Freight Challenges of Indian Railways

Freight Challenges of Indian Railways

Uday Shankar Jha

Emerging challenge of Indian Railways (IR) is to retain the freight customers to its fold. The rapidly decreasing market share indicates that if the trend is not reversed urgently, the growth and survival of IR would be under question mark. Understanding the gravity of the issue the Railway Board (RB) has recently issued two important documents: - Vision 2020 and White Paper. In this paper we will evaluate what were issues raised in these documents and what solutions have been suggested? We will also evaluate whether these solutions are sufficient or we need to look something beyond?

GDP and Transport

Vision 2020 (RB: 2009. pp 3- 4) accepts that the elasticity of transport to GDP is around 1.25. Since in recent past there has been higher GDP growth the GDP growth of 9% would, therefore, translate into increase in demand for transport to the tune of 11%.The following table no. 1 indicates that the IR has not been able to capture the potentialities.

Table1: Railway traffic growth vis-à-vis GDP

Period	Average GDP growth	Potential for growth of Railway traffic @elasticity of transport of 1.25	Average growth in freight traffic of railways	Opportunity missed by the Railways
1991-92 to 2001-02	5.6	7	3.9	3.1
2002-03 to 2008-09	7.9	9.9	7.2	2.7

Source: Vision 2020(Railway Board 2009. pp4)

The above table indicates the underachievement of the IR. It means the opportunities were there, but the IR was not able to tap the market or capture the opportunities. This may be due to various limitations or challenges being faced by the IR.

Even though traffic volumes on Indian Railways have gone up over the years, rail share, particularly in freight transport, has gone down steadily over the past few decades. White Paper (Railway Board: 2009. pp62) mentions that the market share of rail transport has reduced drastically from 89% in 1950-51 to 30% in 2007-08. The road sector has been the biggest gainer and pipelines also have gained share by 4.5%. Comparison of tonne kilometers for different modes for the year 2007-08 indicates share of railways at 36.06% (against 30% if compared in tonnes), highways 50.12%, coastal shipping 6.08%, airlines 0.02%, pipelines 7.48% and inland water transport 0.24%.

Table2: Historical Overview of Operational Performance of different Modes of Transport

Year	Total Originating Inter Regional Traffic	Railways	Highways	Coastal Shipping
1950-51	82.2	73.2 (89%)	9.0 (11%)
1978-79	283.4	184.7 (65%)	95.6 (34%)	3.1 (1%)
1986-87	484.9	255.4 (53%)	224.0 (46%)	5.5 (1%)
2007-08	2555.35	768.7 (30.08%)	1558.9 (61%)	59.1 (2.31%)

Source: White Paper (Railway Board 2009. pp62)

The Railways have, however, maintained their traditional dominance in the carriage of bulk commodities as is brought out from the figures in table below:

Table3: Rail co-efficient of Major Commodities

ties

Year	Coal	Iron Ore	Cement	Food grains	Fertilizers	POL
2004-05	65.94%	63.05%	40.87%	23.29%	74.17%	24.68%
2005-06	66.03%	65.39%	41.40%	19.80%	74.01%	25.04%
2006-07	66.12%	61.12%	45.28%	18.54%	72.51%	22.73%
2007-08	66.46%	66.11%	45.16%	16.25%	75.30%	21.14%

Source: White Paper (Railway Board 2009. pp62)

Of the railways' freight traffic in 2008-09, 88% was accounted for by eight bulk commodities. The share of non-bulk traffic is 12% of the total traffic; a small decline of 1% compared to 2003-04, but compared to 1978-79 the decline is a significant 10%. There is good potential, therefore, to increase the share and thereby the volumes of non-bulk traffic. For increasing the market share of the Railways, non-bulk traffic would need to be attracted to rail through a focused strategy aimed at providing better services at competitive tariffs. This is especially important because of the increasing share of the manufacturing sector in the GDP. There is also further potential for increase in the share of bulk goods by providing better services such as faster transit and efficient handling at terminals. A policy to encourage and incentivise bulk customers to be committed to rail movement, e.g. by their participation in rail connectivity works, would also help.

Challenges to Freight Traffic

White Paper (Railway Board 2009. pp58-59) accepts that rail share in freight transport has declined and roadways are a serious threat to railways, particularly with the expansion of the national highway network through the NHDP. There is a decline in high return, non-bulk traffic because of the Railways' suitability and focus on trainload traffic. Railways are not able to provide time-tabled freight services as available in some countries, thereby not being able to attract traffic that requires guaranteed transit times or fixed schedule transit such as overnight delivery for special consignments. Railways have not been able to develop multi-modal logistics parks that could provide aggregation of cargo and door-to-door service; it has not been able to put in place a policy to encourage/facilitate setting up of multimodal logistics parks as in other countries in Europe, Southeast Asia and China. Containerized cargo movement by rail is still at a fairly low level of about 25 million tonnes annually and rail share in international container cargo is only about 25%. Consequently, there is regular hold-up of containers in ports. Overdependence on a few bulk commodities is a dangerous sign for the IR. Moreover these traffics are also facing competition from multi-axle higher capacity trucks. Railways have not been able to adapt efficiently to business other than movement of bulk cargo over long distances. Payload to tare ratio of wagons needs to be improved significantly even in its main business of bulk cargo transportation. High pricing of freight transport and subsidy for passenger transport is another problem area. Compared to railways which carry larger volumes of cargo than Indian Railways, such as the Chinese Railways, Russian Railways and US Railroads, Indian Railways' average lead of freight traffic, its asset utilization figures like NTKM per wagon day, and its manpower productivity figures like NTKM per employee are much lower.

Vision 2020 (RB: 2009. pp 7- 11) has also identified some issues affecting freight performance of the IR:-

(A) Capacity Constraints

The growth in Railway's freight and passenger traffic in recent years has highlighted a number of systemic constraints in railway operations. Foremost among these is capacity constraints on most of the high-density routes of the railways. The trunk routes of the railways comprising merely 16% of the network carry more than 50% of the traffic. These routes, on most of the stretches, have already reached over-saturated levels of capacity utilization. To manage a system reliably, capacity utilization must not exceed 80% and planning must ensure that capacity augmentation by way of doubling/quadrupling and other traffic facility works takes place well before saturation sets in. however progress in this respect has been very slow

(B) Reliability of Assets

A lot of effort in recent years has gone into improving asset reliability by use of upgraded track structure, better maintenance practices and improvement in locomotive as well as signal technology. However, on a saturated network the impact of an asset failure on operation is often severe. Use of shared tracks by both freight and passenger traffic, speed differential between passenger and freight trains and the precedence accorded to passenger trains exacerbate the effect. As a consequence neither the freight nor the passenger services run optimally. Freight services, in particular, suffer the most. Investment in technological tools and managerial systems that ensure reliability of assets is, therefore, a major challenge, if Indian Railways is to achieve high growth by offering superior services.

(C)Slow Speeds

The speed of freight trains on IR has stagnated at around 25 kmph for a long time. Passenger services are also slow by international standards. The maximum permissible speed on Indian Railways is 130 kmph for Rajdhani/Shatabdi trains and 110 kmph for other mail/express trains, compared to a maximum permissible speed of 200 kmph on several European Railways on conventional networks and more than 300 kmph on high speed corridors in Europe and Japan. Chinese Railways are presently engaged in construction of 12, 000 Kms of dedicated passenger corridors with speeds of 250-350 kmph. Currently, eastern and western routes of dedicated freight corridors (DFCs) totaling 3400 kms from JNPT (Mumbai) to Delhi and Ludhiana to Dankuni have been sanctioned. Pre-feasibility studies for other dedicated freight corridors for North-South (Delhi to Chennai), East-West (Howrah to Mumbai), Southern (Chennai to Goa) and East-Coast (Kharagpur to Vijaywada) have also been carried out. The DFCs are being planned with high axle-load and modern technology. These would provide the opportunity to achieve substantial segregation of freight and passenger traffic on the trunk routes and improve the speed and reliability of both services. The key challenge is to find and devote adequate financial and human resources to execute these projects in time. Segregation of freight and passenger services, creation of adequate capacity and rising of speeds of both services would be a key challenge if Indian Railways are to retain their market share and improve upon it.

(D) Door-to-door handicap: partnership with private players

Railway's inability to provide door-to-door service and transport of small volumes is a handicap. This can be overcome by forging partnership with logistics providers and establishing presence in large logistics hubs serviced by the Railways. Similarly, close attention to the totality of passenger services including use of information and technology to provide information and assistance in terms of other value-added services such as booking of taxies and hotel services prior to and after the railway journey would enhance attractiveness of the Railways.

(F) Project Execution

Railway projects suffer from chronic shortage of funds, as available funds are spread thinly over a large shelf of projects. Time and cost-over runs adversely affect the viability of projects. Efficient execution of projects within time and budget is, therefore, an urgent necessity. There are managerial and organizational issues that need to be addressed to fast-track project execution and meet the challenges of massive capacity creation within a short period of 10 years.

Further there are several projects which are very critical for the freight traffic. But, these are not being given due priority due to various socio – politico reasons. It is very critical to finish these projects on a given time framework. Otherwise, the IR would not be in a position to capture the new potentialities of traffic

(G) Technological Up gradation

Indian Railways has been adopting international best practices in various facets of railway infrastructure construction and induction, maintenance and operation, albeit with a time lag. A conscious policy to close the gap with the developed railway systems and compress the technology adoption and adaptation cycle on a continuous basis with a view to achieving steady improvement in cost of operations and quality of services needs to be evolved.

(H) Improving carrying capacity

There are ongoing plans to improve payload to tare ratio of freight wagons by use of lighter-weight materials like stainless steel and aluminum so that net payload per wagon increases. Simultaneously, there are also plans to make feeder routes of dedicated freight corridors and other identified routes on the network fit for 25 tonne axle load. These measures would improve the load per train from the existing level of less than 5000 tonnes to 6000 tonnes in future. These measures will provide useful quick-fix solutions in the short and medium term till adequate capacity is built up to match the requirement in the long run. Optimal use of maximum moving dimensions (width and height dimensions can be used to design larger-sized wagons and coaches) is another important area. This would require a systematic study of the "kinematics profile" of Indian Railways and adoption of the best of the know-how available so that with minimum investment on infrastructure, maximum usable dimensions in terms of optimally designed wagons can be pressed into service. There is a need to closely monitor these measures with regard to timelines and full realization of their potential.

Vision 2020 (RB: 2009. pp 11-12) has further mentioned the following two more challenges:-

(I) Quality of service

In recent years, there have been attempts to adopt flexible tariffs to smooth out seasonal imbalances, utilize empty-flow directions and incentivise loyalty of customers. However, major tasks that still remain are development of special-purpose rolling-stock to suit specific needs of the customers and the ability to promise and deliver time-sensitive cargo in time. At present Railways are neither geared to meet pre-registered requirements of customers for specified pick-up and delivery schedules nor those of guaranteed transit times. This issue is closely related to carrying capacity and reliability of the system. There is also an issue of marketing and mindset to develop closer market linkages with customers so that products are tailored to meet their specific needs. Also pertinent is the fact that although, there is generally no shortage, occasional peaking of demand and mismatch in rolling stock procurement programmes have at times exposed the Railways to the risk of losing customer loyalty. These issues need to be resolved through close linkages with customers and evolving responsive market-driven systems for procurement of rolling-stock and operational management.

(ii) Connectivity Issues

Railway's ability to improve the logistics and supply- chain efficiency of freight customers will be the prime determinant of success. As the dynamics of manufacturing, distribution and logistics change, the transport landscape would throw up newer challenges. Ports, private mining blocks and third party logistics providers are already emerging as major transport generators. Ability to establish IR's presence and linkages to these customers and service their needs would be crucial in the future. A clear-cut and workable policy on connectivity to railway's network in partnership with the entities concerned, wherever necessary and feasible, would be needed.

Operational Strategy for Freight Traffic

White Paper (Railway Board 2009. pp15-17) has mentioned some the strategies adopted in last few years as under:

A. Improving wagon mobility and availability by

(I). reducing terminal detentions by increasing goods sheds working hours

(ii). Improving the infrastructure at the goods sheds;

(iii). Rationalizing maintenance practices by extending the maintenance cycle of closed circuit rakes (CC Rakes) to 35 days/7500 Kms from 15 days/4500 Kms; introducing "premium" examination at nominated depots with a validity of 15 days

(iv). using FOIS (freight operations information system) for better monitoring; complete roll-out of  rake management system module enabling on-line monitoring of freight train operations

The above steps resulted in a reduction of average terminal detentions at loading points from 23.17 hrs per rake in 2004-05 to 16.21 hrs in 2008-09. Similarly, terminal detentions for unloading improved from 25.13 hrs per rake in 2006-07 to 18.36 hrs in 2008-09. The average number of trains examined per day reduced from 340 in March 2006 to 238 in March 2009, generating additional rolling stock availability, which helped capture incremental loading of 12 to 15 MT, in a year.

Consequently, the wagon turn-round improved significantly by 18%, i.e. from 6.4 days in 2004- 05 to 5.2 days in 2007-08. In other words, the same freight rake was available for loading 70 times per year in 2007-08 compared to 57 times in 2004-05. However, these measures were not able to realize the true potential of the system, commensurate with the growth dynamics.

B. Increasing lengths of trains - BOX-N rake lengths were increased from 58 to 59 wagons and BCN rake length from 40 to 41/42. No significant move, however, was made to operationally long length freight trains as run in countries such as Australia, Canada and other countries.

C. Increasing the carrying capacity of wagons by:

I. Increasing axle-load from 20.3 to 22.9, thereby increasing loadability by 10 tonnes per wagon

ii. Universalizing CC+6 loading except on certain branch lines

iii. Upgrading 26,000 Kms of important routes to CC+8 standard

iv. Upgrading approximately 4,800 Kms of track to 25-tonne axle-load

v. Inducting new BOXNHL and BCNHL wagons with axle-load of 22.9 tonnes

Increasing the CC no doubt brought in extra earnings but it exposed the track and rolling stock to the risk of premature deterioration.

Railways also took a number of preventive measures to ensure that overloading did not take place, including installation of electronic in-motion weigh-bridges for weighing all rakes and wheel impact load detection (WILD) systems to monitor axle loads being exerted by wagons in dynamic conditions. Systems were put in place to ensure that a maximum number of loaded rakes were weighed to detect overloading. Monitoring of track behavior by recording track geometry parameters using track recording cars (TRCs) at least once in four months, procurement and installation of acoustic bearing detectors and finally levy of heavy penalties on customers to discourage overloading were some of the other steps taken.

D. Phasing out of vacuum brake wagons. During the period 2004-09, around 30,000 vacuum brake wagons were condemned, leaving about 33,400 wagons to be condemned in a phased manner.

E. Running of double-stack container trains from 2006 onwards

F. Implementation of a number of identified low-cost high return works such as IBSs, by-passes, electrification of sidings and up gradation of goods sheds.

G. Use of IT in freight operations

i. Terminal management system (TMS) introduced at 560 locations accounting for more than 75% of originating loading and online generation of RR

ii. Expansion of e-payment facility to cover more than 227 customers accounting for over 30% of freight earnings

H. Opening of the container sector to private players bringing investment in container rakes and in container depots

3.2 That the strategy achieved its goal of using the existing assets more effectively is borne out by the improvement seen in critical efficiency parameters for freight operations like wagon utilization, NTKM per wagon day and wagon turnround (Table 11). Wagon turn-round (WTR), the single measure that encapsulates the overall operating efficiency of the freight system, improved by a CAGR of over 6% per annum. There were several critical parameters, however, such as average speeds of freight trains, locomotive utilization and terminal detention where substantial scope for improvement remained.

Table4: Efficiency Parameters

Year	2003-04	2004-05	2005-06	2006-07	2007-08	CAGR (2003-08)
NTKM per Wagon day	2574	2677	2960	3238	3539
YOY growth	4.29%	4.00%	10.57%	9.39%	9.30%	7.47%
Wagon Km  Per Wagon day	187.8	204.4	217.5	230.1	248.9
YOY growth	-8.21%	8.84%	6.41%	5.79%	8.17%	3.98%
WTR (in Days)	6.7	6.4	6.1	5.5	5.2
YOY improvement	4.48%	4.69%	4.92%	10.91%	5.77%	6.13%

Source: White Paper (Railway Board 2009. pp17)

Commercial Strategy for Freight Traffic

White Paper (Railway Board 2009. pp17-20) accepts that while the operational strategy was based on increasing the availability of rolling stock to achieve higher loading, the commercial strategy was designed to improve the realization per net tonne kilometer of freight traffic. A number of steps were taken to increase earnings which included simplification of the tariff structure, dynamic demand-based pricing and charging of tariffs which the commodity could bear. The major steps were:-

a. Rationalization of Freight Tariff structure: A thorough overhaul of the tariff structure was undertaken including:

i. Reduction in the number of Classes from 59 to 15, with a uniform interval of 'tens' between successive Classes.

ii. Highest Class reduced from Class 300 to Class 200, in stages. For light weight commodities, new Classes LR1, LR2, LR3 and LR4 introduced so as to levy more appropriate rates to lighter goods.

iii. Rationalization of freight for all traffic booked up to 100 Kms.

iv. To-pay surcharge on freight reduced from 10% to 5% for all commodities except coal, for which it was reduced from 15% to 10% with effect from 01.04.2003.

v. Goods Tariff with more than 4,000 commodities was reduced to 21 commodity groups and 4 divisions under a new low-rated tariff line. All commodities, which were earlier having only a wagonload Class, were assigned trainload Class.

vi. The concept of Minimum Weight Condition was abolished and freight charged uniformly on the basis of the notified standardized permissible carrying capacity (PCC) of the wagon.

b. Dynamic Pricing Policy: A policy was introduced through which differential tariff was charged to take care of skewed demands during different periods of the year, as well as in different regions. Particularly in the case of iron ore export traffic, this policy led to revisions of freight rates closely linked to market dynamics. As freight constituted only a small part of the total cost of iron ore, this did not affect the consignors/consignees too much, but the railways gained considerably through higher earnings.

c. Freight Incentive Schemes: A slew of freight incentive schemes were launched to attract traffic, particularly in traditional empty flow direction and during the lean season. Mini rakes and schemes to facilitate aggregation of traffic into train loads were also introduced. The response by trade and industry to these incentives, however, was not as buoyant as expected.

d. Additional Charges: In addition to the freight charges, a number of additional charges such as busy season charge, busy route/congestion charge, development charge and terminal charges were levied on the customers. These charges varied from time to time, and on date they are as under:

i. Busy Season Charge: 5% surcharge on coal and coke group; all other commodities 7%.

ii. Congestion Charge: 20% on traffic to Bangladesh and Pakistan. (This charge, in case of iron ore varied from 21% to 100% between 2006 and 2008).

iii. Development Charge: 2% on all traffic from 1.07.2007.

iv. Terminal Charge: Iron ore traffic, Rs.40 per tonne per terminal; all other traffic Rs 20 per tonne per terminal for traffic handled at railway goods sheds.

e. Wagon Investment Schemes: In 2005 Indian Railways introduced the Wagon Investment Scheme (WIS) to encourage Public Private Partnership in procurement of wagons to meet the future growth of traffic. The investor was free to procure even general purpose wagons like BCN, BOXN, BTPN, BRN, BOST, BOBRN and there was no restriction on commodities that could be transported. The scheme envisaged guaranteed supply of certain number of rakes every month to the investors besides giving a concession in freight varying from 7 to 15 years depending on type of stock. In addition, provision for supply of bonus rakes without freight concession was also proposed under the scheme.

The response was encouraging and during the period 2005-08 approval for procurement of 140 rakes was given. Till 2009 93 rakes have already been inducted. Interestingly, more than 99% of the rakes for which permission was granted were for BOXN wagons meant for loading of iron ore in three major clusters on three railways viz., South Eastern, East Coast and South Western Railways. Such large scale induction of rakes under the scheme for a single commodity confined to few iron ore loading points with provision of assured supply put tremendous pressure on the railways making it virtually impossible for the railways to fulfill its commitment of assured supply to WIS customers on the one hand and moving programmed traffic on the other. Despite the favorable response, Indian Railways were forced to withdraw the scheme without prejudice to all those who had either procured the wagons or had been granted approval. This episode clearly brought out the fact that without resolving its major constraints of line capacity and terminal capacity, railways could not hope to launch a popular scheme and sustain it.

It was not surprising to note that the Liberalized Wagon Investment Scheme which replaced the WIS w.e.f. April, 2008 has its scope restricted to special purpose wagons and high capacity wagons and excludes commodities like coal, coke, ores and minerals including iron ore from the purview of the scheme. The focus is on non-conventional traffic moving in special purpose wagons like bulk cement, alumina and fly ash etc. Though this scheme provides for freight concessions, there being no assurance of guaranteed supply, the response has been tepid with approvals being accorded for only 10 rakes.

Terminal Incentive-cum-Engine on Load Scheme (TIELS): In order to reduce terminal detentions to rolling stocks at the existing sidings and goods shed by way of investment by the terminal user for augmenting infrastructure like mechanized loading/ unloading, improvement in yard lay out, introduction of round the clock working, etc, this scheme prescribed "engine on load" free time for loading/ unloading operations by providing freight rebate for a period of 10 years to the customers opting for this scheme.

However, after implementation of this scheme, at few locations it was found by audit that the desired result of reduction in detention did not materialize despite the financial incentives given to the customers. In view of the audit observation, the implementation of this scheme has been kept on hold since November 2008.

The commercial strategy gave the desired results as freight earnings grew at a much higher CAGR of 14.16% against the 8.38% growth in loading. Except for POL, the realization per NTKM for all commodities went up considerably. In the case of iron ore, the variation in the earnings per NTKM was as high as 160% between 2003-04 and 2008-09. Even in the case of food grains and fertilizers, there was an increase of 44% and 35% respectively over the period. Overall, freight earnings per NTKM grew at a CAGR of 6.55% during the same period. The commodity-wise details are given in Table 4 below:-

Table5: Earning Per NTKM (in paisa): 2004-09

Commodity	2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	% var over 03-04
1Coal	74.06	81.12	84.68	82.92	84.26	93.78	27%
2 RMSP	80.27	82.19	97.17	112.59	97.01	101.72	27%
3 PI& Steel	97.82	99.13	97.85	100.89	104.80	110.96	13%
4 Iron ore	70.26	81.74	106.11	126.80	132.98	182.48	160%
5 Cement	82.93	80.83	86.02	88.80	90.27	95.79	16%
6Foodgrains	51.54	47.37	54.55	64.19	68.55	74.36	44%
7Fertilizers	58.99	54.93	58.75	70.35	73.47	79.92	35%
8 P.O.L.	135.55	127.59	126.41	122.90	125.46	128.69	-5%
9Other goods	58.89	62.99	66.82	76.30	76.50	77.27	31%
Total	71.88	74.84	80.83	85.39	89.04	98.73	37%

Source: White Paper (Railway Board 2009. pp20)

In non-bulk goods and in traffic that is time-sensitive, IR was unable to develop more business friendly strategies to attract traffic and cater to it efficiently. Though the container sector was opened to private players, the traffic volumes did not increase to their full potential. There were issues regarding use of Railways' existing sidings, haulage charges and tariff, besides lack of cargo aggregation by the operators and cases of diverting existing traffic of Railways like steel and cement. These factors combined with the general recession led to less than anticipated level of private investment in procurement of new rolling stock and terminals. On the operations front, improvement of carrying capacity of wagons, payload to tare ratio and terminal handling time, continued to be weak areas with scope for improvement. Since 2005 the Railways were able to use up whatever slack capacity was available in the system and reach a stage where there is now a need to develop additional capacity to handle further incremental traffic. Therefore, capacity on busy freight routes, which are unable to fully cater to the movement requirements, needs to be augmented on an urgent basis and terminals infrastructure further strengthened.

White Paper (Railway Board 2009. pp28-29) accepts that considering the growth in freight traffic over the last five years, the biggest constraint that railways face today is of inadequate network capacity and infrastructure. In fact, capacity creation on Railways over the years has not kept pace with the transport output. This is brought out clearly in Table 17. Since 1950-51, route-kilometers has increased by just 18% and track kilometers by 41% even though in the same period freight and passenger output had gone up by more than 12 and 11 times respectively. As shown in this Table, the increase in infrastructure during the last five years has also been minimal compared to the growth in transport output.

Table6: Growth Index of Traffic

1950-51 as Base Year

Year	N T K Ms	Route KMs	Wagon Capacity	Tractive Efforts of Locos
1950-51	100	100	100	100
1980-81	359	114	269	201
1990-91	550	116	278	192
2000-01	715	118	246	233
2003-04	875	118	257	252
2007-08	1185	118	247	292

Source: White Paper (Railway Board 2009. pp28)

During the last 5 years, even though there was an emphasis on expansion of the BG network and line capacity augmentation, the addition by way of new lines, doubling and gauge conversion was a total of only 7,497 kms with the major component being of gauge conversion (4,717 kms). The addition in doubling and new lines has not been very significant and has been below the plan targets set by the Railways.

Besides, common corridor for both freight and passenger traffic another major challenge. With super fast passenger services and slow moving passenger trains on the same corridor, it is extremely difficult to run freight trains Further, with the emphasis on passenger traffic (presently 60% of the total train-kms), passenger trains take precedence over running of freight trains. On some of the major trunk routes, introduction of new passenger trains directly affect freight train movement. It is no surprise, therefore, that the average speed of freight trains was only 25.7 kmph in 2008-09. Further, the metre gauge and narrow gauge network, though accounting for 19.2% of the total route kms, contribute only 2% and 0.2% respectively of the total passenger and freight traffic output of IR. Furthermore, skewed traffic patterns on the Railways create another complicated situation. More than 55% of the traffic moving on the golden quadrilateral and its diagonals, connecting the four metropolitan cities of Delhi, Kolkata, Mumbai and Chennai, and the Delhi-Guwahati route, which form less than 20% of the total IR network. This has saturated the HDN with over two-thirds of the sections showing a utilization of over 100%

Option for Future Development in Freight Business

White Paper (Railway Board 2009. pp60) has mentions the following measures:-

1. Induction of high capacity and high-speed wagons to reduce unit cost of operations. Present payload to tare ratio which is 2 - 2.5 needs to be increased to at least over 3.5.
2. Setting up of private freight terminals and commodity specific terminals by adequate incentivisation.
3. Liberalization of private siding rules to establish multi-user sidings and incentivisation of private sidings through freight concessions, preference in allotment and supply of wagons and revenue sharing.
4. Induction of special types of wagons for bulk movement of commodities such as cement, fly-ash and food-grains.
5. Incentives for promoting port connectivity.
6. Attracting new streams of traffic like fly-ash, exploiting the full potential for automobile traffic by design and development of special types of wagons.
7. Incentivise private sector for ownership of wagons and terminals and warehousing.
8. Operation of scheduled freight services and value added services for high-end customers. This is particularly applicable to container traffic and commodities like FMCG and white goods that are highly time sensitive and are not moving by railways today.
9. Construction of dedicated freight corridors on all trunk routes. In view of the high cost of construction, long period of construction and funding issues, if private sector has to be involved, issues of revenue sharing.
10.  Network and line capacity augmentation.
• Setting up of non-lapsable dedicated fund outside the normal budget for lines sanctioned on socioeconomic lines.
• State Governments to share the cost/losses in the operation and maintenance of socio economic lines.
• Allowing railway projects to be included under National Rural employment guarantee scheme.
• Investment by municipal bodies/State governments for development of suburban rail network.
• Policy initiatives/incentives for construction of rail lines by private sector.
• Route-wise sanction of projects instead of project-wise sanctions.
• Private sector incentivisation for uneconomic branch line rehabilitation/operations.

Action Plan

Vision 2020 (RB: 2009. pp 56-57) has highlighted some of the action plan. It says that Railways would concentrate on strengthening its presence in the bulk traffic segments and container cargo i.e. in commodities it already serves and attracting new commodities like fly ash, automobiles etc. through partnership with private sector freight operators. Special mini-or two-point rake services will be designed. Special-purpose rolling stock suited to meet the specific requirements of commodities will be inducted. These will be encouraged through Liberalized Wagon Investment and Leasing Scheme. Long-lead traffic will be courted with special effort. Port connectivity works would be taken up on priority in partnership with ports and other major users. Some of the priority enlisted would be as under:-

a) The emphasis would be to meet the exacting needs of customers in terms of timeliness and quality of service. Time-tabled and guaranteed- delivery freight services would become the norm. Freight services will also be designed to meet pre-determined schedules of customers. Dedicated freight corridors will greatly help in achieving this goal.

b) There would be a constant stress on cost efficiencies through reductions in terminal and en route detections and rationalization of carriage and wagon examinations.

c) Loyal customers who transport their cargos from siding to siding on rail and contribute to the efficiency of operations by installation and operation of efficient freight terminals and handling systems would be incentivised by sharing a part of the efficiency gain with them.

d) Freight terminals and sidings for use of multiple users will be encouraged.

e) Tariff-setting would be a dynamic and market-based exercise.

f) Rolling stock with high payload to tare ratio( at least 3.5 vis-à-vis 2-2.5 now), tailored to the needs of customers would be developed and deployed.

g) IT-based MIS and customer relationship management (CRM) systems would be adopted for inter alia, paperless transaction for indenting, freight payment and invoice forwarding as well as real time tracking of cargo.

h) Average speed of freight trains would be improved from 25 to 50 kmph.

To achieve the mammoth task Railway has set itself, it has to concentrate on its core activity of creation of railway infrastructure and operations and forge partnerships with private sector to do the rest. The challenge of project execution and efficient provision of service can not be accomplished without involving private sector in a big way. However, the activities and projects to be opened for private participation have to be carefully selected and structured for their amenability to market-based incentives and smooth execution. Several areas currently identified for execution through PPP such as redevelopment/development of world-class stations, high-speed corridors, setting up of Multi-modal Logistics Parks, Kisan Vision projects, expansion and management of the extensive network of Optical Fibre Cables (OFCs) and big infrastructure projects like new lines and Dedicated Freight Corridors, rolling-stock manufacturing units, Multi-functional Complexes at stations and port connectivity projects would need to be developed and awarded on a mission mode. To be able to do so, Railways would have set up dedicated project organizations who would work with model documents and streamlined procedure within the framework determined by Government of India. Vision Documents expect that by these measures the IR would virtually attain a state of "availability on demand" in freight,

Despite the detailed analysis of challenges being faced by Indian Railways (IR) with respect to movement of freight traffic, there are some areas which remain unanswered. Some of these are as under:

1. Quadrupling Golden Quadrilateral:

In our analysis, we have seen that more than 55% traffic moves on the golden quadrilateral and diagonals and most of these sections are saturated. In such a situation, question arises why IR has not taken steps for converting this quadrilateral and diagonal into quadrupling since it is in existing track with stations, quadrupling could have been much easier alternative than going for a separate Dedicated Freight Corridor (DFC).  Although, IR has planned for the DFC, initially the project was supposed to be completed by 2011-12. In the recent times, time schedule has been revised till 2014-15. But with the present pace of working, it is quite probable that project would not be ready and fully operational before 2020. In this scenario, it would have been better or even now, IR could have planned quadrupling of these lines to cater to the demands.

2. Shortage of Wagons:

In the present freight working, shortage of wagons is one of the acute problem particularly covered wagons like BCN and open BOX’N wagons. Neither the White Paper nor the Vision – 2020 has chalked out any concrete plan to increase the number of wagons. To meet the present trend of traffic, it is urgent that in immediate future,  a very high substantial ( around 50,000 or more) number of wagons are added in to fleet of IR. If the IR wants to survive its core activity, it should stop all other activities first and add minimum number of these wagons so that there is more flexibility in capturing more volume of traffic.

3. Number of Diesel Power:

At present, freight working is facing acute shortage of Diesel Locomotive Power. The shortage is seen all around.  This problem is being faced for last so many years. Despite adding of few more Diesel Locomotive Power and few more high horsepower Diesel Loco Motive power, no concrete solution has been provided.  Neither the vision document nor the white paper has provided a strong solution to this problem. Nor any action plan has been laid down.  This entails that we add at least 25% Diesel Loco Motive Power in the kitty of the IR.  Until unless this is done, the benefit of adding extra wagon contract can be reaped.  We need to develop way and means for the procurement of Diesel Loco Motive.

3. Improvement in the condition of Goods Shed:

In the last few years there has been some improvement in the condition of Goods Shed.  However,   a lot of work is yet to be done.  Provision of covered shed, stacking area, ware housing facility, motorable road, appropriate lighting  drinking water, traders room, labor resting room including urinals and bathrooms etc.  is required to be provided.  In almost, all Goods Shed arrangement is to be made to make working round the clock.  These measures will help in improving turn around of the wagon and better utilization of assets.

4. Policy of wagon supply: 

This is high time that IR rethink the policy of wagon supply to the traders.  Presently wagon supply is done on the basis of priority based on the government rules.  The government rule permits priority ‘A’ to priority ‘E’, giving high priority to ‘A’ with decreasing priority up to ‘E’.  In this situation it is quite probable that traffic listed under ‘A’ & ‘B’ wagons are supplied almost on immediate basis and traffic for C to E, the customer has to wait quite long. And, if the customer is ready to pay high price, for traffic listed in C to E, there is no system for overlooking the priority.  Hence, the IR need to introduce some kind of wagon allotment scheme so that we can spare 60% wagon for the present priority allocation, another 20% wagon may be given to those customers who are ready to pay 25% higher charge for getting wagon in advance overlooking to other customer.  Another 25% could be given by the auction to be conducted 2 days in advance on the basis of computerized auction, where only the interested customers with guaranteed payment of freight at the time of supply of wagon could participate.

5. Containerization of Traffic:

Internationally almost 50% of the traffic moves in containers.  In India, this containerization is only up to 15%with greater implementations of freight movement including higher import and export.  It is quite probable that the % condition of traffic would increase to capture this trend; IR needs to take some initiatives to containerize the traffic.

These suggestions are not exhaustive and we could have few more models for private participation and market mobilization. However such processes have not started in abig manner. As commented by Gajendra Haldia (Seminar 591: 2003) Indian Railways continue to run on a monolithic inward looking model. Several attempts to introduce reforms and restructuring were stillborn.  He has viewed it as being a closed organization that does not entertain much external scrutiny. He has further said that it determines its own policies and strategies largely on the basis of internal perceptions and compulsions. He felt that few external checks and balances are available by way of self-correcting mechanisms. He has commented that the vast potential of railways thus lies substantially untapped. On the contrary, a steady deterioration in many of its fundamentals is obvious to any observer. Painting a negative picture he has doomed it by saying that given the mould in which railways seem to operate, there is little hope of substantive reforms. It is futile to expect that incumbent players will be harbingers of change. Railways may thus continue to deteriorate unless a multi-disciplinary Railway Commission consisting of eminent persons is set up for devising a reform strategy that would rejuvenate this sector. The situation may not be so grim, but at the same time the IR need to do some out of box thinking and adopting new models of synthetic development.

To sum up we can conclude that the present state of awareness, the IR is aware of its limitations.  The measures suggested to overcome the problem is not enough to enhancing of the crises suggested to overcome the problem could be one major issue.  We need to seriously rethink the present suggested measures and its probability of implementation and best alternative measures that could have been made system movement workable.  It is high time that IR takes some measures in such a manner that the initial year the profit out of these measures could be less but in the long run the IR should be in position to capture not only the greater share of traffic but also provide a robust paid service available in India.  This will make trading achieving in India more comfortable and will ultimately lead to higher GDP growth and more and faster economically developing country.

Bibliography

Railway Board (RB) Government of India 2009 New Delhi: Vision 2020. Indian Railways.

Railway Board (RB) Government of India 2009: White Paper on Indian Railways.

Gajendra Haldia (Seminar 591: 2003):Salvage Reforms. Available on http://www.india-seminar.com/2003/521/521%20gajendra%20haldea.htm