The ideal track to run India’s logistics system

• The Union Budget 2023 has doubled the PM Gati Shakti National Master Plan (NMP) to States to ₹10,000 crore, and has announced an outlay of ₹2.4 lakh crore for the Indian Railways.
• The plan is a “transformative approach for economic growth and sustainable development dependent on the engines of roads, railways, airports, ports, mass transport, waterways and logistics infrastructure”.

Investing in Railways

• The Railways offer an efficient and economic mode of logistics movement and can play an important role in enabling a coordinated and integrated logistics system.
• With a target of increasing the share of the railways in freight movement by 2030, PM Gati Shakti provides the right platform to address the infrastructural challenges that have hampered the movement of freight by rail.

Convenience over cost

• Currently, the modal mix in terms of freight movement is skewed by a considerable extent towards road transport, with 65% of freight movement by road.
• The effect is an increased burden on roads, and, therefore, significant congestion, increased pollution, and resultant logistics cost escalations.
• The increased adoption of the railways as a mode for cargo movement is crucial to improve India’s logistics competitiveness.

In 2020-21, share of the total freight movement :

• Coal (44%)
• Iron ore (13%)
• Cement (10%)
• Food grains (5%)
• Fertilizers (4%)
• Iron and steel (4%), etc.

Rise in container traffic

• PM Gati Shakti National Master Plan: A continuous monitoring of existing projects along with identification of new priority areas will help in achieving the targets of rail freight movement.
• Shift of freight traffic to roads: The national transporter faces several infrastructural, operational and connectivity challenges, in turn leading to a shift of freight traffic to roads.
• Issues with freight movement by rail: The increased transit time by rail and pre-movement and post-movement procedural delays such as wagon placement, loading and unloading operations, multi-modal handling, etc., hamper freight movement by rail.
• Lack of infrastructure: The lack of necessary terminal infrastructure, maintenance of good sheds and warehouses, and uncertain supply of wagons are some of the infrastructural challenges that customers face.
• The absence of integrated first and last-mile connectivity by rail increases the chances of damage due to multiple handling and also increases the inventory holding cost.

A special entity needed

• The upcoming Dedicated Freight Corridors (DFCs) and multimodal logistics parks will ease the oversaturated line capacity constraints and improve the timing of trains.
• The Indian Railways need to improve infrastructure that is backed by adequate policy tools and also encourage private participation in the operation and management of terminals, containers, and warehouses to efficiently utilise resources.
• Establishing a special entity under the railways to handle intermodal logistics in partnership with the private sector will help in addressing the first and last-mile issue faced by the railways.
• The entity could function as a single window for customers for cargo movement and payment transactions.
• The Indian Railways may keep operating the other wagon, the way it is done currently, until the success of the proposed model is established.
• This could directly increase freight traffic without any additional investment in infrastructure.

Conclusion:

• An integrated logistics infrastructure with first and last-mile connectivity is essential to make rail movement competitive with roads, and facilitate exports by rail to neighbouring countries such as Nepal and Bangladesh.