Coronavirus helps Indian Railways improve market share in container haulage

Containers handled at state-owned Jawaharlal Nehru Port Trust (JNPT), India’s top container port, plunged 37 per cent in April to 2,83,802 twenty-foot equivalent units (TEUs) from a year ago as the pandemic cut demand.

But, this presented rail haulage a chance to improve its share of boxes evacuated to and from the port in the face of a acute shortage of trucks and drivers.

“In the month of April, JNPT handled 499 container trains, making it the highest number of container trains handled in a month. This also resulted in increasing the rail coefficient during the month to 22.39 per cent against the previous financial year monthly average of 16.04 per cent,” said Sanjay Sethi, Chairman, JNPT.

“This is an impressive achievement,” said a port industry executive.

If an extra 6.35 per cent of the container volume went through rail instead of road, that means an extra 18,203 TEUs went by rail instead of road. With a box mix of 1:4, it means nearly 13,000 less truck journeys for that volume compared to previous financial year. This is even excluding if two TEUs are carried on one trailer.

“That translates into 400 less truck moves a day. There will be truck delivery for last mile, but even so, a commendable amount to get off the road by Indian Railways, CONCOR, container train operators and terminals,” he said.

He said that more should be done to promote the use of rail - considered environment-friendly, across the nation. “It is really playing its role now. Still, there is lot of untapped potential,” he added.

Railway strategy

Indian Railways should introduce more dynamic/commercial pricing as opposed to the more rigid, distance-based pricing, like it did in the case of short distance pricing, said an executive with a private container train operating company.

“Indian Railways should remove the 50 per cent discount for the top tier of double stack trains as the discount is not fully passed onto the users and has outlives its usefulness. After all, who knows whether a train is double stack or not or if a box is on the top tier or not. The discount quantum should be repackaged into a more transparent distance-based pricing,” he added.

“And, most importantly, complete the dedicated freight corridor (DFC) as early as possible,” he stated.

Container flow through rail has jumped significantly since the lockdown was announced, CRISIL Research said, adding that rail is being increasingly used to transport containers out of ports, even for shorter leads.

Inflow through ports

During March 25-April 30, more than 30 rakes (compared to occasional movement prior to lockdown) shifted containers from the Chennai port premises to the inland container depot (ICD) in Tondiarpet, Tamil Nadu, to ease congestion. Also, there was additional rail movement at JNPT to CFS and ICD in Mumbai region (Mulund, Boisar, and Dronagiri).

Ports with a higher road coefficient have been more impacted because of the shortage of truck drivers. Among key container ports in India, JNPT (around 85 per cent) and Chennai (over 90 per cent) have higher road coefficients, while Mundra (around 75 per cent) and Pipavav (30 per cent) in Gujarat have lower road coefficients.

In April, out of the 283,802 TEUs handled at JNPT, some 64,000 TEUs were moved through container rakes. The rail haulage (exports and imports) accounted for about 22.5 per cent of container traffic, which is higher than the rail coefficient observed in recent months. Post March 24, an uptick in container rail wagons, particularly for imports, has also been observed at Mundra and Pipavav ports, CRISIL Research said.

In the absence of passenger trains on tracks and reduced traffic on roads due to the lockdown, logging of higher speeds by cargo rakes (for instance, Delhi-Mumbai distance can be now covered in less than 24 hours) is also a good measure of efficiencies that can be achieved, it said.

“Indian Railways has a rather sub-optimal share (20-25 per cent in TEU terms) in EXIM container movement and hasn’t been able to crank it up in long-distance freight because of congestion-led delays. However, there is considerable potential to increase the spoils. For one, a gradual linking of dedicated freight corridors with ports on the west coast would, over the medium term, materially improve its attractiveness as a mode to move EXIM containers,” CRISIL Research added.

Indian Railways, according to a government source, lacks the flexibility to wean away more containers from road. “Apart from the first mile, last mile issues, the way truckers in India and Railways operate, the freedom private players have to quote different rates, the Railways can’t differentiate among customers,” he said.

For years, JNPT has been looking to shift more containers to rail. The port even brought its rail handling costs on par with trucks.

The current share of rail volume at JNPT, as a percentage of the total container throughput, is less than 15 per cent.

A cargo origin-destination study carried out by a consultant for the shipping ministry had suggested increasing the share of railways in the modal mix from 18 percent to 25 percent by 2025. The rail coefficient for five out of the eight major container-handling ports is less than 10 percent.

The modal mix for container transport in India is heavily skewed in favour of roads due to high railway freight, lack of reliable scheduling of freight trains and low last-mile connectivity.

Raising the modal share of rail from the current 18 percent to 25 percent will save as much as ₹6,000 crores a year in logistics costs by 2025 and cut down crude imports by 1.2 million kilo litres.

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