The robust development of rail freight infrastructure plays a crucial role in logistics movement and supply chains in India. The modal split of freight transportation varies based on geography, nature of commodities, legal and regulatory framework, availability of vehicles and the state of infrastructure. At present, nearly 27 per cent of logistics in the country is transported by railway network. According to a 2022 NITI Aayog report, it is important to strengthen the railways to ensure the cost-effective and clean movement of a broad commodity base. When compared to other modes of freight movement, rail freight costs the least at Rs 1.60 per tonne-kilometre, followed by waterways at Rs 2, roadways at Rs 3.60 and air freight at Rs 18. The cost-effectiveness of rail freight is one of the primary reasons for the government’s push to increase the modal share of railways in overall freight movement.
Indian Infrastructure takes a look at the trends in rail freight movement, recent government initiatives to promote the segment, and the way forward…
Trends in rail freight movement
Freight traffic has grown at a compound annual growth rate (CAGR) of 5.4 per cent from 2018-19 to 2022-23. It witnessed a steady increase and reached 1,512 million tonnes (mt) in 2022-23. Owing to the steady freight movement, the rail sector also managed to overcome the challenges of the pandemic, despite the complete shutdown of the passenger segment. Treading on similar lines of growth, Indian Railways (IR) transported 887.25 mt of freight in the April-October period of 2023-24, marking a 31.61 mt increase compared to the freight loading in the corresponding period in 2022-23. Meanwhile, the national transporter earned freight revenue totalling Rs 959.29 billion in the April-October period of 2023-24, a 3.88 per cent increase compared to the corresponding period in 2022-23 (Rs 923.45 billion).
Commodity-wise, rail freight is dominated by nine commodity groups – coal, iron and steel, iron ore, raw materials for steel plants, cement, food grains, fertilisers, petroleum products and container traffic. Of these, coal holds the highest share, accounting for 44-49 per cent of commodity traffic, followed by raw materials for steel plants at 13-14 per cent and cement at 9-10 per cent.
Government push
The government has been focusing on the development of new and improved infrastructure with the aim of improving rail freight movement. To this end, the Gati Shakti Multi-Modal Cargo Terminal (GCT) policy was launched on December 15, 2021 with the aim of setting up 100 GCTs by 2024-25. As of July 2023, 48 GCTs have been commissioned. The development of GCTs is essential as it encourages industry investment for the development of additional terminals to handle rail cargoes.
In another development, IR started “Mission Hungry for Cargo”, to achieve a 45 per cent modal share in freight transportation. To facilitate new traffic from road to rail, IR has set up business development units in each division, which has helped capture new streams of goods such as salt, sand, stone, sugar and onion. In June 2022, Mission 3000 MT was launched as an intermediate milestone towards achieving the ambitious targets under the National Rail Plan. It aims to identify and prioritise crucial capacity enhancement works for implementation before 2027 and suggests an action plan for making requisite policy and strategic adjustments.
On September 7, 2022, the union cabinet approved the Ministry of Railways’ proposal to revise the railway land policy to implement the PM Gati Shakti framework (covering cargo-related activities, public utilities and the railway’s exclusive use). It allows for the long-term leasing of railway land for cargo-related activities for a period of up to 35 years at a 1.5 per cent rate of the market value of land per annum.
Boosting rail cargo services and associated infrastructure
In February 2023, IR and India Post jointly launched the Rail Post Gati Shakti Express Cargo Service with the aim of providing seamless logistics for the services sector in the country. In another significant development, IR plans to operate dedicated parcel trains on specific routes to capture goods shipped by online marketplaces. The introduction of this service is expected to help it regain some of the non-bulk freight business that moved to roadways over the decades.
In order to optimise transit time and ensure direct connectivity with seaports, a double-stack train was successfully flagged off on April 20, 2023, from Dadri inland container depot to Mundra Port on the western dedicated freight corridor network. This initiative will help reduce the transit time from 70 hours to approximately 30 hours. IR is also working on replicating the concept of Vande Bharat trains and introducing the first semi-high-speed freight train. It will be a 16-coach “Gati Shakti” train which will operate at a speed of 160 km per hour. Providing further impetus to the rolling stock, in February 2023, IR placed the highest-ever order for about 84,000 wagons in a bid to increase the share of railways in freight transportation. IR is also exploring real-time train tracking options to ensure faster and more reliable services.
Container traffic share remains stagnant
Container services can contribute to sustainable and environmentally friendly freight movement as they promote energy efficiency in rail transport, thereby reducing carbon emissions compared to other modes of transportation. The total rail container traffic stood at around 79.45 mt in 2022-23, increasing at a CAGR of 7.12 per cent over the 2018-23 period. Meanwhile, the share of containerised traffic in the overall freight transported witnessed a meagre increase from 4.93 per cent in 2018-19 to 5.23 per cent in 2022-23. The total rail container revenue stood at approximately Rs 79.01 billion in 2022-23, increasing at a CAGR of 7.34 per cent over the 2018-23 period.
Various supply chain players are either acquiring container train operators or collaborating with them in a bid to improve their rail freight carrying capacities. In light of this, in November 2023, JSW Infrastructure Limited ventured into the container train operations business by acquiring Sical Multimodal and Rail Transport Limited’s container train operator licence from Pristine Logistics and Infraprojects Private Limited (PLIPL). PLIPL acquired Distribution Logistics Infrastructure Private Limited, which also holds a licence to operate container trains, bringing the total licences to three, which the company does not require to run container trains.
In 2017, logistics solutions provider Allcargo Logistics Limited signed a deal with Container Corporation of India (CONCOR) to facilitate faster transportation and enhance service offerings to customers by rail for export-import trade. With this, Allcargo was authorised to use CONCOR rakes between Jawaharlal Nehru Port to Tihi, Indore. The primary goal was to enhance the ease of doing business by shifting emphasis from road to rail, thereby easing congestion and pressure on road transportation. Similarly, Transport Corporation of India Limited (TCI) has a joint venture with CONCOR, enabling TCI to provide reliable, efficient, cost-effective and environmentally friendly rail services.
CONCOR is actively working towards business expansion and aims to achieve sustainable growth. The company is steadily growing due to its focus on establishing multi-modal logistics parks along dedicated freight corridors (DFCs), increasing the double-stack haul of containers, providing value-added services, innovative use of technology, expanding warehousing business and venturing internationally to boost freight movement. Despite concerted efforts and various collaborations, container traffic in the country has not witnessed much growth due to infrastructure challenges. According to industry experts, the rail container segment requires a major policy push in order to gain traction.
In sum
IR is prioritising a modal shift from road to rail due to its logistically cheaper and less polluting nature. With the National Rail Plan aiming to achieve a 45 per cent share in rail freight, the national transporter is working towards attracting more cargo to trains. This involves a focus on expanding the rail network, gauge conversion, improved wagon production, and other related initiatives. Furthermore, the DFCs are approaching completion, which is already bolstering freight movement. According to industry experts, containerised transportation is expected to play a role in expanding railways’ freight basket. This is expected to move freight from road to rail, decongest roads and reduce pollution. In a recent study, the Indian Railway Board also highlighted the need for dedicated coal corridors in the country on account of the growing power demand. With the majority of the coal being transported from Odisha, Jharkhand and Chhattisgarh to the north, west and southeast regions of the country, it is crucial to develop tracks exclusively for coal movement on these routes. Going forward, cargo consolidation, real-time wagon monitoring and interventions in wagon designs may help in attracting larger volumes of commodities.
Disha Khanna
