The Indian Railway Network
While I was in India I wanted to make sure I really understood how freight was moved around the country, as well as how it could be shipped out of there. In the last article I talked about the expansion of the Jawaharlal Nehru Port Trust in Mumbai, but in a country the size of India, even getting things to port can be a logistical challenge. As a result of the under-developed trade and logistics infrastructure, the logistics cost of the Indian economy is over 13% of GDP, in comparison to less than 10% of GDP in most of Western Europe and North America. Rail freight accounts for 40% of freight moved around India, compared to 89% in 1951
Currently the majority of freight in India goes by road, and the improved highways being built to supply ports like the JNPT will begin to make this even more efficient (although efficient is a relative term..!)
There has been a huge investment in the road network in India over the past half century. Despite the fact that a freight train (or ‘rake’) can carry 90 TEU’s or 3000 tons of bulk material, for journeys less than 450 miles it is still more economical to move containers by road – but the railways are working on an enormous fightback to regain some lost ground. Indian Railways makes 70% of its revenues and most of its profits from the freight sector, and uses these profits to cross-subsidise the loss-making passenger sector.
Anyone who has ever been to India or even seen a documentary about the country will already be familiar with the experience that is travelling by train, with passengers hanging onto the outside of the carriages and hawkers selling their wares whenever the train slows to a pace that they can keep up with. Trains began to appear in the mid 19th Century, set up by private companies with the assistance of the ever present East India Company, but by 1907 nearly all of the companies had been nationalised and in 1920 railway finances were considered so important that they were ring-fenced with a separate budget to keep them away from the rest of the financial negotiations that any government has to contend with. Indeed the Indian rail system is immense, it’s the worlds largest employer with a workforce of 1.6m and it carries 15 million people and more than a million tonnes of freight every day over routes that cover nearly 40,000 miles – and it’s about to get even bigger.
A further 1,650 miles of track are planned for the exclusive use of freight transport with an additional 3,000 miles feeder lines that will include some new construction and the upgrade of many existing lines. The plan is to provide dedicated freight lines that can isolate the freight from the passenger trains, increasing the capacity for both sections and slashing the amount of time that it takes to get goods across the country to export.
The first phase of the Dedicated Freight Corridor is the Western Corridor which will run from the JNPT in Mumbai to New Delhi. As you would expect from a line that goes straight to one of the fastest growing container ports in the world the Western Corridor is expected to carry mainly container traffic, and lots of it, with trains up to a mile long, double stacked with TEUs. The Eastern Corridor will run from Ludhiana to Sonnagar and is planned to eventually to join up with the deep water docks at Kolkata carrying coal finished steel, food grains, cement, fertilizers, and lime stone.
As well as the construction of the lines themselves there is a lot of work to be done to make sure that the tracks fit into the existing infrastructure, with the demolition of 30 Road Over-Bridges (or ROBs) and construction of another 150 with approximately 900 level crossings to enable travel across the lines.
While the Prime Minister Manmohan Singh laid the foundation for the Western Corridor in October, the Eastern Corridor may have hit a bit of a stumbling block. Both sections were due to be funded by the Japanese government, most likely through the Japanese Bank for International Cooperation (JBIC) in the form of an aid or a soft loan, and the Rs 16,000 crore deal (about £2billion) for the Western Corridor is still on track (if you will excuse the pun). But it seems that Japan is getting nervous about the spiralling costs for the Eastern Corridor (currently projected at Rs 11,000 crore, which is about £1.5billion) partly due to the increased cost in buying the land needed to lay the tracks and is looking for an opt out on that side of the project, but also because it has more interest in the fast turn around of the container freight than the industrial commodities that would be moved along the Eastern Corridor.
In response to this The Dedicated Freight Corridor Corporation of India Limited (DFCC), the company set up to manage the project, are looking into the possibility of implementing toll charges (similar to those used on highways in the country) to fund the project, the cost of the toll would vary depending on the type of goods being moved.
The entire project is expected to take 5-7 years to complete and is set to have a significant impact on many areas of Indian industry. On the Western Corridor it will mean journey times from New Delhi to Mumbai are cut from 60 to 36 hours, with trains travelling at up to 60mph, leading to a faster turnaround, and lower transport costs making Indian goods more competitive worldwide. Container traffic alone on the Western Corridor is anticipated to increase from 0.69 million TEUs in 2005-06 to 6.2 million TEUs in 2021-22.
On the Eastern Corridor the coal and steel are mostly raw materials destined for the industrial areas and power stations in the northern area or Uttar Pradesh with traffic projected to grow from 52 million tonnes in 2005-06 to 142 million tonnes in 2021-22 providing the resources for a massive expansion in capacity.
The DFC is the single largest infrastructural project being undertaken in India, at enormous public cost, but it is being backed by inward investment from some equally enormous corporate bodies. At this point I must express my gratitude to Ashok Gupta, Director of the Indian Roadways Corporation Ltd, one of the most well established and respected road operators in India, who kindly arranged a meeting for me with the CEO of ETA Freightstar, Mr Sathianathan. ETA Freightstar is an Indian Division of the huge Dubai based ETA Group, a company with 140 branches in 21 countries employing over 48,000 people with an annual turnover of $4 Billion. ETA are one of the first private companies on the scene and are extending the network where the DFC ends by providing road freight to and from the rail network an handling to get the freight onto the rakes themselves, making the Dedicated Freight Corridor all the more efficient as a way of shipping goods around the country.
By upping their game the road freight groups are going to have to try to improve their efficiency to be able to compete, and by separating the passenger and freight aspects of Indian Railways both will be able to develop at a much faster rate.
This article is copyrighted John Cave 2008