September 7, 2020: Imagine the irony of rail wheel and axle makers preferring road over rail tracks to move components, despite the long-standing claim of Indian Railways’ that it is the cheapest mode of transport— particularly for heavy, long haul traffic. But, that is exactly what happened when Steel Authority of India Limited, a public sector unit, indicated to Indian Railways that sending railway wheels and axles was cheaper on roads than on trains in about a one-fifth of 48 routes between October 2019 and March 2020.
According to a note seen by BusinessLine, SAIL’s Durgapur Steel Plant cited to Railways that road freight rates were cheaper than rail freight on a per tonne basis for moving heavy iron and steel cargo over long distances in 11 of the routes of 1,500-2,000 km.
The freight rate estimation was done for moving cargo from Durgapur steel plant to 48 different destinations across the country for three months ending December 2019, and March 2020, which was the pre-Covid-19 time. This was when the train tracks were occupied with passenger trains and freight trains did not get priority. The distances for which trains rates were cheaper by more than half included short distances of less than 400 km, as per the freight comparison.
Push by Railways
That this is not a one-off case becomes clear from recent public declarations of rail component manufacturing units, which said they are putting extra effort to make customers prefer rail over road.
On August 31, Rail Wheel Factory (RWF) tweeted that it convinced wagon builders to use trains to transport wheelsets from Bengaluru to Kolkata. Having loaded 1,663 wheelsets – in one rake comprising 45 wagons – RWF generated ₹0.75 crore for South Western Railway and Indian Railways. “In several such (long distance, heavy cargo) routes, consignors prefer road because of the lack of multiple handling,” SP Singh, Senior Fellow, Indian Foundation of Transport Research and Training (IFTRT), a transport research firm, told BusinessLine.
That recent preference for the road sector may now change again with the national transporter unleashing a set of new measures post Covid-19 as passenger trains stayed off the tracks.
Trend may change
Also, freight trains are racing to meet an ambitious target to load 50 per cent more freight than last year. The steps introduced since June include discounts in freight rates for long distance, short distance, commodities of various weight, among others. Indian Railways hauled 94.33 million tonne (mt) of goods in August 2020, clocking 3.5 per cent growth y-o-y, making August the first month this fiscal when the rate turned positive.
Meanwhile, post-Covid-19, India’s road transport sector, a fragmented sector that comprises lot of small truck owners, is grappling as truckers struggle to find cargo as they are highly dependent on small and medium enterprises and continuous flow of traffic, noted Indian Foundation of Transport Research and Training (IFTRT) in its latest report. This is evident from freight rates of trucks that had increased by 20 per cent in June (against March) on the back of high diesel rates and lack of drivers in several stretches after the Covid-19 stuck, have dropped again in August. Experts do not expect it to recover in the festive season.
Source: Business Line
