Introduction
As India strives to compete with the economic powerhouse that is China, one critical area where the country falls short is in its logistics capabilities. While the Indian media often touts the country’s growing population and young workforce as advantages over China’s aging demographics, the reality is that India severely lags behind its neighbor in mastering the logistical superpower that is essential for sustained economic growth.
One prime example of this disparity is the performance of India’s freight train system. These trains, which carry millions of dollars’ worth of goods across the country, are the lifeblood of Indian trade. Yet, the average speed of these freight trains in India is a mere 25 kilometers per hour – slower than the average Activa scooter. This alarming statistic points to a critical problem that threatens to stifle India’s economic progress in the coming decades.
Unlocking the Potential of Freight Rail
To understand the root causes of this issue, let’s delve deeper into the challenges plaguing the Indian freight train system:
Oversaturation and Prioritization of Passenger Trains
The existing rail transport infrastructure in India is severely oversaturated. For instance, if a manufacturer in Dadri, Uttar Pradesh, wants to transport goods to the JNPT port and then ship them to Europe, the Delhi-Mumbai rail line is operating at 115-150% of its capacity. This means that if the company originally built the line to handle 100 trains, it is now accommodating between 115 and 150 trains, including both passenger and freight trains.
Whenever there is a clash in schedule between a passenger train and a freight train, the Indian Railway system always prioritizes the passenger train, forcing the freight train to halt for up to three days at a remote station to allow the passenger trains to pass. This lack of punctuality and timetable for freight trains results in their extremely slow average speed of just 25 kilometers per hour.
The Impact of Slow Freight Speeds on the Economy
The slow movement of freight trains in India has a significant impact on the country’s economic competitiveness. This is where the concept of “capital rotation” comes into play. In simple terms, capital rotation refers to the cycle of investment, revenue, and reinvestment that businesses undergo to manufacture and sell their products.
Let’s consider an example to illustrate the impact of freight speeds on capital rotation and profitability. Imagine two traders, one from India and the other from China, both selling products that cost $5,000 to manufacture and are sold for $7,000. Both send 10,000 units per shipping cycle to Europe, with their manufacturing units located 1,500 kilometers away from the ports.
While the Chinese trader’s freight fleet moves at an average speed of 45 kilometers per hour, the Indian trader’s freight fleet crawls at just 25 kilometers per hour. This means that the Chinese trader can complete 263 cycles per year, while the Indian trader can only manage 146 cycles. Assuming a profit of $20 million per cycle, the Chinese trader’s annual profit would be $5.26 billion, compared to the Indian trader’s $2.92 billion – an 80% difference!
The stark contrast in profitability enables the Chinese trader to offer discounts and undercut the Indian trader in the same market, despite both incurring the same product cost. The speed of freight transport is a critical factor that gives China a significant competitive edge over India in global trade.
The Shift Towards Road Transport: A Problematic Trend
As the Indian freight train system struggles to keep up, the country has seen a growing reliance on road transport for goods movement. In the 1950s, rail transportation accounted for 88% of goods, while road transportation moved only 12% of goods. Now, this ratio has completely reversed, with road transportation handling 74% of goods and rail transportation only managing 26%.
This shift towards road transport is not a positive development. Transporting goods by road is significantly more expensive than rail, costing 2.5 rupees per ton-kilometer compared to just 1.36 rupees for rail. Additionally, road transport is far more environmentally damaging, emitting six times more CO2 per kilometer than rail.
As the world moves towards stricter carbon regulations, India’s heavy reliance on road transport for freight could put its goods at a disadvantage in the international market, where carbon taxes and emissions standards are becoming increasingly important factors.
India’s Response: The Dedicated Freight Corridors
To address the challenges plaguing its freight train system, the Government of India has launched an ambitious project called the Dedicated Freight Corridors (DFCs). Engineers designed these specialized rail corridors exclusively for freight movement, prohibiting passenger trains from operating on them.
The plan is to build six such DFCs across the country, connecting the hinterlands to major ports like JNPT, Vijaywada, and Kolkata. The first two corridors under construction are the Western DFC, running from Haryana to Maharashtra, and the Eastern DFC, connecting Punjab to West Bengal.
Key Features of the Dedicated Freight Corridors
– Increased axle load per wagon from 22.5 tons to 25 tons, allowing for higher cargo capacity.
– Doubling of train load from 5,400 tons to 12,000 tons and train length from 700 meters to 1,500 meters.
– Increased average speed from 25 kilometers per hour to 70 kilometers per hour, significantly reducing transportation time.
– Decongestion of the existing rail network, allowing passenger trains to operate at faster speeds as well.
– Reduction in logistics costs, which currently account for 13-15% of product costs in India, compared to the global average of 6%.
– Estimated savings of 4.9 billion rupees in logistics costs due to the decongestion of roads along the DFC routes.
Early Successes and Future Potential
The DFCs have already started to show their impact on India’s logistics landscape. For example, the port of APM Terminals Pipavav, which previously relied on road transport for LPG shipments from oil companies like HPCL and Bharat Petroleum, has now connected itself to the freight corridor with a 250-kilometer railway line. As a result, all LPG shipments are now transported by rail, a more efficient and environmentally friendly mode of transport.
Furthermore, the DFCs have played a crucial role in India’s energy security. During the power crisis in April 2022, when India faced a sharp decline in coal stocks at thermal power plants, the government was able to quickly rush coal supplies from the eastern part of the country to the north and west using the DFCs, preventing a nationwide power crisis.
Looking ahead, the DFCs are poised to transform India’s logistics landscape and boost the country’s economic competitiveness. By increasing the share of rail transport in freight movement from the current 26% to a targeted 44% by 2051, the DFCs are expected to significantly reduce transportation time, lower logistics costs, and enhance the efficiency of the overall supply chain.
Challenges and the Road Ahead
While the Dedicated Freight Corridors hold immense promise, the project has encountered several challenges that we must address to fully realize its benefits:
Delays and Cost Overruns
The DFC project has been plagued by delays, with the original completion target pushed back multiple times. The estimated cost of the project has also ballooned from the initial 21,140 crores in 2006 to a staggering 95,000-138,000 crores as of 2021, due to the slow pace of implementation.
At the current rate of construction, which stands at just 600 meters of rail per day, the DFCs are falling behind the country’s road-building efforts, which average 37 kilometers per day. This disparity in execution speed is a cause for concern and needs to be addressed by the government to ensure the timely completion of the project.
Technological Advancements and Global Competition
While India is slowly moving forward with its DFC project, its competitor, China, has already taken the lead in advanced freight rail technology. In 2020, China rolled out the world’s first freight bullet train, capable of reaching speeds of up to 350 kilometers per hour, far surpassing the maximum speed of 75 kilometers per hour planned for the Indian DFCs.
China is not only connecting its own states and towns with this cutting-edge technology but is also expanding its reach to other countries, including Vietnam, Laos, Uzbekistan, Kazakhstan, Russia, Hungary, the Netherlands, Germany, and even Italy in Europe. This rapid technological advancement by China poses a significant challenge for India, which must strive to keep pace with its neighbor’s logistical prowess.
The Role of Citizens and Policymakers
Ultimately, the success of the Dedicated Freight Corridors project will depend on the execution and implementation by policymakers, as well as the involvement and support of the Indian citizenry. It is crucial that the government prioritizes the timely completion of the DFCs, addresses the challenges of delays and cost overruns, and invests in the latest technological advancements to ensure that India’s logistics capabilities can truly compete with the global leaders.
As citizens, we have a role to play in holding our leaders accountable and advocating for the efficient and effective implementation of the DFC project. By staying informed and engaged, we can contribute to the transformation of India’s logistics landscape and the country’s overall economic competitiveness.
Conclusion
The challenges facing India’s freight train system are a critical obstacle to the country’s economic growth and competitiveness. The Dedicated Freight Corridors project promises to address these issues, but officials must execute it efficiently and focus on technological advancements to keep pace with global competitors like China.
Sources:
https://dfccil.com/upload/DFC_write_up_GHG_emission_analysis2003_23012015.pdf
https://swarajyamag.com/infrastructure/indian-railways-dedicated-freight-corridor-will-change-more-than-just-the-way-goods-are-hauled
Link to my other case study:
https://geocrit.com/is-make-in-india-failing-a-deep-dive-into-the-initiatives-challenges/