Railways emerges as the Preferred Carrier of Automobile in the Country

The Indian Railways states it has emerged as the most preferred mode of transportation for automobiles, given low cost of transportation, faster service, reliability and safety offered. In FY2017-18, around 29 million vehicles were produced in country registering a growth of 14.78 percent over the same period last year.
First train from Detroj Station, Ahmedabad Divison of Western Railway, carrying Maruti Suzuki cars to transport all over the country

NEW DELHI: Indian Railways has emerged as the most preferred mode of transportation given the low cost of transportation, faster service, reliability and safety offered by railway system. Needless to mention that railways are the green mode of transportation. In 2017-18, around 29 million vehicles were produced in country registering a growth of 14.78 percent over the same period last year. Given the current low car penetration, rising prosperity and the increasing affordability of private vehicles, the automobile industry is poised to grow even faster in India. These vehicles need to be transported to the far flung areas of the country. Indian Railways in recent time have undertaken a number of initiatives to capture automobile traffic.

Member Traffic, Shri Mohd Jamhsed stated that Year 2017-18 has witnessed a paradigm shift in the marketing efforts of Indian Railways to attract automobile traffic and enhance our freight basket. Specially in the later half of 2017-18, under the guidance of Minister of Railways, Shri Piyush Goyal, we decided to liberalise Automobile Freight Train Operator (AFTO) policy to encourage more private investment in special wagons, procurement of our own BCACBM (high-capacity railway wagons) and NMG wagons. In April, 2018, we have taken two game changing decisions to allow handling of automobile from all container terminals and to allow loading automobile and auto spares in privately owned wagons in different directions for optimal utilisation of stock.

Indian Railways is working closely with automobile industry to develop policies which are mutually beneficial to industry as well as Railways. The following noteworthy steps have been taken in 2017-18 to attract automobile traffic by Indian Railways:

Meeting has been conducted with all stake holders in automobile business including Society for Indian Automobiles Manufactures (SIAM), M/s Maruti Suzuki, M/s Hyundai Motors, M/s Tata Motors and automotive logistics providers on 28.09.2017 in Rail Bhawan.

In view of the issues raised by the stakeholders the AFTO policy has been liberalized viz. registration fees for the AFTO scheme has been reduced from Rs. 5 crore to Rs. 3 crore; and condition of minimum procurement of 3 rakes under the scheme has been relaxed to one rake. The revision was issued on 13.10.2017.

So far 28 routes have been notified for operation of BCACBM rakes.

Now, Auto Hubs are already functional at Walajabad (Southern Railway) and Farukhnagar (Northern Railway). Works are underway for up-gradation of facilities at these auto hubs. Further General Manager’s of all Zonal Railways have been asked to identify terminals to be developed as Rail Auto Hubs.

Conversion of 17 additional NMG rakes has been approved out of which 4 rakes have already been inducted.

10 BCACBM rakes have been included in Railway’s RSP for 2018-19.

The agreement for licensing of commercial plots at Detroj of Ahmedabad division duly agreed by M/s Maruti Suzuki India Ltd finalized and loading started in March 2018.

The positive results of these initiatives are visible in the enhancement of automobile loading in 2017-18. During 2017-18, the loading from automobiles traffic has increased by 16% and earning from automobile traffic has increased by 18% as compared to 2016-17.

In April, 2018 Indian Railways has liberalised AFTO Policy. Earlier, the transportation of automobile and auto spare by AFTOs was permitted only in one direction. With the coming up of auto-hubs across the country, this restriction has now been lifted. AFTOs will be able to utilize their rakes for loading in different directions and will be able to optimize the utilization of their rakes.

The loading of automobile loading was permitted only from auto hubs, Private Freight Terminals’ (PFT) and Railway good sheds with automobile handling facility. This condition has severely restricted automobile loading on account of limited availability and capacity of such terminals. It has been decided that the automobile loading/unloading shall be permitted from all Inland Container Depots (ICDs), Container terminals managed by Container Train Operators. This shall result in availability of additional 86 locations in addition to the earlier auto hubs, PFTs and Railway good shed with automobile handling facility.

Automobile Industry is quite ecstatic with these reforms and committed to increase market share of Indian Railways in automobile transportation. Railways would certainly emerge as most preferred carrier of automobiles in the country.

A chat with Mohd Jamsheed, Member Traffic on Freight Transportation gave few more details on Indian Railways plans to increase Railways freight revenues and changes in policies in traffic transportation to boost revenues. Here are the excerpts:

What were the key factors that helped you achieve freight loading growth in in 2017-18?

Indian Railways achieved the highest-ever originating freight loading of 1,161.66 MT (million tonne), registering an increase of 52.87 MT (4.77%) compared with last year. The incremental loading is also the highest since 2010-11.

Almost all commodities have witnessed impressive growth over last year. We achieved the best-ever loading of coal at 555.23 MT, apart from pig iron and steel (53.18 MT), cement (54.31 MT), container (54.31 MT) and other goods (85.73 MT) in 2017-18. The annual growth in iron and steel, cement and container loading was the highest ever in the last eight years.

Also, railways achieved 658,020 million NTKM (net tonne kilometre) in 2017-18, registering a healthy growth of 6.11% and the average lead has gone up to 566 km, an increase of 7 km or 1.25% over last year.

What helped NTKMs and leads which had been going down in the last two years?

This reversal is the result of various policy initiatives to improve the lead of loading, incentives for loading in empty flow direction, rationalisation of distance slab above 1,500 km to 3500 km, rationalisation of coal tariff, promoting loading of bagged consignment in BOXN wagons. For instance, we have transported 20.69 MT traffic and earned Rs 1,277.12 crore under liberalised automatic freight rebate scheme in empty flow direction during 2017-18 which is around 208% higher both in loading and earnings terms compared with last year. Under the scheme of discount for loading of bagged consignment in open and flat wagons, loading increased from 40.91 MT to 46.09 MT and earnings from Rs 3,433.88 crore to Rs 3,955.01 crore during FY 2017-18 compared with the previous year.

Ro-Ro service trial between Roha – Karabali Goods Shed conducted on March 24th, 2018 with 3 trucks

What other measures worked?

Some of the other notable initiatives which worked include long-term tariff contracts, concessional tariff structure for double stack containers, withdrawal of dual freight policy for export of iron ore, opening up of railway terminals for container handling, allowing mini rake loading, withdrawal of port congestion charges, concessional station to station rates, and rationalised classification of commodities, among others. Though it is difficult to assess the impact of each initiative.

What are plans for future growth in the freight segment?

The NITI Aayog has set an ambitious target of achieving 1,900 MT of loading by 2022 and increasing the market share of railways in freight transportation to 40%. In this direction, our emphasis would be to further rationalise freight tariff, promote private investment in development of freight terminals, diversifying into new areas such as transportation of fruits and vegetable, containerised transportation, parcel cargo, e-commerce, among others.

Apart from various policy reforms, priority is accorded to capacity augmentation works such as doubling, third and fourth lines and DFCs (dedicated freight corridors) to create adequate capacity. This additional capacity cannot be utilised without commensurate number of wagons and locomotives. Procurement of around 18,000 wagons is already under process and indent for another 22,000 wagons has been placed for procurement.

Two locomotive factories are being set up – in Marhaura for diesel locomotives and in Madhepura for electric locomotives — to manufacture high horsepower locomotives to meet the demand. DFCs, which are expected to commence operations by 2019, would be the game changer for transportation of coal, container and other commodities. Containerised traffic, which is already growing at a double-digit rate, will prove to be boon for logistics ecosystem of the country. With these developments taking place, railways is certainly at the cusp of logistics revolution.