The ideal track to run India’s Logistics System

Context:

The Union Budget 2023 has doubled the PM Gati Shakti National Master Plan and has announced an outlay of ₹2.4 lakh crore for the Indian Railways.

About Plan:

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”.
The Railways offer an efficient and economic mode of logistics movement given their pan-India network 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 from 27% to 45% and increasing freight movement from 1.2 billion tonnes to 3.3 billion tonnes, 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 65% of freight movement is done by road, which results in 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.
Freight movement cost is the highest in the road sector, nearly twice the rail cost.
However, the convenience of road transport has taken precedence over cost and the railways in India have been losing freight share to other more flexible modes.

Rise in container traffic:

The convenience of moving non-bulk commodities in containers has led to an increase in containerised traffic over the last decade, growing more than double TEUs in 2020 from 2008. TEU is a unit of cargo capacity.
Globally, railway systems are heavily investing in advanced rail infrastructure for quick and low-cost container movement.
For example, China uses special trains to carry containers that connect significant ports to the inland and has dedicated rail lines to move container traffic and planned double-decker container carriages for greater efficiency.
The national transporter faces several infrastructural, operational and connectivity challenges, in turn leading to a shift of freight traffic to roads.
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 along 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 to efficiently utilize resources.
Establishing a special entity which could function as a single window for customers for cargo movement and payment transactions to handle intermodal logistics in partnership with the private sector will help in addressing the first and last-mile issue faced by the railways.
Based on industry recommendations, introduction of an Uber-like model for one of the two cargo wagons, wherein the customer can book the wagon using an online application, could help in increasing the utilization rate of these wagons.
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 neighboring countries such as Nepal and Bangladesh.

Conclusion:

While the Indian Railways are upgrading their infrastructure (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.