Tata Steel to transport raw material by coastal route in the aim to save on freight and energy costs.
India’s largest steel producers, Tata Steel is planning to transport Steel & Coal through coastal and inland waterways to save on freight and energy costs.
The company that sets up an INR 400 billion project in Kalinganagar (Odisha) is likely to transport 15-20% goods of its factories in the next 3-5 years via water from almost zero now. At present, Tata transport 63% cargo through rail and 37% by road.
The group head-shipping & logistics of Tata Steel, Mr. Amitabh Panda stated to media, “We are planning to transport the finished steel coils, Re-bars to South India & Mumbai via coastal route. Inland waterways will be utilized to transport limestone from Middle East, while coal from Australia by barges from ports to plant based in Kalinganagar”.
The barges will travel via the Brahmani River that flows close to the Odisha based Kalinganagar plant, which add capacity to produce 6 MnT Steel to the present capacity of 10 MnT. It is anticipated that plant will start producing steel by the current fiscal year-end.
Part of finished steel from Jamshedpur & Kalinganagar will be delivered to automobile and other industries nearby Indian coast in Tamil Nadu & Maharashtra. To check the cost benefit, Tata Steel had conducted a pilot this year and it is estimated that by using waterways to transport goods will turn out to be upto 20% cheaper.
Therefore, if the company transports about 20% cargo via waterways, it will be able to cut upto 3% of total freight costs in next 5 years.
With collaboration of other companies, Tata Steel plans to design a network of waterways in India, alike of aviation network worldwide. However, before this, India needs to develop coastal & inland waterways. Around 7% of cargo in India moves via waterways as compared to over 40% in China & European Union, despite having long coastline.
The company already uses coastal route to transport goods in other parts of the world.
At present, due to lack of roads & railways connected to ports, factories or consumption centres, companies in India can’t be able to use coastal route. The new government, which allotted INR 42 billion to develop Ganga for inland waterways in its new budget, gives a major push to transport Coal in the region.