‘Establishment of a specialized entity under Railways to handle intermodal logistics in partnership with the private sector will help address the first and last mile problem faced by the Railways’. Photo Credit: Getty Images
union budget 2023 have doubled PM Gati Shakti National Master Plan States have announced an outlay of ₹5,000 crore to ₹10,000 crore, and Rs 2.4 lakh crore for Indian Railways, The plan is a “transformative approach to economic growth and sustainable development dependent on the engines of roads, railways, airports, ports, mass transport, waterways and logistics infrastructure”. Railways, given its pan-India network, provides an efficient and economic mode of logistics movement, and can play a significant role in enabling a coordinated and integrated logistics system.
With a target to increase the share of railways in freight traffic from 27% to 45% and freight traffic from 1.2 billion tonnes to 3.3 billion tonnes by 2030, Pradhan Mantri Gati Shakti provides the right platform to address infrastructural challenges . Movement of goods by rail.
convenience over cost
Currently, the modal mix in terms of freight movement is heavily tilted towards road transport, which accounts for 65% of freight traffic by road. The effect is an increased load on the roads, and hence, significant congestion, increased pollution, and consequential increased logistics costs. Adoption of railways as a mode for cargo movement is important for improving India’s logistics competitiveness. A look at the comparable costs of different forms of transport reveals that the road sector has the highest freight cost – almost double the rail cost. However, the convenience of road transport has taken precedence over cost, and the railways in India are losing share of freight to other more flexible modes.
In 2020-21, coal accounted for 44% of the total freight traffic of 1.2 billion tonnes, followed by iron ore (13%), cement (10%), food grains (5%), fertilizers (4%), iron and steel (4%), etc. Transportation of non-bulk commodities constitutes a very small share of rail freight traffic.
increase in container traffic
Containerized traffic has increased over the past decade, from 7.6 million Twenty-foot Equivalent Units (TEU) in 2008 to 16.2 million TEU in 2020 due to the convenience of carrying non-bulk commodities in containers. TEU is a unit of cargo capacity. Globally, railway systems are investing heavily in advanced rail infrastructure for quick and low-cost container movement. For example, China uses special trains to carry containers that connect important ports inland, has dedicated rail lines to move container traffic and planned double-decker container carriages for greater efficiency. While Indian Railways is upgrading its infrastructure (PM Gati Shakti National Master Plan), continuous monitoring of existing projects along with identification of new priority areas will help in achieving the rail freight targets. At present, these are quite low compared to other countries like USA and China.
The national transporter faces several infrastructural, operational and connectivity challenges as a result of which freight traffic is shifted to the roads. Increased transit time by rail and pre-movement and post-movement procedural delays such as wagon placement, loading and unloading operations, multi-modal handling, etc., hamper freight movement by rail. Lack of necessary terminal infrastructure, well maintained sheds and warehouses, and uncertain supply of wagons are some of the infrastructural challenges faced by the customers. This results in higher network congestion, lower service levels and increased transit times. Absence of integrated first and last-mile connectivity by rail increases the possibility of losses due to multiple handling and also increases inventory holding cost.
need a special unit
Dedicated freight corridors along India’s eastern and western corridors and multimodal logistics parks will reduce oversaturated line capacity constraints and improve train timings. Indian Railways needs to improve infrastructure which is supported by adequate policy instruments and also encourage private participation in operation and management of terminals, containers and warehouses to utilize resources efficiently.
The setting up of a specialized unit under the Railways to handle intermodal logistics in partnership with the private sector will help address the first and last mile issues faced by the Railways. The company can act as a single window for the customers for cargo movement and payment transactions.
Each passenger train has two goods carriages. Based on industry recommendations, introducing an Uber-like model for one of the two cargo wagons, in which a customer can book a wagon using an online application, can help increase the utilization rate of these wagons. Until the success of the proposed model is established, the Indian Railways may continue to operate other wagons, the way it is currently done. This can directly increase freight traffic without any additional investment in infrastructure.
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An integrated logistics infrastructure with first and last mile connectivity is essential to make rail movement competitive with roads and facilitate exports by rail to neighboring countries like Nepal and Bangladesh.
Afaq Hussain is the Director at the Bureau of Research on Industry and Economic Fundamentals (BRIEF), New Delhi. Nikita Singla is Associate Director at the Bureau of Research on Industry and Economic Fundamentals (BRIEF), New Delhi. Views expressed are personal