centre is all set to tap into various “sunshine sectors” of the economy including automobile sector, e-commerce industry and the fast-moving consumer goods (FMCG) segment to deliver goods, senior ministry officials said. The Indian Railways is also exploring ways in which it can help in door-to-door transportation of goods. It may soon use ‘Road Railers’, capable of movement on road as well as rail, to provide last mile connectivity.
Other delivery mechanism which the Indian Railways may look into include RO-RO (roll on, roll off) through which loaded trucks can be carried directly on railway wagons between two destinations, an official said. Konkan Railways is running the RO-RO service since 1999.
The Indian Railways is in the process of carrying out a detailed study of as many as 46 commodities to find out the potential sectors which can help increase its declining freight traffic growth. “We have carried out a detailed study and held discussions with industry players to explore potential areas which the Indian Railways can tap in to boost freight growth,” said another ministry official. Some of the areas which the Indian Railways is considering include refrigerated goods, building material, horticulture, courier express and parcel, marble, glass among others. “For instance, there is a lot of potential in horticulture. Its output has grown faster than food grains in the past few years,” the official added.
E-Commerce puts Once-Troubled China Railway Bonds on Track
Railway bonds in China, rocked by crashes and corruption probes five years ago, are among the best performing local corporate notes in 2016 as investors bet on support from a government seeking to develop a high-technology, service economy.
Debt of transport companies including China Railway Corp. gained 4.2 percent this year, the most among 11 industries in a Bank of America Merrill Lynch index. Energy notes returned 3.9 percent and utilities ranked third with 3.6 percent. Property bonds were little changed, the worst performance, amid concern the government is tempering a real-estate bubble.
While the rally in transport bonds has been helped by central bank monetary easing, investors are taking comfort in President Xi Jinping’s support for an industry at the intersection of services, consumer spending and Internet commerce. Alibaba Group Holding Ltd., China’s largest online retailer, saw its revenues surge 47 percent in the quarter ended June 30 from a year earlier as it pushed into rural markets.
“It boils down to the boom of the new economy in China,” said Ken Hu, chief investment officer of Asia fixed income at Invesco Hong Kong Ltd. “The old way of shopping such as going to department stores is being overtaken by e-commerce and this has led to a surge in transportation volumes.”
The yield on China Railway’s 10-year bonds fell 83 basis points in the past year to 3.46 percent, sending the premium over similar-maturity government securities down 27 basis points to 69. The gap reached as wide as 180 basis points in 2013, when China’s cabinet arranged for the state-owned company to take over commercial operations from former Ministry of Railways, raising concern over its level of government backing.
The break-up followed the firing of the previous rail minister in 2011 amid allegations of corruption and a high-speed crash that killed 40 people.
“Bonds issued by China Railway now have explicit support from the government,” said Angus To, a senior research analyst of ICBC International in Hong Kong. “The outperformance may be due to market appetite for safe assets which provide higher yields relative to government bonds in an environment of falling yields.”
Hainan Airlines Co. and Changsha Metro Group Co. were among other transport gainers. The yield on Changsha Metro’s December 2025 notes has slid 65 basis points this year to 3.5 percent, and returned 6.3 percent, compared with an average 3.3 percent gain in Bank of America’s China corporate bond index.
Infrastructure Boost
State-run China Railway’s bonds are also benefiting from haven demand after a series of defaults, according to ICBC’s To. Recent local failures have included Sichuan Coal Industry Group, which missed payment on 1 billion yuan of notes in June, and Inner Mongolia Nailun Group Inc., a fertilizer producer and a property developer, which didn’t repay 800 million yuan of bonds in May.
Alibaba reported better-than-expected net profit last quarter, while rival Tencent Holdings Ltd. registered a 47 percent climb in net income.
The government is stepping up capital spending on roads, rails, airports. Transportation bonds have more room to advance as long as liquidity conditions remain supportive for the overall debt market, according to BOC International Holdings Ltd.
“Policy support is very strong for the transportation sector with more subways, highways and new airports under construction,” said Steve Wang, Hong Kong-based head of fixed income research at BOC. “Consumers are continuously evolving and transportation is a sector that can benefit for long from the rise of the new economy.”
Mumbai: The Railways is upbeat about running high-speed trains like the Spanish Talgo and Rajdhani between Mumbai and Delhi at a speed of 160 kilometres per hour (kmph), but Chandrika Prasad, a former Railway Board member, has warned of pitfalls for running trains at high speed (160-200kmph) on the Mumbai-Delhi section. In the latest issue of a railway industry magazine, Mr Prasad has said that to run high-speed trains, signalling needs to be upgraded. There are 495 speed-killing curves on the tracks between the Mumbai and Delhi section.
Salem: Revenue loss of 55 per cent and pressures from industrial stakeholders have now forced the Railways to re-look its last year’s decision to stop the loading of ‘parcel cargo’ in the passenger trains that halted in Tirupur station for less than five minutes.
Indian Railways has proposed to undertake construction work in its projects under the government’s flagship rural jobs programme, potentially bringing in thousands of crores of rupees to the cash-strapped national transporter.