Public Private Partnership to boost Rail Freight

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Public Private Partnership to boost Rail Freight

“Presently Railways is largely a government operated organization, that inherently limits its growth. As we have seen in the case of sectors such as Airlines, Telecom, Banking, etc., post the entry of private players, the sectors have witnessed an explosive growth. To have similar experience in Railways, there is a need to develop an ecosystem, which promotes private participation in Railways. Railways is a capital-intensive sector. Leasing of Railway’s resources and assets will be an important enabling measure to promote private participation in the Railway sector and its consequent desired growth,” highlights industry veteran Lalit Chandra Trivedi…

We would like to understand from you the transformational landscape that rail freight has witnessed over the years as you have been a part of this journey for the past four decades.

Lalit Chandra Trivedi

In the last four decades, Railways logistics management system globally and particularly in India have undergone radical changes. Plain bearing, vacuum braked rolling stock has been replaced by Roller bearing, stainless steel, air braked stock. Mechanical signaling systems have given way to advanced electronically interlocked signaling systems. Implementation of state-of-the- art anticollision system KAVACH is underway on Indian Railways. Project Unigauge has improved efficiency of transportation with MG and NG sections (except for mountain trains for tourism & heritage) having been converted into BG. It may be noted that at the time of independence, 40% of Indian Railways track was either MG or NG.

Soon IR will boast of the first major Railway system to have 100% electrification of tracks, leading to seamless runs of locomotives. In 1983, the year I joined Railways, IR’s total originating loading was around 200 million tons, which today is around 1600 million tons. ICF coaches have been replaced by high speed LHB and Vande Bharat coaches. Terminals have become bigger. Container traffic has grown in a big way. Trains are longer and faster. Every day around 15km of new track is being laid, from a single metro system at Kolkata, today 15 cities boast of their own metro with another 30-40 aspiring.

In the last few years globally, environmental concerns have given a big push to the Railways for multimodal transportation in logistics as it’s fuel consumption is 1/7th as compared to Roadways and 1/15th as compared to Airways. In fact, countries like France are not permitting domestic flights between cities, which can be covered by trains within 4 hours. In a nutshell, we have come a long way.

What are the challenges plaguing the growth of cargo transportation through inland waterways in the country?

Growth of Inland waterways in India has been affected by problems like low draft, presence of old bridges which do not permit passage of bigger ships, and locally erected pontoon bridges which block through movement and are erected by local administration at number of places to facilitate the movement of local population in the absence of regular bridges. The only worthwhile movement is in the Northeast region where mighty Brahmaputra has facilitated cargo movement. Coastal movement, however, both along the West and East coastline, is flourishing for facilitating movement of commodities like coal, cement, etc.

What are Kisan Rails? Why couldn’t they take off?

Kisan Rails were introduced as a supply chain management solutions to help farmers to transport their produce to markets. They were started during the Covid period when the passenger train services across India were suspended. This resulted in empty passenger platforms where the Kisan trains could be received, and their consignments could be unloaded. This well-conceived move faced difficulties with the resumption of passenger trains post Covid as neither slots were available on platforms to receive these trains nor the place to unload their consignments. To revive them, there is a need to develop a complete ecosystem on a timetabled basis with dedicated sidings, rail head warehouses for perishables farm goods, etc.

How could Kisan Rails have helped to handle the tomato crisis and what is needed to revive them?

Kisan Rails can be an excellent logistical input to transport perishables. They can transport huge quantities of perishable goods in double quick time. Following models can be followed:

  • Running Refrigerated container trains for transport of perishable goods, which can drop off loaded containers and pick up empty ones from time tabled stations which can be distribution hubs. These refrigerated containers can also act as temporary warehouses for places where currently cold warehouses are not available.
  • IR has large numbers of Airconditioned ICF coaches which are being condemned on account of their replacement by LHB/VB trains.
  • Just as non-AC ICF coaches have been successfully converted as automobile carriers, opening a new revenue stream for IR, old ICF design AC coaches can be converted into Refrigerated Parcel Vans for transporting perishables. This will also add a new traffic stream to the revenues of the Railways.

In addition to the above, there is a need to set up cold storages at Rail heads. Till such time regular cold houses can be set up, refrigerated containers can be kept at Rail heads, which can double up as transportation cum warehouse modules for perishables. Kisan Trains need to run as timetabled express trains with first and last mile connectivity to Kisan Mandis. All these need to be done by private enterprise by suitable enabling measures and support system.

Why is the speed of execution of Highways by NHAI (National Highway authority of India) faster than the execution speed of Railway’s Dedicated Freight corridor by DFCCIL (Dedicated Freight Corridor Corporation of India Ltd)?

The first and foremost reason has been Railway’s inability to facilitate entry of private players / entrepreneurs in Railways in a manner that led to the explosive growth of Road and airlines sector. A dialogue with the logistics industry needs to be initiated to find ways and means for participation of private sector in Railways.

The construction of Railway lines is basically more complex than construction of highways. The associated engineering, involving advanced signaling and overhead electrical equipment adds to the complexity. Through tolling of its assets, NHAI has been able to build a successful model to finance its projects. It’s possible for road projects to undertake minor changes in alignment midway in Road projects, which are amenable to sharper curves and gradients.

The land acquisition process was much simpler in NHAI on account of the fact that it is easier for a road network to undertake minor changes in alignment during the course of execution on account of unforeseen ground situation. For DFCC an original decision was taken to build it alongside existing Rail alignment. Historically the land alongside railway tracks was inhabited with authorized as well as unauthorized construction. Clearing this land for DFCC’s alignment proved to be difficult.

What’s your take on electric train for freight? How do you the feasibility in India?

Electric Trains are best for Railways. Electricity is cheaper, produced locally, and electric locomotives are very powerful (12000 HP), enabling the running of heavier trains at higher speeds. Going further, it will also be possible to provide renewable sourced electricity for running electric locomotives. Electric trains, are in my opinion, should be the most preferred way of running trains in India. 100% electrification of IR tracks has enabled seamless runs of freight trains leading to higher average speeds. By electrically coupling multiple locomotives it has been possible for Indian Railways to run 1100 T trains on regular basis and occasionally even 1500+ T trains.

With the commissioning of a large portion of DFCC corridor, the problem of path has also been resolved to a great extent. Another noteworthy improvement is the running of double stack container trains on the Western DFCC corridor providing through connectivity to ports on western coast like Mundra, Pipavav, Hazira, etc., giving a push to EXIM traffic.

You have recently voiced your opinion on the use of hydrogen for running Road Trucks is more difficult than running Railway Trains with Hydrogen. Can you elaborate on this?

Sustainability in transportation is required. Use of hydrogen for running Road Trucks, in my opinion, is more difficult than running Railway Trains with Hydrogen. Unlike a train, which has to remain confined to railway tracks, a road truck should have unhindered access to every mile of road. India has the world’s 2nd longest road network at 6.3 million kms. Even presuming that a hydrogen powered truck can run for 500 kms before next fueling, we need around 12000 fueling points served by extremely costly fleet of road tankers for hydrogen replenishment. Transportation of Hydrogen needs to be done either by compressing it or liquefying it. Both require special costly paraphernalia.

Special arrangements have to be made for storing it. The whole ecosystem of storage and distribution across India is not a financially option. There are safety issues too associated with handling hydrogen. As we know India is likely to use coal for production of electricity for minimum 2-3 decades more, till then to divert renewable electricity for hydrogen production will not be in the national interest.

The first priority for green hydrogen should be for points where the points of production and consumption are same, like fertilizer plant, steel plants, hydrogenation of food items like oil, etc. How much will a green engine cost? Using $160,000 as the baseline for representative vehicle costs for a long-haul Class 8 truck, DOE projected the following purchase costs: $457,000 (186% higher) for a battery-electric heavy truck, $324,000 for a plug-in hybrid version (up 103%) and $265,500 for a hydrogen fuel cell-powered one (66% more). Since the German company which produced first Hydrogen train has decided to discontinue their production on viability account, viability of hydrogen powered internal combustion engine for truck also looks remote.

There are many reasons why green hydrogen cannot be a fuel for the Railways in India. Some of them are:

  • Electricity produced from Renewable source of energy required for producing green hydrogen should first needs to be used for replacing electricity presently being produced from burning coal and other fossil fuels. Diversion of electricity produced from renewables for any other activity will be sinful before eliminating fossil fuel consumption for electricity production.
  • After ensuring 100% production of electricity by renewables, green hydrogen needs to be utilized for industries where it can be consumed at the place of production to avoid prohibitively costly transportation and storage involved with Hydrogen. Railway by nature needs its fuel distribution network to serve hundreds of points spread all over the length and breadth of the network.
  • Indian Railways will shortly achieve 100% electrification of its tracks. It can easily use directly renewable sourced electricity. This will ensure that no change in locomotive design and other equipment and parameters of Railway ecosystem is required which otherwise can be a costly exercise. This will also avoid major loss of energy which takes place in producing, transporting, and distributing green H2L.
  • Locomotives on account of vehicle design requirements has to be around 20 m long with width and height determined by the envelope of maximum moving dimensions permissible on Indian Railways. The special arrangements required for storing onboard liquid hydrogen onboard a 6000/9000 HP locomotive the standard locomotive on Indian Railways doesn’t appear to be feasible.
  • Energy cost of IR will increase minimum 3 folds if it uses Liquid Hydrogen directly even if all other issues are taken care of.

You have raised a pertinent concern in your statement – why should it cost 50$ to transport a ton of steel from Jamshedpur to Mumbai over Rail?

For every ton of steel produced, 3 tons of raw material needs to be transported. The problem becomes worse as most of the steel plants are land locked and depend for 80% of their transportation on Railways. Steel and Coal are among those commodities, which majorly depend upon Railways for their logistics needs, while there are many transportation models in supply chain management.

Transportation by Road almost costs double. Further frequently wagons earmarked for iron ore are diverted for coal transportation which takes priority over requirements of steel industry whenever coal stocks dwindle in thermal power plants who target to maintain a coal stock for around 14 days consumption working at full capacity.

Movement through slurry in pipelines or waterways have not been established in India. Waterways otherwise the most eco-friendly transportation system, suffer in India from pontoon bridges, low draft and have not emerged in India as dependable means for bulk transport. Higher transportation costs is becoming a handicap for Indian steel sector.

IR segregates commodities through a classification table for tariff purposes resulting in different rates for different commodities for same tonnage and distance. Commodities like food grain, salt, fertilizers cost less while transportation of some others like oil/ coal /steel cost more. So, while cost for transporting 1 ton of salt over 1000 km is ? 931, for oil/ steel it is $?1670 per ton, for coal, it will be 1891/-.

In comparison, road transportation rates are fixed for an identical truck load between same destinations. The unstated strategy in Railways is to charge more for a commodity with inelastic demand for transportation by rail as alternatives are not feasible to maximize freight earnings. IR’s problem is empty haulage of wagons like BOXN wagons in return direction, unlike covered wagons used for transportation of cement / food grain, etc., which are loaded in both directions.

There is a need to bring down the cost of Rail Transportation. This is possible and is needed to attract cargo to Railway. With 15% fuel consumption as compared to Road, higher staff productivity (a train with one set of crew replaces around 200 trucks with as many sets of crew), it is feasible to bring down costs of Rail Transport in a significant manner.

Five strong statements that claim the usage of Railways for transportation as one of the safest and efficient means…

  • Railways has already electrified 100% of its tracks (few leftover sections will be electrified by the end of current financial year). This, besides improved efficiency of Rail transport, has made it cheaper and amenable to harness renewable based electricity. Electric Trains can be stopped from a remote location by switching off electricity supply leading to safety enhancements.
  • Double stack containers on the Western DFCC have revolutionized EXIM transport.
  • Railway energy consumption is 1/7th that of Road and 1/15th that of Air, making it environment friendly.
  • Railway shoots up manpower productivity as 1 train is provided with 1 set of crew replacing close to 200+ trucks with as many crew sets.
  • The safety record of Railways as compared to Roadways is way better.

Making asset leasing market for Railway Transportation system in India… pls share your stance…

Railway is a capital-intensive mode of transportation. To ensure wider participation of logistics players, it is essential to develop leasing markets for paths, Rolling stock, Terminals/ yards, repair depots and workshops so that with marginal capital a company is able to obtain on lease each and every resource needed to complete cycle of rail transportation chain from A terminal to Terminal B and further either back to Terminal A or to a new Terminal C for self-use or for handing over to a third party at any point in the supply chain. Just as Toll based financing of highways has resulted in explosive growth of highway network, leasing market can do the same for expansion of Railways.

There is a need for parking depots where at nominal charges, trains / rolling stocks, not required for any reason, can be parked safely till such a time they are in demand again. Parking slots will be required for rolling stock to be scrapped where these will be cut and auctioned like ship breaking yards.

There is a need for agencies to trade in paths, freight, passenger trains, warehouses, stacking areas, breakdown services, rolling stock maintenance depots and for other assets with the rates displayed on exchanges fluctuating by the demand supply pulls and pressures. Leasing will ensure productive utilization of Railway resources with a consequent increase in Rail-borne cargo.

Railways needs to leverage its environment friendly nature. While electric road trucks are nowhere to be seen, Indian Railways are nearing 100% electrification of tracks, leading complete switchover to renewables for running trains. Commissioning of major portion of DFCCs has established connectivity to major ports on Gujrat coast like Mundra, Pipavav, Hazira with double stack container trains, which has led to productivity gains, also needs to be leveraged.

Similarly commissioning of Eastern DFCC up to Son Nagar has resulted in the diversion of coal traffic from CIC area (BCCL, CCL, NCL) to DFC, relieving IR network to run more trains.

All this leads to only one conclusionthat decline in IR traffic is due to lack of entrepreneurial attitude of bureaucracy in attracting cargo to make Railways lucrative to logistics players. Developing railway resources leasing markets is essential to propel Railways into higher orbit by unleashing entrepreneurial spirits of logistics players.

How can private players play an equal role in bringing rail freight to equilibrium with other modes of transportation?

As stated earlier, private players have played a major role in exponential expansion of banking, telecom, road, airlines, and other sectors. Enabling policy guidelines which facilitate unhindered entry of private players into Railway transportation will result in similar growth trajectory for Railways.

The private sector needs to be encouraged to acquire special purpose freight trains. We have already seen significant improvement in rail-borne automobile traffic, fly ash movement, food grain movement, consequent upon entry of privately owned trains by entrepreneurs.

Recently AP Moller acquired 10 trains on lease and synchronized their movement with sea lines with terrific results. There is a need to encourage the setting up of private sidings to overcome the Railway’s handicap of first and last mile connectivity. Participation of the private sector in setting up Gati Shakti Terminals is already being encouraged by the government with suitable enabling policy guidelines.

Development of locally developed anti-collision system, ‘Kavach’ was also done with the active collaboration of Research Designs and Standards Organisation (RDSO) and private industry players. Recently mega orders for the acquisition of wagons, locomotives, and Railway coaches (Train sets) have been placed with private

players. The only discouraging move recently has been to put a temporary ban on Wagon manufacturers to accept orders from private sector. Hopefully these instructions will be withdrawn shortly. 

How do you foresee India becoming a transportation giant in the future?

Current transportation volume in India is around 5000 million tons. Railway currently accounts for 1500+ million tons and the remaining is contributed mainly by Road. There is some contribution of coastal shipping too. Inland waterways, as discussed earlier, contribute very little.

The National Railway Plan envisages increasing Railways’ share to 45% from present levels of around 27%. It is expected that by 2050 the total transportation volume will be around 16000 million tons with Railway contributing around 7500 million tons almost five times the current volume. Similarly, the share of roads is expected to be around 8000 million tons, i.e., more than twice the current figure.

With Indian economy growing at 6%+ and daily average addition of 15+ kms of railway track and highways at 50+ km, the forecasted volume is likely to be achieved. 100% electrification of Railway tracks is already giving a major push. Running of double stack container trains on the Western DFCC will help environment and productivity.

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