Indian Railways, the world’s fourth largest network, is looking to cash in on India’s booming $4 billion e-commerce industry to boost revenue from its freight operations.
In the upcoming Railway Budget, the Union government may soon look to tap into various “sunshine sectors” of the economy including automobile sector, e-commerce industry and the fast-moving consumer goods (FMCG) segment to deliver goods, senior ministry officials said.
The Indian Railways is also exploring ways in which it can help in door-to-door transportation of goods. It may soon use ‘Road Railers’, capable of movement on road as well as rail, to provide last mile connectivity.
Other delivery mechanism which the Indian Railways may look into include RO-RO (roll on, roll off) through which loaded trucks can be carried directly on railway wagons between two destinations, an official said. Konkan Railways is running the RO-RO service since 1999.
The Indian Railways is in the process of carrying out a detailed study of as many as 46 commodities to find out the potential sectors which can help increase its declining freight traffic growth.
“We will carry out a detailed study and hold discussions with industry players to explore potential areas which the Indian Railways can tap in to boost freight growth,” said another ministry official.
Some of the areas which the Indian Railways is considering include refrigerated goods, building material, horticulture, courier express and parcel, marble, glass among others.
“For instance, there is a lot of potential in horticulture. Its output has grown faster than food grains in the past few years,” the official added.
At present, the Indian Railways mainly carry commodities such as coal, pig iron and steel, iron ore, cement, food grains, fertilisers and mineral oil. “We also need to find the appropriate delivery mechanism.
“The trial run for Road Railers is over and we may soon look to introduce it on the Delhi-Chennai route,” said the official.
More than 65 per cent of the earnings of Indian Railways come from freight and around 25 per cent from passengers.
The railways’ earnings from freight have been poor throughout the year. It carried 816.71 million tonnes of revenue-earning freight in April-December this fiscal year, up only one per cent from same period last year.
In comparison, freight traffic grew over five per cent in April-December 14. Revenue growth from freight has also halved to 6.6 per cent in April-December 2015.
While the passenger fares for travel in rail are among the lowest globally, the freight rates, on the other hand, are among the highest.
This has led to a sharp decline in the share of railways in the total transportation of freight traffic from 89 per cent in 1950-51 to 36 per cent in 2007-08.