By declaring freight transport is critical to India’s growing economy, Niti Aayog vide its publication on “Fast tracking freight in India – A roadmap for clean and cost-effective goods transport” has produced a 140 pages report which is reproduced below:

 https://www.niti.gov.in/sites/default/files/2021-06/FreightReportNationalLevel.pdf

The following information is mind boggling and is relevant to India’s logistics sector which moves your tables, furniture, building materials or what not either by train, fast moving transport or newly developing water transport long neglected by us. The following statistics may vet our curious minds:

  • Logistics represents 5% of India’s GDP with an engagement of 2.2 crores of human beings, handles 4.6 billion tons of goods every year contributing to a cost of INR 9.5 lakh crores.
  • These goods constitute 22% from agricultural sector, 39% from mining sector, and other 39% from manufacturing-related commodities.
  • While trucks attempt to handle most of the movement of goods, train transport, water ways, pipelines, and air do have their own contribution.

fast track - career concept

The above report totaling 140 pages with 8 chapters has the following objectives:

1. Establish a coherent vision for a cost-effective, clean, and optimized freight transport system in India

2. Quantify the economic, environmental, and public health benefits of that system

3. Describe techno-economically feasible solutions that would collectively deliver those benefits

4. Create a call for coordinated action on promising technology, policy, infrastructure, and finance solutions.

From a simple attitude towards understanding this statistically outstanding report, I would analyze as under.

Rail transport in India, its current position, comparison with the best in the world, what is the scope for improvement, and finally what does the government intend/already doing to the expected levels in the next few decades.

Rail transport

Where does India stand with U.S.A. about utilization of railway net- work?

U.S.A.

Average train length – 2000 m

Average train speed – 33 km/hour

Gross Vehicle Weight Rating (GVWR) per wagon – 130 tons

Let us measure us with our details of railways in India.

India

Average train length – 700 m

Average train speed – 25 km/hour

Gross Vehicle Weight Rating (GVWR) per wagon – 80 tons

Whenever two Indians meet in U.S.A., they wail about lack of train transport between cities and the inevitability of usage of cars to move around the country.

Did any- one imagine that India is way behind in its efficiency in moving its transport across the nation through railways?

The steps taken by the government so far:

  • The GOI recently allocated INR 10.5 lakh crore to upgrade and expand existing rail network capacity.
  • The government is also addressing network congestion, extending new lines, acquiring new rolling stock, building high-speed networks, and upgrading tracks, bridges, and signaling systems.
  • Can we quote an example to understand better? One example is the development of the Eastern and Western DFCs. These DFCs will help move most of the freight on these existing corridors to the new ones, freeing up capacity and improving network speed and fluidity. These new corridors will enable rail upgrades like heavier axle loads, double stacking, and higher train speeds.

Density of freight movement on Eastern corridor is shown clearly on page 41 of the report.

Let us do study two case studies for clearer understanding. How did the developed nations emerge out of their deeper depths of inefficiency?

Case study 1: Heavy axle loads in the US Class1 railroad network

What was the position in 1988?

In 1988, the Association of American Railroads (AAR) started a research program called Heavy Axle Load (HAL) Research Program to study the feasibility of switching to heavier axle loads on the Class 1 railroad network – the rail network of seven large rail freight companies that own and operate 70 percent of the total track miles in the United States.

 The research highlighted the economic benefits and improved efficiency because of higher axle loads and how those benefits outweighed the associated infrastructure costs. Prior to this research, the United States relied on 64-tonne cars for freight movement. However, post this research, the United States railroads started adopting 130-tonne heavy axle cars.

Let us understand clearly that the consortium of American railways decided to shift from 64 axle loads to 130-tonne heavy axle cars. One can understand the quantum jump in technical standards by nearly 70% of railways operating there.

How did they achieve this enormous productivity standard and what steps were taken to reach the new standard?

Yes, significant investments in the venture.

  • Developing better tracks by using improved and hardened steels, developing continuous running surface, upgrading in-rail join configurations and using concrete crossties
  • Increasing bridge strength by testing of new lightweight and high strength materials such as hybrid composite beam spans.
  • Introducing new maintenance techniques like track geometry and track strength inspections, bridge and track condition monitoring, rail joint bar inspections, proper grinding of rail.

Or in a simple way, can I put it like strengthening the steel tracks, using highly supreme materials to improve the bridge strength, and adopting new maintenance techniques?

This example amplifies continuous upgradation of technology, proper investments, and willingness to test new techniques for advancement.

Let me quote another case study from Australia to widen our vision.

Case is covered on page 44 of the report.

Case study 2:

Roy Hill iron-ore mining in Pilbara region, Australia

Context: Western Australia’s Pilbara region is known for its iron-ore reserve. After mining the iron-ore, heavy loads of deposits move from the mines to the ports. Roy Hill, a mining company in this region, transports its deposits from the Roy Hill mine to Port Hedland. The iron-ore is then exported to China.

How did they show outstanding results?

Roy Hill has developed an innovative business model to provide an integrated service for iron-ore mining, rail transport, and port operations. The company transports iron-ore over a specialized heavy-haul rail corridor from the Roy Hill mine to Port Hedland. This corridor allows heavier trains to move more freight, increasing productivity and reducing unit costs.

What results were achieved?

Each day, five iron ore trains utilize this 340-km specialized heavy-haul corridor, carrying payloads of 31,132 ton per train per day – accounting for a total of 3.5 billion ton-km annually.

Specialized corridors offer a cost-effective solution to move heavy bulk goods. Identifying potential high-density corridors where industries can unlock the economies of scale makes this solution viable.

What do we learn from this example?

Usage of special iron ore trains, use of heavy-haul corridor, and apt usage of economies of scale to meet humongous handling of heavy materials.

What can we summarize for our railways transport from above examples?

Continue with the present investments and more required in future to enhance the existing rail infrastructure and build new and exclusive corridors.

How do we do it?

Prescriptions mentioned on page 45 are reproduced but we shall also analyze the same immediately.

“• Allocate funds to initiatives supporting the following rail upgrades in the rail-network design: increased axle loads and train lengths, improved network fluidity and specialized heavy-haul corridors

  • Encourage build-out of specialized heavy-haul corridors for moving commodities like grains, iron ore, and coal
  • Allocate funds for the following upgrades in existing heavy-haul corridors: double tracking, specialized loading and unloading equipment, and improved quality of rail
  • Create opportunities for capacity building program for senior leadership and the engineering/technical staff to understand the know-how on design and build-out of an advanced rail network
  • Encourage use of Internet of Things (IoT) in freight rail operations to improve fluidity
  • Evaluate market structure and regulations to enable more investments in the rail network.”

In a nut- shell, it summarizes allocation of more funds for upgradation of rail-network links, further strengthen existing heavy-haul corridors, double tracking, and allow our top management in railways to learn new knowledge to update their learning so that they could oversee the transformation smoothly. Can we change our outlook to entice more investments?

  • Start promoting the use of rail over road for long haul goods transport
  • Goods manufacturers and e-commerce companies can promote sustainability initiatives in their organizations to encourage the move from road to rail particularly for long distance movement of goods.
  • Industry players can optimize warehouse siting to access rail transport.

Let us also look at road transport mostly governed by trucks on roads.

Where do stand cost wise with the transport sector from developed countries?

The prescribed definition is as under:

The transportation efficiency of a truck is determined by how much distance it can cover daily, how much of that is with and without load and to what extent the truck is loaded. Higher utilization lowers costs, a load factor close to 100 percent is the most cost effective and safe, and lower share of empty running translates to higher productivity. With these parameters, can we quantify Indian transport cost with others?

The average daily distance India Peer nations

The average daily distance India Peer nations
covered by a truck Daily utilization (km) 250-400 BRICS 500, USA 700-800
Empty running 28-43% USA 13-29 %, EU 15-30%
Load factor trucks overload Not overloaded

Why such a performance for Indian transport?

The drivers and their present state as on today.

Moreover, around 28% of the current truck fleet is sitting idle due to the dearth of drivers. Factors such as lower salaries, long working hours, time away from families, bad road and driving conditions, poorly maintained vehicles are making the sector unattractive for drivers and increasing the logistics costs for the country due to poor utilization of the assets.

How does one optimize the truck use?

  • Improve load matching
  • Maximize vehicle productivity through efficient packaging and loading
  • Improve the siting of warehouses with proper planning stage itself by city planners
  • Update the warehouses with air conditioning, proper working conditions for employees and availability 24X 7 with proper infrastructure facilities like electricity, water, parking etc.
  • Case studies a galore on page 69 onwards.

Usage of EV has been separately covered by me in another article in depth and hence it gets omitted here.

Let us consider waterways transport which does a huge coverage in USA/EU in transport sector.

What about India?

Cost (in India) INR/TON   2.00; CO2 emissions (gm CO2/ton-km) – 11, next only to pipeline.

Suitable use cases: Suitable for the long-haul of large, regular flows with less fragmentation along the coastline or navigable inland waterway.

Let me quote from page 32 some useful information on waterways transportation abroad.

“Waterways are a dominant mode of transport for countries with high coast-to-landmass ratios or high concentration of cities near the coast: The EU, with a high ratio of coastline to landmass, has developed an effective water freight transport system through convenient access to the Atlantic Ocean and the Mediterranean Sea. On the other hand, the United States, with a smaller coastline relative to its land mass, has developed a rail dominant mode share. China with a large landmass but economic activity concentrated on the coast, has developed a mixed mode share that uses both rail and water.”

India needs to utilize its longest water ways around the country to improve movement of people, transport more materials and improve job opportunities to our fisher men and all others who love rivers, oceans, and ponds.

What about intermodal transport in India?

Investing in logistics parks: In 2017, the government sanctioned INR 2 lakh crore for building 35 multimodal logistics parks across the country. These logistics parks are expected to handle 50 percent of the road freight activity128 and reduce total logistics costs by 25 percent.

Similar explanations are given on page 51 regarding optimizing siting of logical parks, piloting double track trains, building out inland container depots, and existing stakeholder ecosystem.

Indian Railways’ subsidiary Container Corporation of India Limited (CONCOR) is the market leader in intermodal container movement, accounting for about 80 percent of the market share.

Conclusion

Let us recollect the steps taken by the government in the recent budget.

  • The dedicated freight corridors are long distance, high-capacity freight rail routes that are being developed by the GOI for freight movement.
  • The Sagarmala project focuses on developing waterways transport by improving existing ports and developing Coastal Economic Zones.
  • The Bharatmala and Golden Quadrilateral projects focus on the development of road highway infrastructure in the country
  • The Jal Marg Vikas Project (JMVP) is developed for operations for operations of National Waterway 1 is under progress.
  • National infrastructure pipeline includes over 7,400 infrastructure projects – INR 30 lakh crore for roads, INR 14 lakh crore for railways, INR 1.4 lakh crore for airports and INR one lakh crore for ports and inland waterways.
  • UDAN scheme aims to establish 100 more airports to improve air connectivity.
  • Hydrogen Energy Mission is aimed to ramp up the production for green hydrogen used for various end use sectors such as industries and transport.

Will we achieve our goals?

Being one of the largest democracies and civilized nations in the world, we must step up with more alacrity, an urge to achieve the goals and save our large population from pollution and timely delivery of goods/services. The recent success in road building, activities in EV business and enormous interest in waterways strengthen my faith in our nation to achieve its goals.

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Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting because of the above write up. The possibility of other views on the subject matter cannot be ruled out. By use of the said information, you agree that Author/TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors, or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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