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A
MAJOR obstacle to full and smoothly functioning
of intra-Asian trade flows is the state
of India's vast but often crumbling roads
and railways and roads.
While
inadequate, today's problem with railway
infrastructure is largely bureauicratic.
Once one surmounts the institutional barriers,
one can at least access its vast under utlilised
capacity.
Today,
the rail share of domestic freight transport
is 18 per cent, while it can rise to 25
per cent, according to P Mano writing a
Live Mint commentary in the Hindustani Times.
And by 2025, railways stand to save India
INR30 billion - INR60 billion (US$2.9 billion
to $5.8 billion) a year in logistics costs.
The
modal mix for container transport in India
is heavily skewed in favour of roads due
to high railway freight costs, a lack of
reliable scheduling and poor last-mile connectivity,
he says.
Rationalisation
of rail freight charges to reflect the actual
cost has emerged as the single biggest factor
for facilitating a shift towards rail from
roads as the government looks to raise the
share of railways in the movement of containers,
cut logistics costs and make industries
competitive.
The
modal mix for container transport in India
is heavily skewed in favour of roads due
to high railway freight costs and a lack
of reliable scheduling, and poor last-mile
connectivity.
Congestion
and priority to passenger trains adds to
delays in rail freight transportation. Cross-subsidisation
between passenger and freight trains has
made the railways unviable for most transportation
routes. This results in a greater preference
for roads, which is not the ideal mode of
transportation for the long haul.
The
modal shift from road to rail will also
cut down crude imports by 1.2 million kilo
litres a year, saving another INR24 billion
- INR52 billion in fuel imports.
Exporting
a container from the hinterland in India
takes on average 32 days, compared with
26 days for China, for the same distance,
according to a study undertaken by the shipping
ministry. The transit time also varies by
up to five days, forcing exporters to keep
a higher buffer time.
Indian
containers can take around 50 per cent longer
than Chinese containers for a similar inland
distance. The duration is highly variable
due to the lack of automation in customs
processes, lower speeds of trucks and trains,
and congestion and inefficiency at ports.
This
unreliability of transport schedules forces
shippers to build buffer time into the transportation
schedule, leading to idle waiting time for
export cargo at ports.
The
ministry study reveals that on a per tonne
kilometre basis, the cost differential between
India and China is not significant. China,
however, has a lower overall container exporting
cost due to lower lead distances.
The
study finds two opportunities to reduce
export costs by INR1,100 per container.
Export-import container movement, including
empties, was 10.7 million TEU during 2014-15.
Of the 9.3 million TEU laden container volume,
60 per cent was west-bound and the remaining
40 per cent east-bound.
China
and the US accounted for 14 per cent and
10 per cent, respectively, of the EXIM container
volumes to and from India, while the remaining
was split between several countries, including
the United Arab Emirates (UAE), United Kingdom,
Germany, Saudi Arabia, Korea, Vietnam and
others.
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