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Container Corporation of India, also known as CCI/CONCOR is in the core business of Container Freight Station Operation. It performs three distinct roles: Carrier, Terminal operator, and a warehouse operator. The mission of the company is to be a responsive, cost effective, efficient and reliable logistics system provider, ensuring profit and growth.
Services provided by CONCOR:
• Scheduled train freight service – It has regular service between major city pairs
• Cabotage of empty containers
• Stuffing/destuffing: shipper’s unit (Door) & terminal- It handles the loading- unloading of containers at the terminals and warehouses.
• Consolidation of LCL: It consolidates different containers with less than container load to save cost. For ex: If a container is 40% loaded and another container is 30% loaded, CCI will consolidate both to transport a 70% loaded container.
• Bonded warehouse and truck operations
• ETMS – Exim Terminal Mgmt. Sys. – container tracking service
• Handling of customized non-std. containers
• Hazardous material handling
• Exim customs handling: CCI handles all the export- import custom documentation for the international orders. The client should remain completely hands-free; all the transactions between port’s terminal, customs handling will be taken care by CONCOR.
Industry analysis Overview:
Name of Force Force score Implications on future Profitability
Substitutes 2 Decreasing
Complements & Govt Regulation 1 Decreasing
Barriers to entry & Govt Regulation 5 Decreasing
Bargaining Power of Suppliers 2 Decreasing
Bargaining Power of Customers 2 -
Competitors 3 Decreasing

The overall industry profitability is very high with barriers to entry being high and the bargaining power of the suppliers/buyers being very low. CCI almost holds monopoly in the industry. But recent developments and trends suggest that the profitability is decreasing because of:
1. Decline in volume of trade due to recession
2. Decline in profitability due to squeeze on input costs and labour costs (increasing wages)
3. Reducing market share due to new entrants

Figure 5: Industry segmentation of major players

In India in the modal transport, road transport is much ahead of the other modes of transportation. In 2009, the shares in freight movement (tonne kilometre) for roads, railways, air and water transport is 61.2%, 38.6%, 0.02% and 0.2% respectively. Other modes of transport (roads and waterways) can be effective substitutes for railways. In India, considering the extensive network of Indian railways, railway can be termed as a natural monopoly without monopoly power because customers can switch to other modes if their expectations are not met. However, CCI holds a monopoly position in the container cargo business with about 95% of the market share.
CONCOR’s business can be classified into three distinct activities: a carrier, a terminal operator and a warehouse operator. We will look at the key success factors of CONCOR in all these activities separately. However, some of the general attributes if CCI which make it a dominant player should be looked over first. Indian railways own a 63% stake in the Container Corporation of India. The relationships and contracts with the Indian Railways is one of the foremost reasons for the dominant position of CCI. Although Indian railways have opened the container movement sector for private participation, the capital requirement and the leverage enjoyed by the incumbent CCI has made it possible only for 7 of the 15 license holders to start operations. Currently, 146 container trains of CONCOR and 44 container trains of other container operators are operational.
The success factors enjoyed by CONCOR due to its long run relationship with Indian railways are as follows:
i) Spiralling Land prices: Rail-linked Inland Container Depots are an essential factor for the operation of a container cargo business. Thus, strategic positions of ICDs are essential and most of the times these areas are owned by Indian railways. The rising prices of lands create a high capital requirement and barriers for other private players to compete with CONCOR.

ii) Transit-time guarantees: Quick response time is one of the requirements desired by customers for cargo transport. Transit time guarantee is the assurance by the Indian railways to deliver the container within the stipulated time since the Indian Railways locomotives within their system pull the container wagons. This dependence of private players on Indian railways and lack of assurance about the transit time by the IR make it difficult for the private players to compete with roadways. Although there is no contract with CCI, it is observed that IR due to its long-run relationship with CCI, do provide a timely transits which results in accurate response times. This gives an upper hand to CCI and is one of the factors contributing to its monopoly position.

iii) Payment Mechanism: Haulage charges are paid by CONCOR in advance on a fortnightly basis which results in a minimum processing time and as a result quicker response time. On the other hand for the private players the haulage charges are paid on a per train basis.

iv) Allocation of Land: The CONCOR terminals are located on leased lands. These lands are owned by IR and are leased to CONCOR on the basis of old contracts at nominal costs. However, the private players have to pay a higher price for this land due to the current prevailing prices. As a result, the private players are not able to compete with CONCOR on the basis of operational costs.

We will now consider the factors which give an upper hand to CONCOR in each of its three activities.

A financial performance measure of Carries operators is Profit per prime mover. Prime mover is a source of power for propulsion. In our context of carrier operators, we consider the number of container trains as prime movers. For CCI, the number of container trains is 146. This performance measure can be disaggregated into its components as:

Profit/Prime Mover = (Revenue/Prime Mover) – (COST/Prime Mover)
Profit/ Prime Mover = (Revenue/TEU) * (Delivery per Prime Mover) - (COST/Prime Mover) where TEU = Number of containers moved (Measure of absolute number of containers moved measured in Twenty Foot Equivalent Units)
Delivery per Prime Mover = Measure of average delivery in terms of Twenty Foot Equivalent Units made by each Prime Mover

Profit/ Prime Mover = (Revenue/TEU) * (TEU/ Total number of trips) * (Prime Mover turnaround) - (COST/Prime Mover)

Prime Mover Turnaround = Total number of trips made by each prime mover = (Number of Trips made in a time period) / (Number of Prime movers in the time period)

The most important determinants of success can be obtained from the above equation. We consider each of the terms in the above equation and the factors driving them.
i) Revenue/TEU: The carrier operator should be able to charge a higher haulage charge per TEU. However, the operator should ensure that it does not lose on its customer base due to the higher charges. In the cargo transport industry this is done by providing service reliability, quick response time and damage-free cargo transport.
However, CCI is observed to be competing on prices. Hence it does not charge a higher haulage charge. Although it has a reputation and operational efficiencies of high reliability, quick response time and damage-free cargo transport, it has not been able to translate this advantage into higher haulage charges. LCL consolidation is one of the initiatives of CONCOR to reduce the transit time. Considering the increased competition from entry of private players coupled with the existing competition from road cargo transport, it is not advisable for CCI to increase its haulage charges. However it can consider doing it on routes where other mean of transportation are not available. A comparison of the haulage charges charged by CCI and truck operators on two different routes is shown:

Performance metric Train operators Truck Operators
Freight charges – 17.5 MT between Delhi/Kolkata 21,850 55,000
Freight charges – 17.5 MT between Delhi/Guwahati 45,900 68,000

ii) TEU/ Total number of trips: The number of TEUs transported in each of the trip should be increased to increase the revenue per trip which results into an increase in the profit per trip. This is a measure of the operational efficiency of the terminal operator.
The total number of TEUs transported by CONCOR in 2010 was 25,62,297 TEUs. The large market share owned by CCI has given it the scale advantage which is translated into more umber of TEUs per trip. The number of TEUs transported per trip can be further increased by using the double stack rail transport mechanism used in other countries. iii) Prime Mover turnaround: This is a measure of the utilisation of the prime movers. The prime mover turnaround should be increased in order to increase the profits of a terminal operator.
The number of container trains owned by CCI is 146. The hub and spoke approach used by CCI has helped to increase the utilisation of this container trains and effectively the profit per TEU.

iv) COST/Prime Mover: The profit driver for carrier operator is to decrease the cost per Prime Mover. The economies of scale is a major factor which is targeted to decrease the cost per prime mover. Some other measure used to achieve the same are vertical integration or to reduce the power of suppliers.
The old contracts with IR have contributed to lower operational costs for CONCOR as compared to other private players. The entry of CONCOR into road transport to provide in-house first-mile and last-mile transportation instead of outsourcing them also has decreased the cost per prime mover. The industry standards for some of the carrier-related metrics are as shown below:
Performance Metric Industry Standard
Dwell Time Less than 0.8 days
Train Turnaround Time (Prime Mover Turn-around time) Less than 2 hrs
Truck Turnaround Time(Prime Mover Turn-around time) Under 60 minutes
Average Parcel Size per Vessel (TEUs/ Total Trips) 2064 TEUs
Average Throughput per quay length 2513.42 TEU/quay meter Here train turnaround time is not under the control of CCI. The standard mentioned above is the common across India and hence not a differentiating factor.

One major constraint is this is the ‘train scheduling’ which is done by the Indian railways. In some of the passenger/freight lines, priority is attached to the passenger trains and hence ‘dwell time’ is high – this again is common not within the control. This scheduling forms a major part of ‘holdup’ of profits – a major threat to profitability which will be dealt in detail later.

A typical load (full rake) consists of 40 BCN wagons (2200t). Sometimes half loads (mini-rake) of 20 BCN wagons (1100t) are also available for contracts [Source:]

The basic function of a terminal operator is storage and transport of containers. Terminal operators are accordingly concerned with maximizing operational productivity by making effective use of owned containers and land. Container handling productivity is directly related to the transfer functions of a container terminal, including the number and movement rate of container cranes, the use of yard equipment, and the productivity of workers employed in waterside, landside, and gate operations. The efficient use of available ground space involves the number of containers stored in a given area of the terminal. To improve the utilization of ground space involves reduction of the operational accessibility to containers. Thus ground space utilization and container accessibility are inversely related.
The productivity of a terminal operator is influenced by a range of factors, which are a combination of external and internal factors. The internal factors which can be controlled by the terminal operators include terminal configuration and layout, capital resources invested and labour productivity. The external factors include the trade volumes, shipping partners, ratio of imports to exports which affect the number of containers (container chassis).

The performance measures of a terminal are as shown:

The Container Corporations of India has 15,579 (owned plus leased) containers and it owns 55 Reach Stackers and 14 Gantry Cranes. In 2010, the number of TEUs transported by CCI was 25,62,297 TEUs. The above ratios computed for CONCOR are superior as compared to that of other competitors in India. However, in comparison to the international competition CONCOR lags behind. This table shows the comparison of CONCOR with the container freight stations in Los Angeles and Singapore.

Performance metric CONCOR Singapore Los Angeles
TEUs/crane 37,134 150,000 100,000
TEUs/acre 1250 24500 6000
Labour productivity Not tracked 0.4 – 0.74 TEUs/year
Total TEUs/year 2.5 million 20.6 million 7.3 million

Competitive position
Competitive Position: Overall Differentiator.
Even though on first sight, CONCOR might be considered as a cost leader, on closer inspection, it doesn’t concentrate on reducing cost – the low cost is inherent in the mode of operation – Container Train Operation. The cost advantage of such mode is given below.
Performance metric Train operators Truck Operators
Freight charges – 17.5 MT between Delhi/Kolkata 21,850 55,000
Freight charges – 17.5 MT between Delhi/Guwahati 45,900 68,000

CONCOR is the monopoly in the train operation segment and hence charges a hefty premium. The reasons are quite obvious – low bargaining power of customers. It is worth-a-while to note that in every railway budget, passengers are subsidised at the cost of freight. The roughly 20 per cent freight rate hike effected by the railways will undermine their competitive edge vis-a-vis road transport on distances ranging 400-700 km. (Source: Business Standard, Mar 11, 2012). Hence Concor is definitely not a cost leader, it is a differentiator, exploiting the competitive advantage of Train operation to charge premium.

The wide range of offerings, end-to-end solution model and the geographical spread make Concor an overall player. Hence CCI is a clear Overall Differentiator.

Competitive advantage
Points of Differentiation:
The main point of differentiation (POD) is Price. The other PODs are dependability, End-to-end service, Quick response, Established network. Most of these are the characteristics of the mode of operation rather than firm specific. These characteristics make CONCOR the ideal choice for transporting Heavy loads and/or over long distances.
Lack of flexibility in time and place of delivery – again inherent in the mode of operation – are the key points which work against CONCOR. In other words, last-mile connectivity is a major constraint, which takes away the advantages of quick and dependable delivery. But CONCOR partly offsets this is by collaborate with transport corporations (Transport Corporation of India – which is again a public sector organization).

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