Central Idea

• Rail transport has long been a cost-effective means of moving bulk cargo.

Promoting Railway Cargo: Key Policy Initiatives

• Recognizing its importance in reducing overall logistics costs and promoting sustainable transportation, the Government of India has introduced two key policies:

1. PM GatiShakti (PMGS) policy for a National Master Plan (NMP): PMGS focuses on creating a seamless multi-modal transport network in India, leveraging technology for coordinated infrastructure planning.
2. National Logistics Policy (NLP), 2022: NLP aims to establish a national logistics portal and integrate platforms across various ministries to streamline cargo movement.

• These policies aim to revolutionize the Indian transportation landscape by fostering infrastructure development, technology integration, and green mobility initiatives.

Barriers to IR’s Bulk Cargo Share

• Non-Price Barriers: IR faces challenges in maintaining its share of bulk cargo, partially due to non-price barriers. To counter this, IR should reduce these barriers and distribute transaction costs more equitably.
• Capital-Intensive Siding: Railway sidings are capital-intensive and favor large industries, leading to higher logistics costs for smaller entities, such as many cement plants.

Initiatives in Bulk Cargo Transportation

• Private Freight Terminals (PFTs): The introduction of PFTs and relaxation of operating conditions have facilitated specialized cargo movement, including automobiles and fly ash.
• Common-User Facilities: To reduce logistics costs and encourage patronage of IR, common-user facilities at cargo aggregation and dispersal points in mining clusters, industrial areas, and large cities are essential.
• Collaboration with States: Collaboration with State governments is crucial, as they possess knowledge of regional clusters and can play a pivotal role in planning industrial and mining activities.

Exploring New Commodities and Efficiency Measures

• Fly Ash Transportation: The IR should actively explore the potential of transporting fly ash, aligning with the Ministry of Environment and Forests’ guidelines. This entails retrofitting power plant sidings with fly ash loading facilities.
• Innovative Wagon Design: The IR should liberalize wagon design to accommodate higher and more efficient loading for various commodities, promoting versatility.
• Environmental Considerations: Environmental regulations should be mode-agnostic and based on cargo quantity and environmental impact potential. This will prevent cargo from shifting to road transport due to cumbersome rail loading requirements.

Revamping Parcel Transportation

• Challenges: The IR’s existing strategy for moving general cargo relies on passenger trains or special heavy parcel van (VPH) trains, but both have experienced setbacks, with a 15% drop in loading leased parcel vans and an 8% decline in full parcel trains.
• High Tariffs: One contributing factor to the decline is the high tariff, with premium and Rajdhani rates surpassing truck rates when factoring in first and last-mile costs. Exceptions exist for cargo destined to the northeast.
• Other Challenges: The issues also include inadequate terminals, inconsistent weighbridges, excessive penal charges, unreliable transit times, complex booking and delivery processes, and self-imposed environmental constraints.
• VPH Parcel Trains: These have proven ineffective and should be discontinued. A covered wagon, specifically a Covered Bogie Wagon Type with Air Brake and Heavy Load (BCNHL), can carry 700% more cargo with 45% more volume. Even if P scale rates are halved, revenue generated would be 3.5 times that of VPH trains.

Containerization Conundrum:

• Expectations vs. Reality: IR hoped that private container train operators (CTOs) would boost general cargo movement through containerization. However, 15 years post-privatization, domestic cargo carried by containers constitutes a mere 1% of IR’s loading and 0.3% of the nation’s total freight, primarily due to high haulage rates and market risks.
• Shipment Size Challenge: General cargo typically involves shipment sizes ranging from a few to hundreds of tonnes. The IR’s current services do not cater to the needs of this diverse segment, creating a gap in service provision.

Future Strategies

• Segmentation: General cargo can be categorized as highly time-sensitive (HTSG), medium time-sensitive (MTSG), and low time-sensitive (LTSG).
• HTSG Cargo: Valuable goods or perishables should continue to be transported by passenger trains. Attaching parcel vans to popular trains can substantially increase parcel loading capacity and revenue.
• MTSG and LTSG Cargo: These price-sensitive categories should be transported under IR freight rates, which are cost-effective compared to truck rates. Individual wagon bookings should be permitted, even if a train isn’t fully loaded, ensuring timely movement.
• Policy and Mindset Change: IR should adopt a flexible approach to freight tariff rules, including freight of any kind (FAK) for wagon loads in the tariff table. Single-wagon indents should be encouraged.
• Incentives and Aggregators: Tariffs may be adjusted based on quantity loaded to promote volumetric loading. Cargo aggregators should be incentivized through policy adjustments.
• Future Prospects: With concerted efforts, the IR can load substantial general cargo tonnage in the coming years, capitalizing on the existing infrastructure and industry capabilities.

Conclusion

• The Indian Railways stands at a critical juncture in transforming cargo transportation for a more sustainable and efficient future.
• With the support of visionary policies, collaborative efforts, and a proactive approach to diversification and environmental challenges, IR can reassert its position as a key player in India’s logistics landscape.

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