Trends that will drive the shipping and logistics sector
The shipping industry is cyclical in nature, and after a major uptick in the post covid period, the global recession seems to have impacted it again in a downswing, with volumes dropping, rates falling, blank sailings etc. This trend is likely to continue for the coming few months (at least till the Chinese new year which is traditionally a slow period globally), and will only correct once global demand recovers somewhat, and also as global supply is balanced to match with the demand levels. As far as logistics is concerned, this tends to follow the same trend as Shipping, but in the domestic market seems to have remained healthy, as a result of which some of the negative impact of the downturn in shipping has been offset.
Impact of the current geo-political scenario on the global supply chains
The Ukraine shipping has impacted flow of some key engineering goods out of Ukraine, and caused increase in trade pricing and availability. At the same time, the global recession and situation in China has negatively impacted trade flows as well.
Few sections of the International North South Transport Corridor have become operational. Further Bangladesh is looking forward to promoting cross border rail freight movement with India. What opportunities do you see here?
Indo-Bangladesh trade forms a large part of the total Bangladesh trade, and cross border rail can be a major support factor for this trade. There is currently an infrastructure gap at the Bangladesh end, in terms of track capacity, and connectivity through till Dhaka from the India border. Efforts are needed to extend Rail services through to Dhaka instead of only all the border exchange at Benapole, for which terminal infrastructure is required at Dhaka, and some policy changes needed to extend rail services (including private sector container trains) from India to Bangladesh.
While bulk and break-bulk goods continue to move by train, light weight goods continue to move by road. How can they be attracted to rail mode?
The main reason for rail not attracting light goods stems from incorrect pricing and poor service quality. Pricing at present favours heavy cargo which tends to therefore move on rail. There is a need to switch to volume based pricing and to consider pricing at lower levels for light weight cargo to attract this traffic. In terms of service, there is need for an end-to-solution and transit commitments which are currently missing from the Railways bouquet of services.
A major part of the DFCs will be operational in 2023, plus the government has also started Vande Bharat freight trains. How do you see them increase the share of rail freight?
DFC will help by increasing capacity, reducing unit cost and improving rail service quality. This will especially benefit the East to North coal movement and the North-West container trade. Vande Bharat freight services can help address the light weight commodity issue, but will not really be able to make a serious dent as they provide limited capacity, and also the IR does not have a proper institutional mechanism to attract retail type traffic.
Under the National Monetisation Pipeline, the government is looking to monetise railways assets worth Rs.1,52,496 crore between 2022 and 2025. What transformation will this bring to the rail freight movement?
While this will help the government to garner some funds, there will be limited impact of this on rail freight till the primary issues or pricing, operations control, service quality etc. are addressed. As long as the railways does not recognise the need to restructure the approach to freight to attract light cargo in addition to heavy and bulk business, just monetisation of assets will not make a significant difference.
