Planning a rail-based future

It would be unfair to lay all the blame on the ports for India’s failure to fulfil its economic growth and trading potential, as the country’s inland transport infrastructure, if anything, is worse. But the situation is changing, with the new government planning substantial investments in roads, railways and inland waterways.

The changes are coming about for many reasons, including:

• Large population increases in so-called tier I and tier II cities – broadly defined as those having 5M+ people and 1M+ people, respectively. This is leading to more production and consumption in these cities and generating more domestic and international traffic.
• The growing need to encourage connectivity and better integration between the transport modes, including speeding up cargo transfers to/from the ports and industrial zones.
• The growing requirement by shippers/consignees for seamless logistics nodes to be developed where inter-city, inter-regional and international cargo can be mixed, matched, assembled and then distributed.
• The need to reduce highway congestion and accidents while having a plan in place to cut emissions. Pollution is becoming an increasing worry in India and needs addressing.
• Inland waterways are underutilised but can offer effective transport solutions in several regions. Greater use also needs to be made of coastal shipping services.
• Transport and logistics costs have to be lowered, as they are affecting India’s overall competitiveness in global markets.

Ministries combine

Given the scale of the improvements and investment needed in so many different parts of the transport sector, plus Prime Minister Narendra Modi’s desire to create seamless supply chains, it is highly pertinent that he has combined the Ministries of Shipping and Highways.

Nitin Gadkari, a highly experienced politician who served as Minister of Ports in the State of Maharashtra (1995-1999), has been appointed Minister of Road Transport and Highways. During his tenure in Maharashtra, he implemented a number of important public works projects, and so is well qualified for this role.

However, several commentators have questioned the move and asked why civil aviation, rail and urban transport have not been included in his brief and an overall Ministry of Transport created.

A major and immediate concern surrounds port access roads, which in many cases comprise single carriageways that are in poor condition. Paved four-lane and preferably six-lane highways need to be built if real progress is to be made at many port/gate interfaces.

Rail solution

An alternative and better solution is to make greater use of rail, although spurs to/from the main ports are poorly developed, load and discharge capacity at many terminals is limited and grade crossings and shunting activities are inefficient. It is a principal reason why the Modi government is proposing to set up a special entity to tackle rail access issues at the major ports.

Modi wants to see rail used as part of an integrated freight transport network, as he believes the mode can reduce the costs of importing/exporting cargo, raise the nation’s logistics capabilities and cut emissions.

While the new government appears keen to get things done, the administration needs to act decisively to streamline procedures, as large-scale infrastructure projects in India have historically taken a long time to come to fruition, the execution of them has been slow and they have often come in painfully over budget.

The development of the nation’s eastern and western dedicated freight corridors is a case in point. These trunk routes are desperately needed to alleviate rising overcapacity and  congestion on lines, such as those between Howrah and Delhi in the east and Mumbai and Delhi in the west. However, they are still a long way from being completed, and it remains
uncertain whether the corridors will be finished by the 2017 target.

Once again, the capacity situation on rail corridors between the southern ports and the main consuming and producing north has become so severe that several ocean carriers have raised the congestion surcharge on their intermodal cargo offerings. This is due to increased costs associated with the lengthening delays associated with using rail-based services, and in some cases the need to find alternativetransport solutions for their customers. 

According to the Mumbai-Nhava Sheva Ship Agents’ Association (MANSA), rail yards at or near all main ports on India’s west coast have become jammed with cargo. Some observers estimate that as many as 50,000 TEU of import boxes were stranded and waiting for release in mid/late-September in this region. 

The situation had a knock-on effect on vessel operations. The most serious delays were at the Ballard Pier Station and Ballard Pier Extension berths in Mumbai, where vessels faced waiting times of 10+ days in early September. At Mumbai’s Harbour Wall facilities, delays averaged eight days, and problems were still being encountered at the time of writing.

Elsewhere, ocean carriers calling at the port of Kandla also experienced eight days waiting time to discharge cargoes. While the high-volume container terminals at Nhava Sheva, ipavav and Mundra, were not affected to the same degree, delays and congestion were experienced at certain times. WorldCargo News understands that, on several occasions, terminals imposed restrictions on the number of inbound intermodal containers handled, in an attempt to deal with the situation.

The seriousness of the situation prompted MANSA to write to the government seeking action. The letter was targeted at the Container Corporation of India (Concor), the country’s largest operator of intermodal rail services and ICDs. MANSA said that the state-controlled company was not operating enough container trains on northern intermodal corridors, with the agency association estimating that there was a capacity shortfall of as much as one third each day, and stating that urgent action was needed.

Call to action

“Since Concor has not been able to increase the number of trains, private container train operators should be allowed to deploy their rail cars in this sector [in the] interim, until the situation returns to normal levels,” said MANSA. “If no remedial action is taken urgently with the intervention of the highest authorities, the shipping trade will then have to pay heavily towards additional ground rent charges, coupled with increased vessel turnaround times and delayed vessel berthing/sailing times.”

Falling productivity in ports and in the overall supply chain, coupled with longer equipment turnaround times, have prompted ocean carriers to recover these additional costs. For the  last month or so, Hapag-Lloyd has levied a surcharge of US$125/20ft and US$250/40ft on cargo moved from the ports of Nhava Sheva and Pipavav to Tughlakabad, one of the main inland container depots serving Delhi and north of the country. Prior to this hike, the German carrier’s congestion surcharge had been set at just US$25/20ft container. APL has also raised its intermodal surcharges, with customers routing their cargo to Tughlakabad now paying an extra US$225/20ft and US$300/40ft, up from US$100 and US$200, respectively.

Although measures like this highlight the inadequacies of India’s infrastructure and its ability to cope with the ongoing trade growth, there has been progress. Moreover, there is growing evidence to suggest that investment from the state and federal governments and from the private sector in new rolling stock, locomotives, cargo handling equipment, rail
yards and terminal management systems, will result in further and significant progress in the future.

Concor, for instance, is planning to set up logistics parks in Krishnapatnam, Kakinada and Machilipatnam in the state of Andhra Pradesh and at Karimnagar and Patancheru in Telangana. The new facilities will, according to Concor, handle both national and international cargo and allow the rail group to develop further their value-added freight processing and distribution activities.

Commenting on the plans, R Dhananjayulu, Concor group general manager, said: “We have identified around 135 acres of land for setting up a logistics park at Krishnapatnam and forwarded the proposal to the state government for land acquisition. We have sought another 100 acres for a logistics park near the Kakinada deepwater port, which is also planning to expand its container terminal operations. Furthermore, we will develop a logistics park at Machilipatnam, once operations commence at that port.”

In other developments, Concor is ploughing INR3.72B (US$61M) into building and equipping a new logistics park at Vizag (Andhra Pradesh), a freight handling complex that  Dhananjayulu said would eventually occupy 100 acres. It will have the capacity to process 400,000 TEU/year and service up to 120 trains a month. This compares with Concor’s current capacity in Vizag of just 15 to 20 trains a month.

Concor believes its new facility will act as a provincial hub and allow it to improve services for shippers and consignees based in the neighbouring states of Chhattisgarh and Odisha. In particular, the group will offer value-added services and will have significant capacity to handle the growing perishable products business.

Concor is keen to expand its presence in the cold chain and believes it has a role to play in reducing post-harvest losses and raising the country’s presence in the perishables trade. After all, India is the world’s second largest producer of fruit and vegetables, but poor infrastructure and high levels of waste have limited how much of this output is exported.

Meanwhile, imports of protein and processed foods are increasing and there is a need for more cold stores, specialised distribution centres and transport equipment, including reefer trailers/containers.

Auto logistics

Concor is not the only intermodal train operator investing. So far this year AutoLinx has phased in three “rail rakes” – a set of wagons capable of carrying more than 300 vehicles each – to expand its operations. The service, which is a joint venture between Singapore-headquartered APL Logistics and VASCOR Automotive, offers car manufacturers and other entities safe and secure transport of finished vehicles in covered double-decker rail wagons with adjustable middle decks and lock mechanisms.

The door-to-door, fully integrated service includes the pickup of vehicles from various OEM factories, loading operations at the rail yard, long-distance rail haulage, discharge operations at the destination yard and then “finalmile” delivery. AutoLinx provides customers with tracking and inventory management systems that allow visibility of the vehicles throughout the supply chain.

Given the high investment in India’s automotive sector, rising domestic demand for cars and commercial vehicles and the opportunities to become a bigger exporter of vehicles, rail-based services for moving them will become more important. This will raise demand for specialist rolling equipment like AutoLinx’s rail rakes, with further orders likely. The new rakes introduced to service this year were manufactured by Texmaco Rail & Engineering.

Reforms and investment are on the way and while these will take time to come to fruition, a better Indian rail and intermodal system is taking root. 

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This complete item is approximately 2000 words in length, and appeared in the October 2014 issue of WorldCargo News, on page 31. To access this issue download the PDF here.