Indian Railways, which could not meet its freight-loading and revenue budget targets for FY16, have initiated a slew of measures — cancellation of 10% port congestion surcharge, elimination of dual freight policy for iron ore, expanding freight basket to time-tabled freight trains on pilot basis, appointing key customer managers for single-window clearance and grievance redressal — in order to increase its market share in goods transportation. The transporter has pegged its freight loading and revenue to grow by 4.5% and 5.43%, respectively, in FY17. Mohd Jamshed, member traffic, Railway Board, in an interview with Bilal Abdi, talks about the various constraints faced by the transporter in FY16 and how this year would be significantly better.
FY16 saw a plateauing of Indian Railways’ freight business. Could you elaborate on the reasons behind this?
Given the capacity constraints in the network, Indian Railways has been traditionally focusing on the core sectors of the economy. This has led to a situation that major part of our freight basket is confined only to a select group of bulk commodities (cement, coal, ores, steel, etc), with coal alone constituting almost 50% of the traffic.
Under-investment in infrastructure over the years, coupled with the pressures to meet the ever-increasing demand of the power & coal sectors, meant that the railways did not feel the need to reach out to non-traditional sectors. Further, cross-subsidisation of the passenger business resulted in freight rates becoming comparable (or higher) than other modes like roads, inland waterways & coastal shipping, especially for the shorter leads. Insistence on moving only unit loads consisting of one complete train composition also proved to be a disincentive for transportation through rail for certain commodity segments.
In 2015-16, tepid growth in the core sector, below-expectation demand for coal by the power sector and slowdown in the export-import sector impacted our freight business. A number of course correction measures have been taken by us in the recent past with a view to increase competitiveness of rail and also attract traffic from non-traditional sectors.
How is Indian Railways planning to reverse the trend and increase its freight business?
Some of the important initiatives taken include: Withdrawal of dual pricing policy for iron ore, permitting two point/multipoint loading in BCN rakes, increasing the distance limit for mini rakes to 600 km from 400 km, withdrawal of 10% port congestion surcharge, new merry-go-round policy with rationalised rates, and withdrawal of busy season surcharge for covered stock, besides others.
We are hopeful that these steps will result in additional freight business in the coming months. The container and iron ore segment has already started responding with almost 10% growth in the current month.
What specific commodities are you looking at for expanding the freight basket and how?
Commodities with high volumes, shipment sizes and leads are traditionally railable. The railways would now like to look harder at high leads, but low volume commodities. We have been studying the commodity flows across the country and find that a large number of commodities fall in this bracket: Limestone, granite, ceramics, glass, pig iron & sponge iron, household/consumer goods, maize, three-wheelers, tractors, tyres, bicycles, textiles, caustic soda, soda ash, marble, edible oils, construction equipment, passenger cars, two-wheelers, salt, sugar and so on.
Our strategies to attract this traffic to rail would include: Bulk transport solutions for specific commodities, inter-modal solutions, Hub & Spoke policy, road railers, faster transit speed and reduction of turnaround time as per customer requirement, ensuring timely delivery of cargo and freight readjustments based on marginal costing, and long-term tariff contracts.
What has the railways done in the direction of ‘ease of doing business’ in the freight sector?
Logistics cost in India is estimated to be about 14% of GDP, which is extremely high compared to the global average. A reduction of logistic costs would make our industries globally more competitive. It is reported that India can save up to $50 billion (around `3.33 lakh crore) if logistics costs are brought down to 9% from 14% of the country’s gross domestic product, thereby making domestic goods more competitive in global markets. As railways are by far the most energy and environmentally-efficient mode of transportation, all measures taken by the railways to improve capacities and increase their modal share would contribute towards reducing logistics cost in the country and go a long way towards ease of doing business in the country.
We are working at creating Chennai as an auto-hub. The vacant railway land around Walajabad railway station will be provided to different car manufacturing companies like Hyundai, Ford, Nissan and Daimler Chrysler for logistic purposes, which would be a relief as currently all of it is transported inside the city in their goods sheds. This automobile traffic has already been captured and we also have specialised double-decker rakes for it. We are also working towards connecting the Chennai and Indore ports to these manufacturing facilities.The other measures include: Appointment of key customer managers for focused business orientation and a single window for all railway-related issues, elimination of dual freight policy for iron ore with significantly simplified procedure and reduced documentation, which has brought down the cost of transporting iron ore by `300/tonne/km, and revision of siding policy.
