LOGISTICALLY SPEAKING. Freight services deserve priority, overhaul

By roping in Sreedharan to recommend a transparent decision-making mechanism for Railways, Minister Suresh Prabhu has sent out a strong message that the days of those seeking comfort in the opaque system are over. There is no better choice than the Metroman with an impeccable record of executing railway projects, to do the job.

Though, it may not be easy for Prabhu to bring about rapid changes to a system fraught with inherent inefficiencies, putting in place a mechanism that makes people accountable for what they do or fail to do will certainly pave the way for sound and fast decision-making.

No doubt, the country’s transport behemoth badly needs an overhaul in its administrative and operating system, but equally important is to have a re-look at the relative priority being given to passenger and freight services.

While safety and comfort should receive top priority, freight services that subsidise the passenger fares need enhanced attention. It will not only improve the Railways’ revenues but also enable it to make more contributions to the logistics sector.

It is estimated that logistics inefficiencies reduce GDP growth by more than one per cent. The railways has the potential to reduce such avoidable losses. Unfortunately, Railways ministers seldom focus on freight services, as unlike passenger services, the former rarely adds mileage to their popularity. If Prabhu can change the tradition, he would be doing a great service to the logistics sector.

It is known that for long-distance freight movement, rail is more economical and environment-friendly than road. However, in India, railways accounts for only 30 per cent of the domestic freight movement while road has the lion’s share of 60 per cent.

For a healthy logistics system, this mix is not a comfortable one. What is worrisome is that the railways continues to lose cargo to roads.

Though efforts have been made to improve the goods services, they are still plagued by the tardiness. Currently the railways carry more of bulk cargoes. For instance, coal accounts for about 40 per cent of the total freight. Foodgrains, another major item, enjoy subsidised freight rates.

If there is a 5-10 per cent variation in demand for wagons either way, the railways will not be able to cope up. Either there will be shortage of wagons or too many wagons will idle. Another problem is limited line capacity – passenger trains are always given priority. To overcome this, dedicated freight corridors were started. But when they will become operational is anybody’s guess.

Container service: this is an area that needs active attention. Private operators who came in with a lot of enthusiasm now seem disappointed. Though the volume may not be large, the movement of general cargo in containers will be the future trend.

Unless issues such as high haulage charges, access to railway terminals and restrictions on movement of certain commodities in containers are sorted out, some of them will be forced to wind up operations.

It is time to have a fresh look at the freight services. To begin with, a detailed study is important in view of the emerging trends such as growth of e-commerce, third party logistics, increased containerisation in domestic goods, and the Government thrust on development of the infrastructure sector.

The Railways should also set a target to increase its share in the domestic freight to 40 per cent in the next 5-7 years. For this, it needs to enter multimodal transport service in a logical tie-up with road and coastal shipping operators.

One can reasonably expect Suresh Prabhu, who has had a commendable track record as Power Minister in the Vajpayee Government, to excel in his performance in the Railways.

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