Views of Suresh Prabhu: “Freight has been the mainstay of the railways’ earnings”

“Freight has been the mainstay of the railways’ earnings”

At a recent conference on New Alternatives in Wagon Design organised by Indian Railways, Suresh Prabhakar Prabhu, Union minister, Ministry of Railways (MoR), shared his views on how the ministry is making attempts to get back its modal share in the freight segment…

MoR’s focus on expanding modal share

The MoR is adopting a collaborative approach with customers in expanding its share of freight transport vis-à-vis other modes. Freight has been the mainstay of the railways’ earnings as more than two-thirds of the total revenue comes from this segment. However, the carrier has been losing its modal share over the past 60-70 years, especially to the road sector. Transporting freight via roads only leads to traffic congestion and harmful emissions that cause greater inconvenience to the general public. Overall, the primary motive of the railways is to not only win back its lost modal share, but also increase it, and for this the railways is adopting a collaborative approach with not only its customers, but also wagon manufacturers, the finance ministry and other stakeholders as well.

The MoR has laid special emphasis on the on-ground implementation of policies, which in the case of freight will require robust designing and manufacturing of special wagons to cater to the volume and type of commodity being transported. For this, customer participation has been identified as a key factor in ensuring the flow of new ideas in meeting customer needs and requirements.

Railways to develop “win-win model”

With the need to expand freight volumes, IR plans to work in tandem with the market such that needs and demands of customers are met. It also aims to create a “win-win model”, such that all stakeholders work in a collaborative manner, through which all flourish. In this regard, the MoR has introduced a discount scheme for customers, wherein incremental traffic will be granted a specified discount. This has been initiated primarily to attract more traffic. Broadly, this initiative has been identified as an ongoing process which will be accompanied by continuous engagement between the railways and its customers.

Moving towards new commodity traffic

Another initiative launched by the railways has been “Beyond Coal”. Currently, revenue from coal accounts for almost 50 per cent of the railways’ total revenue from freight or one-third of its overall revenue. However, globally, the movement of coal is expected to reduce going forward, with more and more economies switching to cleaner fuels. Keeping such developments in mind, the railways is now exploring alternative traffic which is currently being handled by other modes. It also plans to increase the number of major commodities handled from 10 to 40, for which the railways is adopting sectoral strategies for effective implementation.

Further, plans are also in place for offering new opportunities to the agricultural and agro-processing markets which will open new business areas for the railways, while at the same time benefiting farmers and state governments. Currently, around 30 per cent of the country’s total produce goes to waste due to delays in reaching the market. The railways will therefore be instrumental in preventing the same.

Collaborative initiatives

In line with the MoR’s plans, a new programme involving the redesigning and retrofitting of 40,000 passenger coaches has been initiated with the participation of the private sector. Also, another programme aimed at identifying new alternatives in wagon design has been initiated to understand market needs of customers. Overall, private participation is not a new subject for the railways. In 2015, the formation of partnerships between all stakeholders including the private sector, state governments, and financial institutions was the theme of MoR’s railway budget. While significant progress has been made with regard to joint ventures with state governments, the MoR is gradually evolving to  undertaking more collaborations.