Rail Transport as Backbone of an

Efficient Multimodal Network

Presentation by
P N Shukla
Ex. Director DFCCIL
19/05/2016

STATUS OF TRANSPORT
INFRASTRUCTURE
India spends 14% of GDP on logistics.
The international benchmark is 8-10%.
Railways operation mixed for both passenger and
freight.
National Highway Still way below Needs
Lack of Multimodal facilities.

RAIL LOOSING SHARE

YEAR

RAIL

ROAD

1950-51

88

12

1960-61

84

16

1970-71

69

31

1980-81

62

38

1990-91

52

48

2000-01

40

60

2009-10

30

70

Important elements affecting the Railway share

Lack of Infrastructure Capacity
High Unit Cost of transportation
Cross subsidy to Passenger Business at Expense of freight Traffic
Railway Remains a transporter and not a logistics solution provider
Focus on trainload traffic and new areas of growth viz automobiles,
parcels , high value white goods etc. missed out
Customer focus has been lacking
Rolling stock policies for private participation in efficient wagons is
archaic

INDIAN RAILWAYS AN OVERVIEW

FREIGHT TRAFFIC (MILLION TONNES) 1950-51 to 2000-01
500

473.5

400
300
200

AN INCREASE OF 400.3 MT
OVER 50 YEARS

100
73.2

0
1950-51

FREIGHT TRAFFIC (MILLION TONNES)

2000-01

CRUNCH OF INFRASTRUCTURE
Operates daily 20000 trains with 12500 passenger and 7500 freight trains
on 65000 route kms.
Choked Golden quadrilateral of 10000 kms (16%) of total network carries
60% of freight and passenger traffic(approx.) has 100% capacity utilisation
In freight basket coal 48% ,iron ore 12%,cement 10% foodgrain 5%,
fertilizer 4%, container 4% etc.
No capacity for parcel and automobile traffic which are time sensitive and
need high volume freight cars to meet road competition
Shortage of Terminals and their poor condition with no value added
services available
Rolling stock innovations not encouraged

FINANCIAL CRUNCH
High fixed staff costs of 51.5% revenue budget as against 20% on

road transport need very high level of productivity to match

competition
Variable fuel costs only 22.2% as against 40% in road transport but
high fixed staff cost eats away advantage
Cross subsidy of Rs. 30000cr. to passenger traffic
Freight rates increased annually by about 10% where as volume
grew annually by only 5% in last 5 years making railway non
competitive over short lead
Falling fuel prices have made road transport to hold price increase in
last 2 years

 Urgent Measures needed to control High unit cost of operation

Short Distance traffic rates policy inconsistent needs to be linked with rake
turn round Policy consistency & Traffic fluctuations not to cloud long term
vision
Train loads size hiked not in line with Market Realities for covered wagons
Policy consistency & Traffic fluctuations not to cloud long term vision
Innovative approach for Container Traffic needed in line with Market Realities
Automobile growth limited due to moving dimension constraint
Parcel traffic growth restricted with high unit costs
Introduce RORO traffic on marginal costing principle like Konkan Railway
Economics should drive wagon design not legacy

FREIGHT SCENARIO FROM 2001 02 ONWARDS

Year

TOTAL FREIGHT TRAFFIC (IN

MT)

% INCREASE OVER LAST

YEAR

Earnings
(Rs. In Crores)

% INCREASE OVER LAST

YEAR

2001-02

492.50

4.0%

24,586

6.6%

2002-03

518.74

5.3%

26,231

6.5%

2003-04

557.39

7.4%

27,403

4.5%

2004-05

602.10

8.0%

30,844

12.5%

2005-06

667.39

9.8%

35,971

17.29%

2006-07

727.75

9.2%

41,073

14.2%

2007-08

794.21

8.98%

47,558

13.86%

2008-09

833.31

4.92%

53,137

11.73%

2009-10

887.99

6.56%

57,594

8.39%

2010-11

921.51

3.77%

62,299

8.17%

2011-12

969.05

5.2%

69,548

10.7%

2012-13

1008.09

4.0%

85,263

22.6%

2013-14

1051.64

4.2%

93,906

10.1%

2014-15

1101.25

4.7%

1,05,770

12.6%

FLATTENING OF GROWTH IN
FREIGHT BUSINESS IN LAST 5 YEARS
Year

Tonnage (Million Tonnes)

2011-12

969

2012-13

1008

2013-14

1051

2014-15

1101

2015-16

1106

TACKLING HIGH UNIT COST OF OPERATION

Reducing the costs
a) Operating long haul trains with proper infrastructure on IR
network synchronous with DFC
b) Allow privately owned wagons for all commodities between fixed
points
c) Concept of marginal costing needed for attracting new traffic or
increasing rail coefficient like RORO services on Konkan Railway
d) Allow private wagon maintenance on private wagons on DFC
dispensing 5% maintenance charges
e) Relax route specific MMD on golden quadrilateral (10000kms.)
coinciding with opening of DFC which carries 60% of freight traffic

LINKAGE OF SHORT DISTANCE TRAFFIC WITH

TURN ROUND CONCEPT
Link tariff system with turn round concept and have variable
tariff linked to trips upto 50 kms. with future consistency
Permit privately owned trains upto 100 kms for all commodities
Private maintenance for all trains upto 100 kms with dedicated
rakes
Use of Container trains over short distances to decongest ports
Allow half rakes for short distances and no flip flop in busy
season

Augmented Train Load Partly Counterproductive

Frequent change in rake composition hits even bulk traffic and long term
policy needed
A balance needed between long rakes and mini rakes
BCNHL wagon de-marketed some cement movement by Rail
With discontinuance of BOXC wagons BOST wagon inducted
Short length BFNS wagon on steel producers may cause same effect as by
BCNHL
Customer specific solutions needed for bulk traffic on rake size linked to
traffic volume commitment

 Share of containerised cargo is just 7-8 % in Indian Logistics.

Worldwide trends indicate 50% share of containerised cargo.
Comparative container handling:
INDIA
12 Mill TEUs
US
70 Mill TEUs
CHINA
140 Mill TEUs

Need for Innovation

- Domestic Container Business is distinct from International Business
Present BLC wagons dont suit domestic Business and longer
wagons needed
Road containers are 34 feet long but Rail borne are only 20 or 22
feet
Domestic Container has to be high cube and ultra light
20m to 24m long container wagons needed as against 12m long
BLC to accommodate two 34 to 40 feet containers to match road
competition
The optimum container train length of 30 long BLL wagons and not
45 can reduce both capex and opex of domestic business container
trains
The market reality is to operate 30 BLC trains to meet customer
needs also

Automobile Production & Potential

Steps to attract Auto Traffic by Rail

Reducing CAPEX and OPEX
Reduce tare wt. to cut haulage cost as haulage cost is GTKM
based
Improve rail economics by allowing new MMD on DFC routes
where height of 5.1m is allowed to carry taller vehicles
Introduce 5.1m height in phased manner on golden quadrilateral
in next 5 years on planned basis
Wagon design approval on DFC to be made autonomous instead
of by RDSO
Facilitating longer wagon design with international trend of
longer length(European 30m. Long & American 27m.)
Allow privatized maintenance for privately owned fleet

RAIWLAY FREIGHT BUSINESS IN 2014-15

Approx. Freight Market

Size

4,00,000 Crores

Market share of bulk

cargo 26 %

1,06,927 Crores

Express Cargo Share 2%

2,002 Crores

PARCEL BUSINESS SEEN PART OF LOSS MAKING COACHING

TRAFFIC
Railways haulage costing is based on GTKM basis and 40 ton tare
weight of parcel van with payload of 23 tons causing high opex due
to poor design
The parcel van weight of 30 tons will bring down haulage cost by
15-20%
If volume of van increases by 50% then for light cargo haulage cost
comes down by 1/3rd
Parcel Van is coaching car has high capex due to passenger service
technical features
Parcel traffic piggybacks passenger business and ipsofacto becomes
loss making due to high opex

Parcel Business Way Forward

Separating Parcel traffic from Passenger Business Head as it has no linkage
with it
Introduce marginal costing principle on parcel traffic space attached to
passenger trains
Avoid focus on bidding and focus on volumes by creating capacity
Long term leasing contracts viz. from 5 years to 7 years linking increased
period with higher quantum of traffic
E-auction leasing of parcel space instead of tender since operators are prequalified
Introduce ultralight highcube new freight car operated by private operators
and make it part of freight business

Mother of Multimodal Traffic RORO service

Introduce policy for RORO service on rail as Green Transport
Initial rating for RORO service to be on marginal costing
principles keeping 20% margin with road
Open private ownership for RORO wagons
Introduce RORO private trains based on time table
RORO service is commodity neutral so great potential
Introduce new services like RORO
Precursor to Future development of Horse cart arrangement of
RORO service