The right track~II

It was the traumatising Covid-19 pandemic onslaught that saw IR initiate some bold moves. The country’s railway men, far from…

The right track~II

Representation image (Photo:SNS)

It was the traumatising Covid-19 pandemic onslaught that saw IR initiate some bold moves. The country’s railway men, far from getting into comatose mode during the rampaging catastrophe, delivered the nation’s goods, braving hazards and lockdowns. The prolonged lockdown lull afforded IR management time and opportunity to reflect on the imperative of adapting itself to a new paradigm of doing things differently. While cancelling operation of almost all of its around 13,000 passenger trains it ran daily, and shedding their entrenched timidity, senior IR managers offered pre-scheduled special parcels services with guaranteed transit, on demand. IR needed to audaciously promote the venture, strategically involving established integrators and logistics providers.

For long IR has been losing most of the LDHV (low density high value) cargo. It has remain- ed overwhelmingly patronized by captive customers, for whom railways is the only viable option. Even in case of nine bulk commodities, its share has been dwindling to less than 45 per cent as revealed by RITES’ Total Transport Study, 2008. If anything, IR has lost out further during the intervening 15 years since RITES collated the data.

The study reported that road transport then carried as much as 68 per cent of country’s POL traffic over an average distance of 272 km, 80 per cent of iron and steel (525 km), 48 per cent of cement (358 km), 66 per cent of containerised cargo of which 28 per cent was over an average lead of 884 km. Roads were estimated to have carried in excess of 95 per cent of na- tion’s fresh agri produce (average lead 522 km), chemicals (611 km), paper (545 km), electrics (614 km), pulses (607 km), timber (450 km).


With acknowledged strengths of energy-efficiency as well as space-efficiency, congestion and space consumption remains a key advantage for rail, des- pite road vehicles becoming electric and/or autonomous. Additionally, the overall safety culture of railways matches that of avia- tion, preparing it for working in an automated environment.

To build upon the known virtues conducive to rail resurgence, it is necessary to recognize and grasp the blizzard of change that confronts railways. It devolves on IR managers, especially those involved in the production, operation and marketing of its core businesses, to seize the imperative of imbibing the salience of rapidly evolving trends and developments in the sector across the globe. Customers increasingly demand a rail experience that is personalised, comfortable and easy to shop for. They demand an intelligent logistics execution, man aging multi-modal, multi-leg and multi-carrier integration.

With an emphasis on integrated supply chains, integration has been one of the dominant themes in the development of logistics management. Two recurring themes reverberate across the logistics domain digitalisation and multimodality. Preference is on one-stop, single window, with one contract, one consolidated price, one compensation system, one contact point. Further ICT has helped revolutionize the transport domain. IT is the glue that holds value chains and supply chains together. Now an integral part of the production and distribution process, transport has ceased to be an independent function, of little consequence. It is fast becoming a high-technology industry.

The value of trade grows much faster than its weight. The nature of freight being transported is changing fast from heavy bulk to lighter high-value goods, to move in smaller consignment volumes. Falling transport costs have resulted in greater fragmentation of services into “components”, rendering manufacturing increasingly globalised, with “world factories” relying on complex global supply chains as their assembly line. As transport costs fall, physical geography matters less; but, with economies of scale in producti- on, economic geography matters more.

Today, customers demand more and more for less and less. Time is the cutting edge. Increa- singly, shippers see goods in transit as NPAs. They consider two costs: one, the direct cost of transport; the second, the time cost which includes that of frozen capital. Speed in delivery today is itself an important characteristic of product quality. Again, with the decline in air transport costs, the price of speed has fallen dra- matically. Goods with the highest time sensitivity have seen the fastest increase in trade, e.g., perishable agricultural goods, fashion articles, and electronics.

There is a growing realization that railways have significant revenue potential, if they can of- fer a time-competitive service. In most cases, rail’s primary competition is door-to-door service by road. This makes it almost impossible for rail to compete for short distance flows. What is needed is an efficient network with interchange poin- ts, such as ICDs/logistics parks that receive short-haul, smaller cargo volume from roads from the hinterland for aggregation and then provide longer-haul rail transport of vehicle loads

forward to ports and other destinations. The heart of IR’s freight strategy is the creation of high volume, high speed freight corridors. A clear need is to re-dimension the rail freight business, for it to acquire the requisite flexibility in servicing the customer. Multi-modality needs to encourage rail operators to open up systems and processes to co- operation. It points to the need to create critical mass of wagons/containers carrying piecemeal general goods in train loads, in partnership with other players, for integrated time-tabled multimodal ‘whole journey’ service. A major sector for IR to focus on is the generic parcels traffic, which encompasses the express market. In India’s Rs 15,000 crore express market, the air express alone has a share of about 30 per cent, more than half of which includes documents; road express another 45 per cent; the rest 25 per cent is accounted for by e-retail.

The sector is in throes of transformation and expansion. One promising avenue for IR to explore is the rapidly expanding e-commerce market for which strategic collaboration with large players would open a window of opportunity. IR may operate dedicated train formations entirely designed and developed by the private entrepreneur/integrator to do value addition activities as well even while the train is on run. There is likely to be popular de- mand for individual vans to be operated for inter-city transport of freight/parcels/courier packages by higher speed passenger trains including Rajdhanis/ Shatabdis/Vande Bharats/ Durontos, etc. Some others may opt for dedicated space to be leased on long term contract in ‘VPs’ on such trains.

Here IR needs to cast aside its ambivalence that has somehow led it to look at ‘parcels’ as a distinct product from ‘freight’. The dichotomy, in fact, diffuses responsibility for planning, operation and marketing. IR may well look at all freight as a single product, consignments priced, as by express industry, based on weight, volume and level of service, and total transit time, door-to-door. Evidently a way forward will be for IR to offer an FAK rate, assuring time-definite money-back guaranteed supply of hardware as well as transit time. It will require selected nodes/ yards/ terminals/sidings for aggregation/ consolidation.

In this context, IR has a lot first to unlearn. In spite of its initiatives taken decades ago to offer pioneering services like “QTS”, collection-and-delivery of ‘smalls’ consignments, time-definite freight transit, and even intermodal containerized domestic cargo transport end-to-end, it lost the plot. Decades ago, IR’s suite of services included “quick transit” of LWL consignments, even involving repacking/transhipment, as also “door-to-door” service with their road collection and delivery, remote locations served through out-agencies. It pioneered in the mid-1960s its own-designed and manufactured 5 tonne freight container.

It proved an instant hit with leading FMCG firms like Hindustan Lever, Tata and Godrej. Why and how did these farsighted pioneering initiatives end, leaving a trail of missed opportunities? No doubt, the “QTS” and “shunting and van goods” operation in effect turned out to be highly cost-intensive and inefficient, in absence of the concomitant support by way of management information and monitoring mechanism as available now. Again, the rapidly growing traffic throughput volumes on the network then in the throes of remodelling and additions to infrastructure left little room for LTL operations.

IR overwhelmed itself with huge, unbearable costs and inefficiencies. Instead of concentra- ting on maintaining overall single-window responsibility for end-to-end service to the customers, and on line-haul, it ought to have involved partners on contract for first/last mile road transport of empty/loaded containers to/from consignees/con- signers, and, above all, for provi- sion of handling equipment as well as millwright maintenance.

Smug and complacent at the growing volumes of bulk traffic in a pervasive environment of permitlicence raj coupled with supply trailing far behind demand, IR continued to wallow in maintaining the status quo, when the need was to provide integrated logistics solution, in collaboration with other partners for door-to-door service. It would not even shake off the antediluvian and anachronistic Driver’s and Guard’s box or dispense with the Brake-van for freight trains; how would it stick its neck out to experiment with running some selected freight trains to a guaranteed schedule.

In a maelstrom of varying views and perceptions, difficult is it not to accept that IR has functioned essentially as a government department, not the least as a customer-centric commercial enterprise. Clearly, it needed to escape from the strait-jacket, to script a new narrative, transcending much beyond its traditional, blinkered vision of a mere railway entity a monopoly of an old era. Instead, it must aspire to be a lead player as an intermodal operator in contemporary milieu of integrated logistics.

(The writer is former CMD of CONCOR, and now Distinguished Fellow at Asian Institute of Transport Development)