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How cargo transport can be improved 

How cargo transport can be improved 

Posted on October 31, 2023 By admin


A cargo train near the Tuticorin Port.
| Photo Credit: File Photo

This is the last of a three-part series of articles on the Indian Railways, its capital expenditure and freight business.

In this article, we will analyse the carriage of non-bulk and general cargo by the Indian Railways (IR). In 2018-19, before the onset of COVID-19, the IR loaded 62 million tonne (MT) of general cargo consisting of 45 MT of general goods, 12 MT of domestic containers and 5 MT of parcels, earning a total of ₹8,247 crore with the average earnings per tonne being ₹1,339 for goods and ₹3,384 for parcel. However, general cargo loading is nowhere near what a Rail India Technical and Economic Service (RITES) study had projected in 2008 for the next ten years — between 194 to 292 MT depending on the IR’s efforts.

The need to give up parcel trains

The IR’s current strategy for moving general cargo is two-pronged — the parcels are moved either by passenger trains or special heavy parcel van (VPH) trains. However, these approaches appear to have gone haywire as loading leased parcel vans and full parcel trains fell by 15% and 8% respectively.

One of the reasons for the decline in the parcel segment is the high tariff; an analysis of 15 origin to destination pairs indicates that both premium (P) scale rates and Rajdhani (R) rates, after adding the first and last mile costs, are higher than truck rates, an exception being cargo moved to destinations in the northeast. Other factors are improper terminals, inconsistent weighbridges intensified by excessive penal charges, unreliable transit times, complex booking and delivery mechanisms and self-imposed environmental restrictions.

VPH parcel trains are proving counterproductive and should be given up. A matching covered wagon (more technically a Covered Bogie Wagon Type with Air Brake and Heavy Load (BCNHL)) carries 700% more cargo with 45% more volume. Even if we reduce the P scale rates by half, the revenue generated would be 3.5 times that of the VPH rake.

The inadequacy of containerisation

Another great hope for the IR was the expected fillip to general cargo movement by private container train operators (CTOs) through containerisation. However, after 15 years of privatisation, domestic cargo moved by containers is a mere 1% of the IR’s loading and 0.3% of the total freight in the country. High haulage rates is one of the reasons of such under-performance. The problem perhaps also lies in the risk involved in developing the market as it would inevitably involve losses over a period of time. Furthermore, sustaining a developed market is also difficult as predatory pricing by other CTOs can wean the market away.

The elephant in the room for carriage of general cargo by the IR is that a shipper can either only send a few tonnes under parcel tariff or thousands of tonnes under freight tariff. General cargo has thousands of buyers and sellers and usually their shipment sizes are a few to hundreds of tonnes. The IR is therefore, not their choice as it has no service to meet their needs. Asking these shippers to book a freight train is akin to asking a passenger travelling by the Rajdhani express to come with a load of passengers before a berth is booked.

The road ahead

General cargo is segmented into three categories — highly time sensitive (HTSG), medium time sensitive (MTSG) and low time sensitive (LTSG).

HTSG cargo is mostly valuable goods or perishables and they should continue to be moved by passenger trains. Attaching two to three parcel vans in all popular trains would easily double the parcel loading capacity and these parcel vans can bring around five times the revenue of sleeper coaches and around two times that of AC coaches.

MTSG and LTSG cargo are price-sensitive and this cargo should be moved under the IR freight rates, which are lower than truck rates. Even after the addition of first and last leg costs there is a cost-benefit to shippers. However, the problem lies in getting a full train load. Shippers should be permitted to book individual wagons with provision to run a train to the schedule even if the train is not fully loaded. The assurance of timely movement would certainly attract shippers to the IR.

Running such freight trains does not require any change in policy, only change in mindset. Tweaking of freight tariff rules would be required by adding freight of any kind (FAK) for wagon loads to the tariff table. Indents for a single wagon should be encouraged.

To incentivise volumetric loading, tariff may also be moderated by increasing charges in slabs as per quantity loaded. Finally, the IR needs to encourage cargo aggregators by tweaking the existing freight forwarder policy. In the long run new kinds of stocks to optimise pay load and speed would also be required which the IR and the rolling stock industry are fully capable to design and deliver.

Opportunities were missed in the past. But now with a more concerted effort, the IR should be able to load substantial general cargo tonnage in the coming years.

Sudhanshu Mani is leader of Vande Bharat project and an independent rail consultant and M. Ravibabu is founding member, Anekdhara, a public policy portal.



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Business Tags:easing transport of cargo indian railways, freight train improve railways, indian railways cargo transport, moving rail cargo, railways cargo movement, railways revenue improving

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