August , 2019
Indian Railways move to a modern logistic provider?
13:29 pm

Ankit Singh

In India, road networks have enjoyed the primary share for inland freight traffic in comparison to railways. The share of railways for freight traffic has dropped to 33% from 90% in the 1950s. Currently, the role of the Indian Railways has been limited as a bulk commodity supplier of coal, iron ore, fertilizers and cement.

The cost for construction of rail networks is comparatively less in comparison to construction of roadways. Even the quotient of energy consumption in railways is less as compared to road networks. These above stated factors well-place railways as a preferred choice for logistics and goods transport. But then, why has the Indian Railways' role been limited?

When compared to road networks, the Indian Railways has been perceived to be more conducive for supply of bulk commodities. A source from the Eastern Railways informed BE, “In comparison to roads, the carbon footprint is less for railways. Bulk transportation of loose commodities like coal and iron-ore are highly polluting. To move these commodities beyond 500 km by trucks, they should be in a washed condition to limit their polluting quotient. In such a scenario, railways are the preferred networks for bulk supply of these commodities.”

The source added, “The Indian Railways also cater to bulk transportation of products and raw materials of the steel and cement sectors. The time required by rail transport to unload these bulk commodities at production units is less compared to road networks. The transportation loss in rail movement is also less as compared to road transport and materials like cement and containers are safely carried in bulk through railways. It is estimated that there is 5% more transportation loss through truck movement as compared to railways.”

Even with such advantages, the Indian Railways remain at the backend of India’s logistical sector. A source from South Eastern Railways who refused to be named stated, “The major problem with the Indian railways is unavailability of rakes. Due to the unavailability of rakes, the logistic sector has turned towards the private players who mostly prefer or operate through roadways.”

The first Modi government had announced its mission to supply electricity to every household by 2020. Since then, the railway network has been largely used for transportation of coal to power plants, which are mostly situated in eastern and the western regions of India. So, with the focus shifted to transport of coal and with the availability of rakes being limited, other commodities are now being increasingly transported through road transport.

As suppliers of bulk commodities have to enter into long-term contracts with road transport companies for their logistical requirements, they fail to use the railways even when there is the availability of rakes. The source from South Eastern Railways informed, “Recent data suggests that due to availability of rakes this monsoon, there has been a six million tonne extra loading of iron-ore and coal.” However, the situation varies widely and remains unpredictable for suppliers to rely on.

The other factors that have held up the development of Indian Railways as a potent logistical avenue include costing and time management. It is estimated that cost and time taken to transport coal from eastern and central regions of India to the power plants located in Nagpur and near western ports are more compared to the cost and time taken to import coal from countries like China. Such a situation has led to an increase in import of coal. Additionally, pithead plants are being increasingly built around ports to reduce transport time, cost and distance. For short distance transportation of coal from ports to pitheads, trucks are being seen to be more viable as compared to railways. However, if Indian Railways is given the right push, the situation may change and import of coal may reduce leading to a possible positive price linkage.

Due to the weakening logistical standing of the Indian Railways, market linkage for goods like cement and iron-ore is also being done through road transport. In case of the cement industry, where previously the entire transport till the retail market used to happen by rail, now only 50% of the material is being transported through rail. 

There are many bottlenecks to Indian Railways becoming a potent logistical option in India and the government needs to bring out policies to increase the use of railways in logistics. Increasing the number of rakes and an expedient implementation of committed freight corridors can improve the situation.


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