Taken big-bang reforms to turn around rail freight biz: Mohammed Jamshed

Interview with Railway Board member-Traffic

Indian Railways is struggling to overcome the challenges posed by the slump in core sector growth that has pulled down freight volumes across commodities. However, the national transporter is responding through policy changes to realise the incremental loading target of 50 million tonnes (mt) for FY17, Railway Board Member-Traffic Mohammed Jamshed tells Sudheer Pal Singh. Edited excerpts:

Is the rail ministry planning to cut down freight rates to recapture the railways modal share in transport?

Indian Railways’ overall freight loading had taken a hit in 2015-16 compared to the planned growth in volumes. We got a study commissioned by the National Council of Applied Economic Research to better understand the national and global factors behind this trend. The rail minister also made an announcement in this year’s Budget that tariff rationalisation should be undertaken to ensure that railways become competitive.
 

We already have a monopoly in long-distance bulk traffic, which is getting a tough competition from other modes of late. We have already started taking actions in this direction and embarked upon a path of big-bang reforms on the freight business segment including special reduced tariffs for the ‘merry go round’ system; two-point loading in BCN rakes with increased catchment area; new coastal shipping policy to capture domestic traffic moving by rail-cum-sea routes; extension of empty flow direction rebate and the major decision to withdraw levy of port congestion surcharge, which would bring back significant volumes of imported cargo from ports to hinterlands by the Railways including containers, coal, iron ore and other commodities.

We are now planning to rationalise rates in the short-distance traffic segment to provide customers more competitive rates and growing volumes for rail freight business.

Coal India (CIL) has achieved production growth of 8.6 per cent in 2015-16. How has Indian Railways performed on coal transportation?

Coal accounts for almost 50 per cent of Indian Railways’ freight basket. The commodity accounted for 552 mt of the total originating loading in the last financial year. Special efforts towards stock management and mobility were made in 2015-16 to meet the transportation requirements of CIL, which contributes to major share. While CIL’s production in 2015-16 increased 8.6 per cent, rail dispatches of CIL rose 9.4 per cent.

The loading of 213 rakes per day in 2015-16 was the highest ever against 194 rakes per day in 2014-15. Similarly, rail dispatches from Singareni Collieries in 2015-16 increased 21 per cent over 2014-15. While coal loading from these domestic sources has increased at an unprecedented level, we have seen a drop of 20 mt in loading of imported coal, which is expected as the domestic production improved.

The railways also lost 12 mt of coal loading in 2015-16 due to non-commencement of mining operations in the captive coal blocks reallocated to the power utilities of Punjab, Karnataka and West Bengal. For this year, we have got CIL to offer 244 rakes per day to Railways to compensate for the shortfall on account of imported coal, which is likely to remain even this year.

How worried are you on the prospect of a failure of demand pick-up from the power utilities?

The slowdown in coal demand by rail-fed power plants has been a cause of concern. Loading of coal in 2015-16 would have been higher but for regulation of coal supplies by a large number of power utilities due to high coal stocks in the power plants. The subdued growth in coal consumption by the power sector has resulted in coal stocks with the power houses crossing an unprecedented level of 39 mt as on March 31, 2016.

A number of power utilities regulated supplies of coal to rail-fed power plants in 2015-16. The coal ministry, too, is looking at 58 mt of stocks at the pit heads. Obviously, the coal production and its transportation to power utilities is fully organised and geared up to carry additional volumes. An unprecedented situation of coal stocks of 35 days in most of the coal-fed power houses is a cause of concern for both us and the coal ministry. We are closely working with the coal ministry and CIL to explore the possibilities of a pick-up additional quantities of e-auctioned coal.

How has the slowdown in core sector growth during April-February impacted railways’ freight loading?

The last financial year has been an extremely challenging year for the railways. The tepid growth in core sector (2.3 per cent during April-February 2015-16 against five per cent in the same period in the previous year), coupled with the global slowdown has significantly impacted loading.

Railways lost 32 mt of loading in coal traffic due to shrinking coal imports and non-commencement of mining in some captive coal blocks re-allocated to public sector power utilities. Also, food grain loading witnessed a drop of 10 mt due to less movement by the Food Corporation of India from the surplus states of Punjab and Haryana as public distribution system needs were increasingly met through decentralised procurement in some states. Container loading fell eight mt as the slowdown in world economy, particularly China, impacted container traffic.

How is railways planning to utilise the excess capacity that will come on stream with the commissioning of the Dedicated Freight Corridors (DFC)? What are your rolling stock induction plans and how would you incentivise private sector participation in this?

The commissioning of the Eastern DFC and Western DFC would provide huge capacity in these sectors. The Eastern DFC would be primarily used to transport coal and steel from eastern parts of the country to northern states.

The Western DFC would not only be the link for container traffic to or from the western ports but also provide the transportation infrastructure for DMIC (Delhi-Mumbai Industrial Corridor). We are also looking at providing value-added services, including running time-tabled trains on these DFCs. The rail minister has announced ‘mission capacity utilisation’, which would prepare a blue print for making full use of the capacities available after commissioning of the DFCs.

We have been inducting around 13,000 wagons every year. The DFCs will have a substantial impact on the wagon turnaround and we expect the wagon utilisation to improve significantly. We’re also moving towards manufacturing of only high horse-power and green technology locomotives, high-speed, high-axle load wagons and commodity-specific wagons such as auto carriers. We are also exploring the feasibility of allowing leasing of general purpose wagons by private wagon leasing companies.

With these strategies and expected growth in core sectors, Indian Railways would be able to meet the entire anticipated rail transportation demand.