Monday, February 1, 2016

With the rail network no longer being the preferred mode of transport for the cost-conscious private sector, all stops must be pulled to get them on board.
By: RC Acharya | February 1, 2016 

Fully aware that Indian Railways
is no longer the preferred mode of transport for the cost-conscious private sector, Suresh Prabhu is now determined to pull out all stops to get them on board in a big way. (AP photo)

Given the current sluggish economy, it will indeed be a surprise if Indian Railways’ ambitious all-time high of 85 million tonnes increment over last year’s freight is achieved this financial year. It could also prove to be a watershed year in its freight business and signal the need for the Railways to, once and for all, move out of the ‘command economy’ mindset to a ‘market-driven’ regime.

It is also about time that it set out to break new grounds, seek unexplored lines of freight business, other than the traditional bulk commodities such as coal, iron-ore, limestone, fertiliser, foodgrains, steel, etc, and aggressively work towards capturing it. Towards this, railway minister Suresh Prabhu had already ordered all hands on deck to explore new avenues, including transport of parcels, high-value white goods, and cars, etc.

As a result, a long list of draft amendments to the existing “Leased Parcel Cargo Express of 2007” and also to the “Modified Comprehensive Parcel Leasing Policy of 2014” have recently been placed on Indian Railways’ website for inviting suggestions and comments from various stakeholders.

However, this time, these amendments were not just the creation of Railway Board mandarins—who are more comfortable with a take-it-or-leave-it attitude—but have been prepared by Prabhu’s team of whiz-kids in close consultation with some of the experts in the private sector, so that it doesn’t die a natural death, as had happened with a quite few initiatives in the past, such as the much-touted “Own Your Wagon” scheme.

Fortunately, the policy for setting up a string of private freight terminals (PFT), announced by Prabhu in his last budget, has evinced reasonably good response, with almost 400 proposals being received, out of which 72 are under active consideration and 27 already operational. This includes some of the existing players in the ‘container’ business who have now opted to migrate to the new regime. Reportedly, even private siding owners are now finding the PFT scheme an attractive proposition.

Learning from the past mistakes, this time the Railways has adopted a hands-off approach, determined not to interfere in how the private sector manages its business and revenue streams as long the Railways gets the freight business coming its way, which could be 100-150 million tonnes a year, if and when all the 400 PFTs successfully take off.

Moreover, Indian Railways’ managers and engineers, in particular those based at the Research Design and Standards Organisation (RDSO), Lucknow, may have to start examining every initiative from the customer’s point of view and not just aim at optimising throughput, which works eminently for low-value bulk commodities such as coal, limestone, iron-ore, etc, but may not be a financially viable option for transport of high-value goods which invariably end up with the road transport sector.

For instance, the volumetric capacity for a newly-designed parcel van was hiked from 144 to 180 m3 (cubic metres), and axle load increased from 22.5 to 25 tonnes, expecting a rush of clients. However, according to experts in the business, a 240-m3 capacity wagon with a 25-tonne tare, 35-tonne carrying-capacity with an axle load of a mere 16 tonnes is what the customer would like to have.

A higher axle load which earns more gross tonnage for the Railways does not cut much ice with the private party when a higher volume gives him economies of scale. However, a parcel van with a 240-m3 profile to be fitted under the constraints of the Railways’ vast electrified sections could prove to be a challenge for RDSO’s designers.

Announced in last year’s budget were scores of new initiatives, including the one with far-reaching impact—capacity augmentation of some of the most crowded corridors of the 65,000-km network. With most of the projects having been farmed out to Railways’ own in-house entities who have an excellent track record, speedy execution is on the cards.

With the completion of the Eastern and Western corridors sometime by 2019, and gauge conversions such as that of the Mughalsarai-Saharanpur East-North corridor over the last few years, a significant amount of alternative route trackage will be added to the 65,000-km network in the near future, making capacity constraint a thing of the past.

Fully aware that Indian Railways is no longer the preferred mode of transport for the cost-conscious private sector, Prabhu is now determined to pull out all stops to get them on board in a big way. The business mantra ‘customer comes first’ may have to soon find a prominent place in the Indian Railway lexicon if it intends to make the private sector a major player in its growth, and become a vital part of its turnaround story.

The author is former member, Railway Board


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