Rail emerging as reliable, environment friendly option for long distance freight

Manufacturing activity in India is quite good at present. Even during Covid, it was there. For Gateway, Covid was an opportunity as roads were closed, but rail was there. People saw the benefits of rail. Also, reliability was more against road. So, there is a shift from road to rail over long distances. I think roads should be short leg and long distances should be rail. There are no doubts about it. Rail is another way of having low carbon emissions as most of the network is electric and they are converting diesel routes to electric. As I said, outlook and visibility so far are good. Indian consumption is still good. There are concerns about recession in some parts of the world, but in India it does not seem to be like this at present. No doubt, interest rates are going up and inflation is high, but we are much better than other countries.

Railways will play a big part in mitigating the risk of high oil prices. It has already done so. In the last two years, railways withdrew the 5 per cent discount, but have not increased rates, while road transporters are facing high fuel prices. This is giving us an advantage compared to roads. So the impact on exporters or importers will not be significant as fuel prices are coming down. No one can say for sure where it will go, but the impact of fuel prices on Gateway Distriparks is less compared to road transporters.

Two big sections of DFC of 300 km each were completed during Covid. Now, it is being worked out in around 100 km sections. We expect the entire DFC to be available from our locations in NCR to Mundra and Pipavav at faster speeds and higher load in each wagon. Turnaround time from NCR to Mundra used to take 4 days, but has dropped to two days. Earlier, average speed was 25 km per hour, but now it is 45-50 km an hour. With full DFC the speed will be 100 km per hour and we stand to gain a lot. When DFC is completed it will bring down turnaround time significantly. Now at current level, it is 30 hours for a one-way journey. When it is fully commissioned, this one way journey will be much less than 24 hours to Pipavav and Mundra ports.

Gateway, after the merger, has nine locations—4 inland container depots (ICDs) and five Container Freight Station (CFS). So from the beginning of this year, we are able to serve customers on pan-India basis. Second, our capacity at ICD’s, two in NCR, one in Punjab and other in Gujarat near Ahmedabad. Presently, we can handle up to 3,00,000 TEUs. But with our land bank and infrastructure, we can ramp it to 1.2 million TEUs from our existing locations. Capex would not be higher as we own the land and can expand in phases.

We are also looking at two locations in north India, Rajasthan and UP, which should be available to us in this fiscal. These will be ICDs, and one will be on dedicated freight corridor (DFC) route. Not many are serving Nhava Sheva from the north, but our Viramgam terminal enables us to provide services at competitive prices to Nhava Sheva. Our two locations in NCR are on DFC, one in Viramgam is DFC and Ludhiana.

For the next year, we have about ₹250 crores, out of which around ₹200 crore will go into two new terminals. As I said, we have land bank and four terminals where we can ramp up capacities. Those capacities need small capex, and we need equipment for handling containers. Also, in line with green push, we have put solar power in our terminals. We are also shifting our road transport from diesel to CNG vehicles. Electric vehicles are not feasible (in comparison to ICE vehicles) as their cost is high and lack of charging infra (their distance range is low). Having charging stations at multiple locations is important.