Cargo Business Newswire ArchivesSummary for February 29 through March 4, 2016:
Monday, February 29, 2016
Featured Story: Weighing-in on Box Weigh-ins
By William DiBenedetto, CBN Feature Editor
The votes are in and it’s pretty much official: shippers, carriers and terminals would like to see the United Nation’s container weight verification rules—scheduled to take effect July 1—to just go away.
Mis-declaration of container weights has been a hot topic for many years; it’s probably responsible for many accidents and was implicated in the sinking of the MSC Napoli in 2007. That’s because even one overweight or badly loaded container can have a huge impact on others once loaded on a container vessel. Erroneous weights can also lead to incidents on land, including trucking accidents and overweight cargo falling through the container bottoms.
Some 600 containers are washed overboard due to weight or loading discrepancies each year, according to official estimates, but that number might be much larger. In addition, the International Cargo Handling Coordination Association (ICHCA) has estimated that up to 20 percent of containers are mis-declared.
Last year the International Maritime Organization (IMO) amended the Safety of Life at Sea Convention (SOLAS) to require, as a condition for loading a packed container onto a ship for export, that the container have a verified weight – known as VGM (for verification of gross mass). It is up to the shipper to handle the weight verification. After July 1, it will be a violation of SOLAS to load a packed container onto a vessel if the vessel operator and marine terminal operator do not have a verified container weight. Without it, the container can’t be loaded aboard the vessel.
There are two methods in which the shipper can obtain the verified gross mass of a packed container:
Method 1 – Upon the conclusion of packing and sealing a container, the shipper may weigh, or have arranged that a third party weigh, the packed container.
Method 2 – The shipper or, by arrangement of the shipper, a third party may weigh all packages and cargo items, including the mass of pallets, dunnage and other packing and securing material to be packed in the container, and add the tare mass of the container to the sum of the single masses of the container’s contents.
Regarding both methods, SOLAS says the weighing equipment used must meet the applicable accuracy standards and requirements of the country in which the equipment is being used. Shippers, freight forwarders, vessel operators, and terminal operators will all need to establish policies and procedures to ensure the implementation of this regulatory change.
And therein lies the rub – because there isn’t much clarity on how to implement those "policies and procedures." It can get pretty complicated. For example, while the rule says the shipper is responsible for providing the verification – who exactly is the shipper? Due to the complexity of the international supply chain, an entity identified as the "shipper" on the bill of lading might not have direct or physical control over key elements of the VGM weighing process.
SOLAS does not mandate any particular form of communication between the parties exchanging the verified gross mass information. Also, is the carrier or terminal operator obligated to check the value given for the gross mass by the shipper and report to the authorities any discrepancy that may be found? Is there a margin of error? And because there is no single international standard covering weighing equipment, does this mean that different standards will be applied around the world?
Most importantly, how will this mandatory rule be enforced? SOLAS says that as a "national" issue, fines and other penalties will be imposed under national legislation. But there’s also a commercial issue in play. Penalties may involve repacking costs, administration fees for amending documents, demurrage charges, and delayed or cancelled shipments. The U.S. Coast Guard said it will not act as the enforcer, so will each port have to enforce the rule? They aren’t too keen on that idea, and few container terminals worldwide are jumping in to provide weighing services for shippers; so far the Port of Charleston is the only one in the U.S. to say it might.
At a recent meeting before the Federal Maritime Commission the U.S. Agricultural Transportation Coalition reiterated its opposition to the rules, asserting that U.S. shippers will be disadvantaged when the rules come into force. "Our current method of reporting weights to the carriers has been accepted by the industry and compliant with SOLAS for the past 22 years," AgTC said. "There is no need for change."
Shippers said that under the new regulation, they will be required to supply the tare weight along with the weight of any packed goods and dunnage. "A shipper should only be responsible for their gross cargo weight. A shipper should not be required to certify the weight of equipment (the container), which is owned or leased by the steamship line."
AgTC said the rule should be delayed and reexamined by individuals familiar with the export supply chain process. If not, the SOLAS Amendment "will require a costly and unnecessary redesign of the supply chain," "disrupt the flow of cargo through ports," and cause turmoil at marine terminals and be a significant impediment to U.S. exports.
Drewry Supply Chain Advisors noted that some supply chains are almost certain to suffer significant disruption when the VGM rules come into force in July, adding there could be a late June surge in shipment volumes.
The consultancy said that while some shippers had made preparations, many others were unlikely to be ready to meet their new obligations. "We are seeing some progress, but equally it is becoming clear that not all shippers will be ready to comply with the new IMO rule," said Drewry.
U.S. bans forced labor exports
President Barack Obama just signed a bill banning the import of goods produced by forced labor from entering the U.S, throwing the weight of the U.S. market into the fight against global slavery.
Shipments derived from slavery, from fish to electronics, will be kept out of the country under the new law that closes a legal loophole that allowed import of goods derived from forced labor if U.S. demand exceeded domestic production, officials said.
The measure closing the loophole from the Tariff Act of 1930 was included in a wider trade enforcement bill, which Obama signed into law at the White House.
"The mere deterrent effect of closing this loophole is a great step forward," Gil Kerlikowske, commissioner of U.S. Customs and Border Protection, told reporters on a conference call. "We're going to make sure that is heavily noted throughout the world."
Private equity is turning away from the shipping industry because a glut of funding over the last five years has contributed to overcapacity in the industry, according to Andrian Dacy, the head of JPMorgan Asset Management’s global maritime business.
While private-equity firms enjoy returns of as much as 20 percent in the tanker market, bulk-carrier markets are in a perilous state with the Baltic Dry Index, a measure of commodity shipping costs, posting near all-time lows as the Chinese economy wanes, Dacy said in an Bloomberg interview in Hamburg.
"The level of fear has increased," said Dacy, who has worked in ship financing for more than two decades. "Private equity will take a wait-and-see approach this year."
Investment firms including WL Ross & Co. and Oaktree Capital Group have scored vessels at near record-low prices since 2010, intending to ride a global recovery in shipping that has failed to materialize amid a sustained slump in the container and bulk-carrier markets.
Deputy Director appointed temporary head of Port of San Francisco
Port of San Francisco deputy director Elaine Forbes has been appointed temporary head of the department by Mayor Ed Lee, while the Port Commission conducts a nationwide search for a permanent director, according to a statement from the San Francisco mayor’s office.
Elaine Forbes will take over as interim director of the port March 1, following the recent resignation of Director Monique Moyer, who had served as port director since 2004, according to the mayor.
"Elaine’s leadership and extensive background in policy and financial management make her an outstanding choice to lead the Port during this time," Lee said in the statement. "Elaine is a proven leader and is an invaluable member of the Port’s Executive Team, showing her commitment and dedication to the Port and our city."
The port is in charge of development, marketing, administration, management and maintenance of San Francisco’s waterfront from Hyde Street Pier to India Basin.
Forbes is the current deputy director for finance and administration with the port and has been an executive with the planning department and at San Francisco International Airport, according to the statement. She led projects like the 34th America’s Cup and the new Exploratorium on The Embarcadero while director.
Canadian man gets probation for smuggling dinosaur fossils
A Canadian dealer in prehistoric artifacts was sentenced on Monday to five years on probation and fined $25,000 in U.S. federal court in Arizona for smuggling dinosaur fossils from China to sell at a Tucson gem show.
Jun Yang, 36 pleaded guilty in August to one felony count of illegally importing 17 fossil specimens into the U.S., one of them dating back at least 100 million years, according to federal court documents.
Yang admitted as part of his plea bargain that the smuggled items were transported from China by freighter inside shipping containers and placed on display at the 2015 Tucson Gem and Mineral Show.
The entire collection was valued at about $22,000 and included a specimen of Psittacosaurus, a small, bristle-tailed, plant-eating dinosaur excavated from central China and priced at $15,000, federal prosecutors said.
Honolulu-based Matson, Hawaii’s largest carrier, announced its earnings last year were up 46 percent to more than $103 million from $70.8 million in 2014.
The company managed to hit a record year even after reporting a lower fourth-quarter income in 2015 than in 2014, the Honolulu Star-Advertiser reported.
Matt Cox, Matson president and CEO, called 2015 an "exceptional" year. "Financially, it was the best year in our history," he said in a statement.
The profit increase can be attributed to Matson picking up business between the West Coast and Hawaii and acquiring operations in Alaska.
The acquisition of Horizon Lines’ Alaska service resulted in Matson carrying 39,100 TEUs in that market over a seven-month period last year, compared to none in 2014. The company also carried about 11,000 more Hawaii boxes last year. Matson picked up container and automobile shipments lost by Pasha Hawaii Transport Lines, which rearranged its service routes after dealing with one ship’s mechanical issues.
Total revenue for Matson grew by about $180 million to $1.89 billion in 2015, up from $1.71 billion in 2014. Fourth quarter numbers for 2015 show Matson’s profit was $26.6 million on revenue of $495 million.
Completed in three months, the new 5.2-mile access channel directly links East Port Said to the Mediterranean Sea, and means that vessels heading to the Suez Canal Container Terminal (SCCT) no longer have to wait 6-8 hours for a time window between vessel convoys transiting the canal.
The channel, dredged to a depth of 61 feet, can now provide 24-hour access to East Port Said, and SCCT, to the ultra-large container ships with capacities of 18,000 TEUs and above now deployed in the Far East/Europe trade lanes.
A ceremony formally inaugurating the project was hosted by SCCT at East Port Said. Attendees included Egyptian Prime Minister Sherif Ismail, Suez Canal Authority Chairman, Admiral Mohab Mamish, and the Governor of Port Said, Major General Adel El Ghadban to witness the opening of the project, which represents an investment of around $40 million.
In August 2015, a $8.2 billion project to deepen the Suez Canal, and excavate a new 22-mile channel parallel to sections of the existing canal was completed, enabling two-way traffic along the entire 120-mile canal route, and doubling canal traffic capacity from 49 vessels per-day to 97.
APM Terminals is the majority shareholder in SCCT, owning 55 percent. Other shareholders include Chinese-based COSCO Pacific, with 20 percent, the Suez Canal Authority, with 10.3 percent, and the National Bank of Egypt, with 5 percent. The remaining shares are held by the Egyptian private sector.
Approximately one tenth of all global seaborne trade moves through the Suez Canal, carried by 18,000 vessels, including container ships, transiting annually. In 2015 5,941 container vessels traveled the canal, representing an aggregate capacity of 41.2 million TEUs.
There are currently 36 vessels of 18,000 TEU capacity and above deployed on the Far East/Europe trade lane, the world’s busiest, with another 73 on order.
New St. Petersburg port to be Russia’s main cargo hub
Saint Petersburg's new deepwater port aims to become Russia's major hub for cargo and container shipping, despite an industry slump and the impact of Western sanctions on the country, officials involved said last week.
Russia's economy has been hit by falling oil prices and Western sanctions, which have also battered the ruble.
Port Bronka, which is located in the Gulf of Finland, has been developed to boost trade and also be able to take bigger ships than Saint Petersburg's historical port, which is located closer to the main city.
"In the long-term we are very positive about the Russian market," said Stefan Wilkens, general manager of Bronka's container terminal. "Russia still has a low containerization level," he told a news conference in London.
At 28 TEUs per capita, Russia is among the lowest users of containerized trade, Wilkens said, adding this compared data showing 97 TEUs per capita globally and 122 TEUs in Europe.
The global container market, which ships retail goods from electronics to clothes and food products, has been hit by a slowdown in demand for goods from Asia. Cargo shipping - including industrial goods such as coal - is also reeling from softer Chinese imports and too many ships available for hire.
The world's number three line, CMA CGM, became the first international group to start calls to Bronka in January and officials said more firms were expected to follow.
Port officials said Bronka represented the "fastest way" to reach Moscow and consumer markets there, with better road connections. They said the first direct cargoes to be sent by rail from the port to Moscow were set to go live in March.
CMA CGM unveils new rotation linking U.S. East/Gulf coasts to Asia, Africa
French shipping giant CMA CGM introduced its new PEX 3 service rotation linking U.S. Gulf Coast and U.S. East Coast (South Atlantic) to Asia, Africa and the Mediterranean.
Starting March 9, 2016 in Houston with the M/V CMA CGM CHATEAU D'IF embarking on the initial voyage, the new rotation will be: Houston - Mobile - Miami - Jacksonville - Charleston - Tangier - Singapore - Hong Kong - Chiwan - Shanghai - Ningbo – Pusan.
PEX 3 will then offer the following features:
Improved connections from the US Gulf Coast to West Africa and North Africa via Tangier hub.
Direct access to Singapore as new port of call.
Improved transit times and connections to Southeast Asia from all PEX 3 ports of load.
Faster transit time from Charleston (new port of call) to West Africa, Singapore and Asia.
Better connections from Mobile to West Africa, Mediterranean and North Europe via our hub in Tangier.
SeaIntel: Container ships skip the canals on low oil costs
The low price of oil is allowing container ships to avoid the expensive tariffs of the Suez and Panama canals and take the long way round Africa instead, according to a new report.
The report released this month by maritime trade analysts SeaIntel found that, since October 2015, 115 vessels transporting goods from Asia to North Europe and the U.S. east coast sailed around South Africa on their return journey, instead of using a canal.
Falling fuel prices mean the ships could afford to take the longer route at a faster speed, thus taking the same amount of time as using the canal, the report found.
According to SeaIntel, using the South Africa route would save on average $235,000 per voyage, which would be a huge boost for cash-strapped carriers.
"Further savings could almost certainly be achieved if the carriers moved some of the intermediate calls to other services or slowed down the speed of the backhaul leg," the report said.
The carriers are highly valuable to the Suez Canal—SeaIntel said vessels sailing from Asia to the East Coast are charged $465,000 on average for passage.
"If the canals want to change the economics of the routing choices, the Panama Canal would need to cut prices by roughly 30 percent, while the Suez Canal would need a cut of roughly 50 percent," the report added.
The decision to use the South African route would also have a big environmental impact. SeaIntel calculated that the increased fuel consumption would mean an additional 6,800 tons of CO2 emitted per voyage.
Mammoth container ship berths at Port of Seattle’s Terminal 18
Photo credit: Mike Siegel/Seattle Times
The largest container ship to visit the U.S., the CMA CGM Benjamin Franklin, arrived at Harbor Island’s Terminal 18 Monday, filled with electronics, clothing, furniture and sporting goods.
Built in 2015 with the capacity to carry 18,000 TEUs, the Benjamin Franklin nearly doubles the volume of a conventional container ship.
"It’ll probably be several years before we see something that big again," said Northwest Seaport Alliance spokesman Peter McGraw. "But we’ll be seeing larger vessels in the 13,000 to 14,000 size before that."
During the month of February, the Franklin called at three of SSA Marine’s West Coast terminals - Pacific Container Terminal at the Port of Long Beach, Oakland International Container Terminal at the Port of Oakland, and Terminal 18 at the Port of Seattle.
"Investment and preparation are the keys in welcoming a vessel the size of the Benjamin Franklin. It is a significant undertaking and one few ports are equipped to handle," said Ed DeNike, President of SSA Terminals.
Terminal 18 is the largest container facility in the Pacific Northwest at 196-acres. Since 2000, SSA Terminals has invested nearly $80M dollars in cranes at the terminal to secure cargo interests in the Port of Seattle. Terminal 18 is the best-equipped terminal in the PNW to handle a vessel this size. Oakland International Container Terminal expanded to a 272-acre facility with 5 continuous berths and 10 Post-Panamax container cranes. Later this year, the Port of Oakland will raise four cranes an additional 26 feet.
Pacific Container Terminal is 257-acres, with 17 gantry cranes and 39 gate lanes, including room for further expansion. With SSA Marine’s $160M dollar investment in cranes, PCT is prepared for high capacity vessels.
U.S. and EU seek to complete Atlantic trade deal by end of 2016
U.S. and EU negotiators moved on with efforts to get the Trans-Atlantic Trade and Investment Partnership done by the end of 2016, weeks after the White House suggested the deal might not be possible before President Barack Obama leaves office.
"If we can sustain our current intensified engagement, we can finish the negotiations this year," U.S. trade negotiator Dan Mullaney told reporters in Brussels on Friday after a week of talks.
Mullaney and Ignacio Garcia Bercero, his EU counterpart, said both sides want to work toward a consolidated draft text by July so that only the toughest issues will remain open. Mullaney said this means a deal could "potentially" get done in the second half of 2016, while cautioning that substance will take precedence over the calendar.
Since starting the trade talks in 2013, the U.S. and the EU have held 12 rounds of negotiations aimed at cutting red tape, eliminating tariffs and jump starting investment between the two markets.
This week’s round of talks included new offers on regulation as well as the first discussions on the EU’s most recent investor-protection proposals, which have drawn intense public scrutiny.
Mullaney said the TTIP talks will also affect global standards on how to encourage investment while ensuring regulators can act in the public interest as needed.
The current negotiating round will stretch into a second week as the U.S. and EU exchange government procurement offers, and two more trade rounds are slated between now and July. Talks so far have covered tariffs, car safety, sanitary standards, and industrial sectors including chemicals, cosmetics, pesticides, pharmaceuticals and textiles.
New cargo train service marks link between China and Russia
A cargo train with 47 containers hauling Chinese-made goods left Harbin for Russia Saturday, marking the opening of a new freight route between the two countries.
The new route links Harbin, capital of northeast China's Heilongjiang Province, with Russia's fourth largest city Ekaterinburg, according to the Harbin Commerce Bureau.
The train transported $1.46 million worth of bicycle parts and light industrial products, mostly from southern China. It will complete the 5,889-kilometer-journey in 10 days.
Before the route was launched, cargo from southern China to Russia was transported via Dalian Port in the northeastern Liaoning Province for ocean shipping. "A shipment took 40 days on average and was quite expensive, too," said Meng Qingwen, general manager of a logistics company that provides freight services between Harbin and Europe.
Freight trains linking Harbin and Europe have carried more than 1,300 boxes since the service began in June 2015, reaching the German city of Hamburg via Russia and Poland.
Peru antitrust regulator sanctions 17 shipping lines
Peru's anti-trust regulator said Friday it had started sanction procedures against 17 shipping lines it suspects of having fixed prices together for years on goods moved between the country's Callao port and Asia.
Authorities could fine each company 12 percent of its parent company's annual earnings if wrongdoing is confirmed, said Jesus Espinoza, an official with regulator Indecopi.
Evidence found through inspections, such as business emails and minutes from meetings, point to a cartel that schemed to increase freight rates between 2009 and 2013 and perhaps longer, Indecopi said in a statement.
Shipping companies named as suspects include units belonging to A.P. Moller-Maersk, Hapag Lloyd AG and American President Lines Ltd., owned by Neptune Orient Lines.
A spokesperson for Maersk said he could not immediately provide comment outside of regular business hours. The other companies did not immediately respond to requests for reaction.
Espinoza said each firm had 30 days to submit a defense. The investigation could take up to a year and a half to conclude.
Peru is a leading global exporter of copper, zinc, silver, gold and fishmeal, and has exported at least $20 billion worth of goods per year since 2009.
Logistics company group complains about "vague" container weighing mandate
A group of global logistics companies have asked the International Maritime Organization to clarify and provide more detail on new container-weighing requirements they say will call for significant changes to the transport of goods around the world, according to The Wall Street Journal.
In a letter to the IMO, the Global Consolidators Working Group said the rule requiring shippers to verify the weight of containers before they’re loaded onto ships is too vague to implement.
"The lack of information, transparency and guidance makes it nearly impossible (and certainly impractical) for shippers to implement necessary arrangements to comply properly," said the letter, signed by executives from CaroTrans International, Shipco Transport and others.
The complaint echoes importers and exporters concerns that the rule, adopted as an amendment to the IMO’s Safety of Life at Sea Convention (SOLAS), would levy an unfair burden on shippers.
Currently, shippers are only required to estimate the weight of the contents in containers, but don't have to sign off on the weight of pallets or other materials inside the boxes, or the containers themselves. Ocean carriers say the system has led to rampant mis-reporting of container weight, which can cause accidents such as collapsing containers or even damaged or capsized ships when the containers are stacked improperly.
The carriers and some port operators say they plan to turn away any containers for which weight isn't properly reported. The prospect has retailers and manufacturers, that depend on ocean transport, warning of disarray and missed shipments.
Experts say requiring shippers to weigh entire containers would require shippers to change the way they communicate shipment information to carriers, likely leading to congestion at ports.
Critics, including U.S. agriculture exporters who say they’re still reeling from last year’s West Coast port delays, say any delays could harm their businesses and add millions of dollars in costs every year from weighing services and extra transportation costs.
The group that wrote to the IMO is made up of so-called consolidators — companies that combine shipments from various shippers into containers. The group said in its letter to the IMO that several issues need to be clarified, including how a responsible party will be identified in case of violations.
What should have been acceptable ship utilization figures last year didn’t prevent spot rates from falling to historic lows, according to the latest issue of Container Insight from Drewry Maritime Research. Carriers would need to intensify their capacity management tactics in 2016, they said, if they are to reverse the trend.
Drewry takes a look at the supply side of the equation to see how full ships were in 2015—noting that they were actually pretty close to full with ship utilization on East-West services averaging 87 percent. Considering the seasonal peaks in volumes, carriers did a reasonable job of matching supply with demand on a monthly basis.
The delicate balancing act was achieved through a combination of tactics designed to suppress supply-side inflation. On top of the now entrenched slow-steaming, carriers upped the number of void sailings, suspended or merged services, cascaded ships into other trades to make way for newer, bigger vessels and as a last resort were forced to lay-up many more of those assets as the year progressed.
In the Asia-North Europe trade alone there were around 230 void sailings in 2015, which reduced the annual on-way capacity count by approximately 910,000 TEUs, or 8 percent of what it would have been without any blanked voyages.
The Ocean Three (CMA CGM, CSCL and UASC) and G6 Alliance carriers (APL, Hapag-Lloyd, Hyundai, MOL, NYK, and OOCL) were the biggest adopters of void sailings in the Asia-North Europe trade last year, removing 290,000 TEUs and 270,000 TEUs in annual one-way capacity, respectively. The other two alliances operating in the trade, 2M (Maersk Line and MSC) and the CKYHE Alliance (Cosco, K Line, Yang Ming, Hanjin and Evergreen) were more restrained, cutting “only” 160,000 TEUs and 190,000 TEUs respectively.
Despite carriers’ best efforts to curb the supply-side growth, it wasn’t enough and spot market freight rates plummeted to non-compensatory levels by the end of the year. Drewry’s East-West Freight Rate Index, as published in the Container Freight Rate Insight, fell back by 26 percent on average in 2015, while the Asia-Europe Westbound Rate Index fell even further by 42 percent.
Even worse news for carriers is that they will have to go deeper again in 2016. With only minimal demand growth anticipated, carriers will still need to be more creative at hiding the 1.3 million-TEU worth of newbuilds scheduled for delivery in 2016, the majority of which are destined for the East-West trades.
In conclusion, Drewry said carriers will need to intensify the cascade of ships, missed sailings and lay-ups in order to raise utilization to levels that could propel rates to profitable levels.
Ports of Singapore and Rotterdam strengthen partnership
The Centre for Livable Cities, the Embassy of the Kingdom of the Netherlands and the Maritime and Port Authority of Singapore Academy (MPAA) jointly organized a conference, "The Port and City of Rotterdam – Era of Transition," which explored ways the port industry can transit towards a sustainable and bio-based economy.
The event was led by the vice mayor of Rotterdam Adriaan Visser and the president of the Port of Rotterdam (PoR), Allard Castelein, according to a statement from the Singapore port authority. The session was moderated by Andrew Tan, chief executive of MPA.
Following the lecture, the MPAA hosted an interactive roundtable discussion with the the Port of Rotterdam to further strengthen their partnership. Topics included the development of Singapore’s Tuas port, the ground-breaking operation and development of Rotterdam’s Maasvlakte 2, current and major issues relating to LNG bunkering and innovation of ports in relation to a culture of green practices.
"The dynamic and complex challenges facing the shipping industry brought about by strong economic headwinds, stricter regulations, ever growing vessels and new technologies require port authorities to work more closely with each other and with industry partners to develop innovative solutions to tackle the challenges," said Tan, chief executive of MPA. "The lecture today and the subsequent roundtable discussions involving key industry players will provide more opportunities for exchange of best practices and collaborations to improve efficiency, sustainability, safety and security, as well as the adoption of future-ready technology and infrastructure in ports."
Oldest Asian railroad seeks to fund $124 billion remodel
India signaled the solution to finding the $124 billion needed to modernize its congested railway which includes carrying more types of cargo and generating revenues from land holdings.
Railway Minister Suresh Prabhu outlined the strategy in his annual budget speech for the rail network last week, saying the target is to earn as much as 20 percent of revenue from non-tariff sources in five years. The plan to expand freight comes amid a slump in the price of commodities, such as coal, that the railroad typically carries.
India’s railway is the fourth-largest in the world. Less impressive is the state of the network, which is in parts both congested and aging with roots back to British colonial rule.
As a result, Prime Minister Narendra Modi wants to spend $124 billion through 2020 on new tracks, India’s first bullet trains and modern stations. The unanswered question for companies such as General Electric Co. and Alstom SA, which are hoping to gain from the revamp, is where all the money will come from.
Indian Railways employs 1.3 million people and carries 23 million people daily on about 65,000 kilometers of often congested track. Sometimes, trains have slowed to walking pace. The sheer scale is daunting.
The outlay India is targeting exceeds the annual gross domestic product of many national economies. The railways may seek to sell land, export trains to Asia and Africa and sell advertising space while curbing costs, to cope with the wage burden and find funds for investment, people familiar with the matter said last month.