Thursday, March 02, 2006

Rail Transportation

Rail Transportation

Rail and roads links are lifelines for economic and trade growth. The players in this segment are increasingly reorganizing to meet a demanding and dynamic environment. With advancements in technology, we now have faster, safer and more reliable vehicles, both on rail and on road.

In an industry that is rapidly consolidating and expanding globally, proper information analysis, information dissemination and management systems become critical business differentiators. To support such rapid changes in technology, while reducing costs and increasing safety, operators in the road and rail sectors need to implement suitable and intelligent IT systems.

India is the country with the largest railway network in Asia. This is the most convenient mode of transport for large-scale goods movement as well as for long distance travel. Based on the spacing between rails, railways are classified into broad gauge (1.69 m), metre gauge (1.0m) and narrow gauge (0.762 m).

Meaning of Railway

A railroad (or railway) is a mode of land transportation in which freight goods and passenger carrying vehicles or cars with flanged wheels move over two parallel steel rails. The guideway or track consists of the parallel rail laid on sleepers and anchored in a bed of crushed rock or other ballast. The car usually is pushed or pulled by a locomotive, although it may be self-propelled. The track guauge (the distance between inside faces of the rail) varies from country to country and sometimes among within the same country. The standard gauge in the railroad is 4 ft 8.5 inches (1.435 metres).

The flanges on the inside of the wheels guide the locomotive and cars, causing them .to follow the line of the rails. The rolling friction of the wheels on the rail is extremely low. Because of this low rolling friction, a locomotive of relatively modest horsepower can a pull a long train of cars. This, basically, is the reason for economy of railroad transportation.

Nature and Importance of Railway Transport

 Railways are the most important means of land transportation because of its speed and safety. It is a useful mean of transport for carrying cheap, bulky and heavy articles over long distances.

 The use of Railways, as a mode of transport, dependents on physical factors like topography and climatic condition of a region. The cost of providing railway service in plain region is less as compared to hilly areas because of the high cost involved in digging tunnels. The development of railways is also difficult in areas of heavy rainfall and snowfall through out the year.

 Railways assist to accelerate the process of industrialization in many countries. The stage of economic and industrial development of a country can be judged from the adequacy of the rail network in it. Railways prove to be one of the most vital links in the chain of industrialization and agricultural development by providing the basic infrastructure facility.

 The railways are large-scale surface transport industry with heavy capital investment. The capacity of railways to carry passenger and goods is much larger than road transport. It can transport full wagonload goods over long distances at lower cost. The greater the volume of traffic on the railways, the lower is the unit cost.

 Railways transport is an economic mode for transportation of bulk commodities and passengers. With a high degree of operating efficiency, the railways are considered as a vehicle of economic growth.

 Railways transport is an important and inexpensive mode for economic exploration of natural resources in a large country like India.

 Railways constitute the main artery of surface transportation, to which other mode of road transport is linked as feeder systems. Its carrying capacity is much larger as compared to road transport vehicles.

 Railways have their own separate track and wagons to carry passengers and goods. The movement from one track to another or in the reverse direction can only be made where facilities for switching or crossing loops have been provided. The movement of goods and passengers in railway transport takes place at fixed points provided for the purpose, i.e., at terminal stations or in the sidings, where they have to be brought by road or other modes.

 Door-to-door delivery cannot be arranged by rail unless complimentary road services are made available. The movement takes place in train loads resulting in haulage of large quantity of goods at a time, but this also needs marshalling of wagons en route for switching individual wagons to proper destination which results in detention of goods as well as additional cost of marshalling. Large movement of empty wagons take place either due to unbalanced traffic for return journey or the wagons a re required to be supplied in large numbers to the points of production of goods according to the priority schedules.

 Railways transport increases the competitiveness of products in the market by reducing transportation cost. The industrially developed countries have developed well-planned railway network in their countries to optimize the utilization of their resources by cutting down the transportation cost. This mode of transport offers an excellent opportunity to do so.

Public Service Obligations of the Railways

Besides their role in fulfilling economic and plan objectives, the railways have to undertake a number of obligations to the public. They have to do so because they are being managed by welfare Government. These obligations are stated below:

 According to Section 27 of the Indian Railways Act 1890, railways have the obligation to provide reasonable facilities for receiving and forwarding the traffic offered to them without any undue preference. Thus, the railways cannot normally refused to carry any goods offered to them or discriminate between what to carry and what not to carry. Such obligations are not there for other modes of transport.

 Until January 1962, the responsibility of the Indian Railways, as a carrier was limited to that of a bailee only. But, now the railways have assumed greater responsibility for the loss, destruction, damage, deterioration, etc., of animals or goods delivered to them for carriage.

 Under Section 27(a) of the Indian Railways Act, the central government may direct any railway administration, in the public interest, to give preference to the transport of such goods or class of goods as may be specified. Such directions are generally given in respect of low rated commodity like coal, mineral ores for export, raw materials for iron and steel industries. manure. food-grain. etc. When such a direction is given, the railways have to provide transport facilities for the designated items of traffic, not withstanding high rated traffic waiting to be moved.

 Indian railways have to undertake to construct new railway lines, for the socio-economic development of a particular region without adhering to commercial viability of the project, e.g., sub-urban passenger services, which carry large numbers of daily passengers on concessional season tickets, are generally not remunerative. The railways have to offer services in their uneconomic branch lines.

 The railways have to grant freight concession on a number of commodities to increase export. Social obligations of Indian Railways force it to provide certain services below the cost of operation. Essential commodities of mass consumption like sugar cane, salt, edible oil etc are carried at low rates below cost. Fares of the short distance second ordinary class and season’s tickets are much below their costs. In addition special concessions are extended to certain categories of people.

Major Problems of Indian Railways

Railways share in total traffic. The railways are energy efficient and eminently suited mode for movement of freight traffic over medium and long distance. However, a good share of the total traffic is carried by road in India. Fifteen thousand kms of the total railways system constitute heavily used routes, over which average traffic density exceeds 20 million gross-ton kilometres per route per year. Bulk of the freight and passenger traffic is concentrated on the quadrilateral formed by the four metropolitan cities and their diagonals. Moreover, expansion of railway line has been taken place mainly on these sections during plan periods. Railways are also facing road competition on long distance routes particularly where break-of-gauge transshipment poses a problem.

Capacity requirements. The capacity assessment of the system necessarily has to contend with certain inherent characteristics of the railways as a mode of transport. Common physical assets are created to provide different types of transport services like freight and passenger movement and any change in the mix alters the output of the system. A considerable portion of the railway asset is location specific and cannot be adjusted to the changes in the demand for services. The important rail corridors connecting major centers of activities, which handle massive volume of, traffic has reached a saturation level. When comparing investments for augmenting capacity either in Railways or road services, it should be borne in mind that the Railways, as a common carrier cannot refuse any particular commodity, whereas individual truck owners can pick and choose, which places the railways in a disadvantageous position. If, therefore, traffic increases and rail facilities remain inadequate, the high rated commodities, which are more susceptible to diversion, will go to the roads and this will weaken the financial position of the railways.

Energy conservation. The railways are a major user of liquid fuels and must contribute to energy conservation. Due to paucity of fund energy inefficient obsolete steam engines and rolling stocks are yet to be replaced.

On line performance. The incidence of 'on-line failures' of fleet and equipment is fairly high. Such failure in crowded traffic corridor brings a quasi-paralysis of the corridor. The maintenance of infrastructure is still inadequate in relation to the rolling stock. The rolling stock designs are out dated and maintenance practices in-several areas are based on obsolete technology. The percentage of ineffective rolling stock far exceeds prescribed levels. The railways have to suffer because of its un-remunerative branch lines for public service obligations.

Manpower planning. The -manpower cost in the working expenses of the railways form a sizable portion due to absence of substantial efforts for technological up-gradation of operational system of the railways. The system is beset with excess manpower and manpower development has not kept pace with technology upgradation.

Containerization. Containerization transport has been favoured because of its inherent characteristics in different parts of the world but the process of development has been slow in Indian railways. Due to slow growth of containerization practice by the railways, it is difficult to improve wagon-turnaround and material handling cost.

Own resource generation. The railways ability to generate its own resources for growth and replacement has not shown any improvement. In fact, rate of return on the capital investment has been low in Indian railways.

Traction policy. Steam traction is inefficient, both from the point of view of operation and energy consumption. Most of the steam locomotives are now relegated to inferior services and are, thus, a drag on the system. Due to non-availability of electric traction in many important railways sections lead to delay in movement of traffic. The shortage of capacities in railways and very high traffic density on major routes are also responsible for creating problems for railways to increase the flow of goods and passenger traffic.

Railway rates have been based on the value of service principle and the relatively high rates charged by the railways for the more highly priced goods have tended to enhance the scope for competition from road transport.

Economies of Railways: The pattern of investment on the railways involves heavy outlays on railway tracks, signaling equipment as well as on the regular maintenance of these assets. Investment is required towards provision of terminal and transshipment facilities, locomotives, various types of coaches and Electric Multiple Unit stock, ordinary as well as special types of wagons. The track as well as other fixed facilities are generally used both for coaching (passenger and parcels) and goods traffic, which are the main constituents of rail transport.

The railway is executing certain unproductive work such as transport of workmen to the site of work, movement of stores for operational purposes, movement of empty wagons to be made available at the loading points where traffic is offered, shunting in yards and at terminals. The cost of these services are included in public traffic cost and termed as 'Revenue Earning Traffic', and these expenses are included in cost of various functional groups/ constituent elements of rail transport. The railway transport cost can be classified as fully distributed cost, which represents the total expenditure in transport service, which can be quantified.

Variable costs (long term), which are also termed as direct cost or out-of pocket cost, are the expenses, which actually vary along with the quantum of traffic moved. These generally represent the cost of provision, maintenance and operation of rolling stock including loco-crew, wages of train staff. These also include such portions of fixed cost like expenses on maintenance of tracks and signaling. The long-term variable cost is very important for working out the economics of movements of additional traffic. Variable cost (short term) or marginal cost relates to the direct additional cost required to be incurred for occasional movement of traffic. These cost include terminal, marshalling yard, and transshipment, line haul-traction expenses.

Rail transport cost is the unit cost of each of its functions plus the cost of movement of a given commodity. In .the railway freight structure, the following factors are taken into account while fixing the freight rate for a commodity.

(i) Cost of service.
(ii) Social costs of a commodity.
(iii) Ability of a particular commodity to bear the transport cost.
(iv) Loading and unloading characteristics of a commodity

Freight is the backbone of the Indian Railways and contributes more than 66 per cent of this organisation's earnings, even subsidising the losses it makes on passenger operations. The Indian Railways decided to adopt the use of information technology to improve the utilisation and maintenance of its rolling stock, for better capacity utilisation and increased output. This led to CMC's freight operations information system (FOIS), an integrated information and management system for controlling and monitoring the multifarious activities in freight operations.

Rail transport comprises of two categories of traffic:
(a) Coaching (passenger and parcel traffic) and
(b) Goods (Freight traffic).

(a) Coaching
Passenger traffic Service
. This includes Electric Multiple Unit transport services (computer services) and rail car service. The total expenditure on coaching service can be grouped as under:

(a) Passenger (Terminal service)-This include expenses relating to facilities provided for booking of passengers, waiting rooms, platforms, shunting/marshalling of trains, provision and maintenance of coaching yards

(b) Catering Service-catering service includes expenses on refreshment rooms, restaurants at stations, dining car services in the running trains.

(c) Special Services-Reservation, enquiries, retiring room facilities,
the expenses of conductor guards, TTEs and coach attendants.

Line Haul Service. This services includes proportionate share of expenditure on traction, cost of train passing staff including guards, provision and maintenance of coaching stock, track and signaling. .

Luggage Parcel Service. These services include booking and delivery of luggage and parcels, loading and unloading from vans, transshipment I repackaging at junction stations, shunting of parcel vans at stations, provision and maintenance of commercial sidings.

(b) Goods
The railway freight transport comprises of the following functional
(I) Terminal services - This service include booking and delivery of goods, loading into and unloading from wagons and shunting the wagons from and to the marshalling yards.
(ii) Line Haul- This service can be sub-divided into;
(a) marshalling yards for formation and breaking up of trains,
(b) transshipment of all goods at break-of-gauge and that of smalls from one wagon to another on the same gauge termed as repackaging of smalls; and
(iii) Line Haul from originating to destination stations

Classification of Goods, Rates and Fares

The freight traffic moved by the Indian Railways has increased to a considerable extent with the growth of production and trade. The railway Ministry has formulated the general basis of freight and rates, which are as follows.

"Railways are, no doubt, commercial concerns but they are hardly commercial concerns in the conventional sense. As a state undertaking they owe it to the public, to provide transport at the cheapest rate, consistent with the maintenance of their financial solvency and providing means for their development. Unlike ordinary commercial concern, they must not aim to maximize their profit, all the more so because they are a semi monopolistic concern. Consequently, they must aim at charging not necessarily what the traffic can bear but what is justified in relation to their cost of operation and essential development."

According to the Taxation Enquiry Commission (1953) chaired by John Mathai, "Railways are an industry and therefore, is to be run on commercial principle. Railway freights accordingly fixed on such principles with due regard to the interest of agriculture, industry, commerce and the general public." These commercial principles on which freight rates are fixed may be stated inter alia to be as follows.

(a) Reasonableness of rate - This principle is commonly refereed to as "charging what the traffic will bear", i.e., fixing the charge for each variety of goods according to its ability to pay for transportation. This takes into account the value of commodity, the use to which it is put and the stage of its manufacture. In the case of industries, it is also usual to take into account the development aspect.
(b) Consideration regarding potentiality of both long-term and short term traffic.
(c) Avoidance of undue preference to persons, locality or any particular description of traffic.
(d) Competition from other modes of transport.
(e) Operating cost of railways, which also take into account factors, such as the bulk of the commodity in relation to its weight, the risk of damage, wastage in transit and the volume of traffic.

In pursuance with the policy of freight structure as envisaged in the Commission's Report, Indian Railways have framed their freight and rate structure for various categories of goods. The railways have taken responsibility as a public utility concern, to transport high valued goods as well as low valued goods irrespective of its size and weight. It undertakes the task of ensuring safe travel of its passenger's as well safe delivery of goods, i.e., without any damage at a cheaper cost. The rationalized fare and freight structure of Indian railways attracted millions of passengers to use" this mode of transport. While performing the role of the major transport operator in India, the railways fixed their rates for different commodities according to the nature, size, cost and importance and essentiality of the society. Besides, the railways always keep in view the paying ability of the user to use railway system for transporting their goods. In order to facilitate reasonable rate and the demand for transporting variety of goods, the railways have classified nearly three thousand odd types of goods into different classes. The rate prescribed for these classes is known as class rate.

The major factors responsible for such classification of goods are as follows:

(a) The railways for socio-economic-national considerations transport variety of raw materials, semi-finished, finished goods as well as personal appliances. The inherent railways influence the consumers to use this form of transport both for short and long distances. The railways cannot deny transporting the goods, as it is a public utility concern. This makes the work of the railways administration difficult, as it has to carry not only essential commodities but also highly valued goods.

(b) It is very difficult to ascertain the railways transport cost for each and every item of goods to be transported in high dense traffic corridor or in a remunerative branch railway line connected with interior areas. Therefore, various types of goods having same nature, value and size are identified as a single group.

(c) Railway's fare policy is generally based on "what the traffic can bear". The transport cost should not be more than the production cost of an article. The transport cost must be reasonable enough, so that the produced goods can be distributed in a widely spread market. Railways shoulders responsibility of keeping the price of essential commodities at a reasonable rate, be it a liquid or a solid goods, for the benefit of both consumers and producers.

Class Rates
In the existing freight structure some three thousand commodities have been categorized into different classes. The minimum class rate is 60 and the maximum class rate is 300. These class rates are subject to change from time to time proportionately. The class rates for certain commodities are quoted under owners risk (OR) and under railways' risk (RR). The OR rate is approximately 20 percent lower than the RR rates and commodities of low value or perishable commodities are usually quoted at OR rates. The consignor has to opt for sending goods at his own risk or at railways' risk to save freight cost. In case, the goods are damaged or deteriorated during transportation, the owner has to prove the negligence of the railway authority to claim compensation.

Wagon Load Rates
The wagonload rate fluctuates from 60 to 300. The customer can take advantage of this rate by dispatching commodities of full wagonload quantities but the minimum weight condition as specified in the goods' tariff should be complied with.

Recommendations of the Railway Freight Structure Enquiry Committee, 1955
The Railway Freight structure Committee was constituted under the chairmanship of Dr. A. Ramswamy Mudaliar. To review the existing freight structure for transport by goods train in all its aspect in the light of the development of economy. The major recommendations of the committee are as follows:

(a) A regular and progressive increase through a percentage'system from the lowest class to the highest class to from an integrated scale of rates covering both class rates and wagonload scales. For this purpose they re-commended a norm rate called class 100 rate.

(b) All commodities are classified as wagonload and smalls. However for some commodities for which separate smells and wagonload classification gas no significance there the rate would apply on an "AQ" (any quantity) basis.

Small Rates
This rate also ranges from 60 to 300 and there are 16 class rates for smalls. These rates are approximately 15 to 20 percent higher than the wagonload rates.

Train Load Rates
To facilitate smooth flow of essential commodities like greens and pulses, coal, cement, iron and steel etc., this train load rate has been introduced by the Indian Railways. These train load rates are approximately 10 percent cheaper than the wagonload rates.

Special Rates
These rates are charged to defense materials and postal traffic, etc. These are the subsidized rates and mutually agreed upon with the concerned authorities or persons with the Indian railways from time to time.

Station to Station Rate
In order to meet stiff competition from other modes of transport the railway authorities can quote station-to-station rate to increase additional freight traffic.
However, the following factors are taken into account to quote station to station rate:

(i) No reduction is permitted in the rates for commodities chargeable at lower class rates.
(ii) No reduction is permitted in the rates for livestock as well as in the rates for petroleum and other hydrocarbon oils, and dangerous good.
(iii) No reduction is permitted in respect of movements of less than 150kms for wagonload traffic and in respect of movement of less than 300 kms for smalls traffic.

Procedure for Booking and Delivery of Goods

The goods carried by the railways can be categorized into;
(i) Smalls, and (ii) Wagon Load.

If the consignor is sending small quantities of goods which does not require hiring a full wagon then it is referred to as 'smalls traffic'. If the consignor wants to send goods in large quantities requiring exclusive use of a full wagon, it is known as 'wagon load traffic’.The consignor is required to place an indent if he wants use a full wagon and have to deposit wagon registration fee at the prevailing rates.

Generally wagons are supplied on first-come-first-serve basis.

Forwarding Note
It is a note which provides information on the description of goods, place of destination and originating station, selection of route, value of goods, and remarks on the packing conditions, etc The consignor or his agent is required to execute a Forwarding Note with the Station Master, which in fact is the document of contract between the consignor and the railways. This note is used to determine the liability .of the railways on the event of claiming compensation by the consignor for damage, loss or deterioration of goods during transportation. This note also assists the railway officials in accepting and dispatching goods and in preparation of Railway Receipt (RR).

Railway Receipt (RR)

When the consignor books the consignments, it is weighed, marked and loaded and a railway receipt prepared and a copy of it is handed over to the consignor or his agent. Generally, 4 copies of the railway receipt are prepared. One copy is given to the consignor, one is sent to the destination station as an invoice, one is sent to accounts office and the fourth copy is retained in the station for record. The consignee who takes delivery of the goods at the destination station has to submit the railway receipt. It is also a negotiable instrument. and possesses all characteristics of it. However, if the railway receipt is lost, then the consignee to take delivery of the goods at the destination station may execute an indemnity bond.

Marking of Consignments
In respect of wagonload consignments, 10 per cent of the packages are required to be marked. Correct marking of consignments with good packing of goods is highly essential for dispatching the goods. There are prescribed packing conditions for various commodities lay down by the railways in order to ensure safe delivery of goods to the consignee. The packing should withstand the rigidity of the journey and handling of the goods during loading and unloading at the stations. Packages generally carry private marks as well as railway marks. It is also essential that the old markings on consignments be obliterated. Small consignments are weighed on the railways' weighing scale and full wagon load consignments are weighed on wagon weigh-bridges. When the consignor regularly sends goods of uniform size arid weight, the railways accept the sender's weight. Wherever weigh bridges are not available, wagonload consignments are charged on floor area basis for certain commodities.


It is levied, if the consignee could not lift the consignment in the free time allotted by the Railways from the destination station. It is the duty of the consignee to take note of the arrival of the consignment at this station. Wharfage is charged after a free time of two days including the day on which the goods are available for delivery. However the rates of wharfage vary with the importance of goods shed and available warehousing accommodation. The rates of wharfage at goods sheds vary from station to station and from one railway zone to the other.

Laws Relating to Carriage of Goods by Railways

Carriage by rail in India is regulated by Indian Railways Act 1890, which was amended with the enactment of the Indian Railways (Amendment) Act 1961. As per the amended section 73, the railway administration will be liable for the loss, destruction or deterioration in transit or animals or goods received by it for carriage by rail from all causes except losses arising from : (i) act of God, (ii) act of War, (iil) act of Public Enemy, (iv) arrest, restraint or seizure under legal process, (v) orders by or on behalf of the central or state government, (vi) act of commission or negligence of the consignor or the consignee or their legal agent, (vii) natural deterioration due to some inherent vice in the goods, (viii) latent defects, (ix) fire or explosion.

Owner's Risk Rate or Railways Risk Rate. (Section-74), the animal or goods may be carried by a railway administration either at Owner's Risk Rate or Railway Risk Rate. Owner's risk rate is a special rate, where as the railway risk rate is an ordinary tariff rate. Accordingly, the owner's risk rate is somewhat less than the railway risk rate. The onus of proving negligence and misconduct by the railway administration in owner's risk rate rests on the owner. Unless otherwise agreed, all goods are considered to have been delivered to the railway for carriage at owner's risk rate. The sender has to agree in writing if he opts for the railway risk rate to send his goods.

Responsibility of Railway Administration as Carrier of Luggage

(A) Under the following circumstances the railway administration is responsible for the loss, destruction, damage, deterioration or nondelivery of a luggage belonging to a passenger:
(i) If a railway servant has booked the luggage and given a receipt.
(ii) It is proved that the loss etc., are due to negligence or misconduct
by the railway administration.
(B) If the owner can prove that the loss caused is due to delay or detention of luggage in transit, then the railway administration have to make good the loss.
(C) The railway administration would be liable if the goods have been delivered to a wrong person without verifying whether the said person possesses the railway receipt.
(D) Where the good are carried at owner's risk the liability of the railway administration is that of a bailee. But, if the goods are carried at railway risk rate, the liability of the railway administration is that of a common carrier.
(E) The liability of the railway administration after termination of transit and during 30 days after termination of transit is that of a bailee. But the administration is not responsible for any loss of goods after 30 days from the date of termination of transit. .
(F) When any parcel or package contains article of special value to be carried by the railway, then the railway administration is not responsible for the loss, destruction or deterioration of the parcel if the person sending has not declared in writing the contents and the value of the parcel and has not paid the additional charges.
(G) When goods are sent in defective condition/ packing, then the railway administration is responsible for the damage only if, the sender or his agent in the forwarding note has recorded it.

Public Sector Companies
There are nine central public sector companies registered as per Company Act, 1956 under the administrative control of the Ministry of Railways, Government of India.
. Rail India Technical & Economic Services Ltd. (RITES)
. Indian Railway Construction International Ltd. (IRCON)
. Indian Railway Finance Corporation Ltd. (IRFC)
. Container Corporation of India Ltd. (CONCOR)
. Konkan Railway Corporation Ltd. (KRCL)
. Indian Railway Catering & Tourism Corporation Ltd. (IRCTC) . Railtel Corporation of India Ltd. (RAIL TEL)
.Mumbai Rail Vikas Nigam Ltd. (MRVNL)
. Rail Vikas Nigam Ltd. (RVNL)

A recent World Bank report on Indian transport sector called for the privatization of the Indian Railways among other areas in the transport sector. Driven against the wall by a poor financial performance and a severe resource crunch, the railways have decided to allow private sector participation in the use of its tracks and rolling stocks. This is a welcome recognition of the opportunities for growth to be realised through a partnership with the private sector. This partnership will enable the railways to concentrate more on its core traffic which needs to be transported over long distances and currently gets diverted to road transport. The interest shown by the private sector in using railway tracks/ rolling stocks under the own your wagon scheme; will also help in bringing about a multi-modal transport system in the country. Private sector will use the railways for long distance transportation and then link railheads to the customer through road transport. In fact, privatisation can be extended to other rail services as well. This will allow the railways to concentrate on its core activities and improve its operating efficiency.

There is also a massive cross subsidy from freight to passenger operations in Indian railways, according to the World Bank Report. While the passenger traffic constitutes 53 per cent of the Indian railways output, its contribution to revenues is only 29 per cent of the railways total revenue. The report said Indian Railways is primarily passenger in terms of output and freight in terms of revenue. The passenger rates charged by the Indian Railways are the lowest in the world. The Indian Railways charge, says the study, about three times as much to move a tonne one km as they do to move a passenger one km. Existing modal shares between rail and road do not conform to optimal shares as judged by least economic cost. The railways have, therefore, devised a new marketing strategy following economic reforms, to attract freight traffic now going by roads which is more energy intensive and less environment friendly. The features of Railway's new marketing strategy are as follows:

 The Container Corporation of India (Concor), a public sector undertaking will provide door to door service to domestic users, transportation in bulk for small customers and international transport in ISO containers.

 Introducing trains connecting Tughlakabad with Bombay, JNPT and Madras ports for the movement of export containers on scheduled time.

 Leasing out brake van space to customers, so that they can have an assured transportation petween fixed points.

 Introducing long distance special parcel service between Bombay and Delhi, Delhi-Mughalsarai and Wadibunder Shalimar.

 Introduction of Own Your Wagon Scheme to invite private sector investment for the ownership of railway wagons and thereby supplement the resources available with the railways for meeting the transport requirements of various sectors of the economy.

 Simplification of rules in key areas like free acceptance of indents, supply of wagons, single window booking systems and faxing of invoices to the destination.

 Rebate on freight for utilisation of wagons in the empty flow direction.

 Closure of yards to facilitate faster movement.

The shares of budgetary support and internal resources are coming down. The growing dependence on borrowings would help speed up the pace of modernisation, but it would soon cause undue strain on Railway finances due to mounting interest burden. The Railways, therefore, proposed to invite private investments to meet its resource gap. It has also decided to drastically reduce dependence on market borrowings. This was indicated by the government in the expenditure estimates of the Railways for 1996-97. The plan will be funded by internal resources estimated at Rs 4111 crore, budgetary support of Rs 1269 crore, market borrowings Rs 1850 crore and private investment under Build-OwnLease-Transfer (BOLT) and Own- Your-Own- Wagon Scheme, which are expected to be around Rs 900 crore.

The financial commitments of the Railways are high in view of the need for timely track renewal, replacement of over-aged wagons and coaches and additions to rolling stock for meeting the growing freight and passenger demand. The passenger traffic. is growing at the rate of 3.5 to 4 per cent per annum and suburban traffic at the rate of 5 to 6 per cent. The modernisation process is not the required pace. The Railways have backlog of 12,000 km of track renewal at the start of the Eighth Plan. To this must be added another 11,500 km during the Plan period.

However, development work is continuing. Under the Project Uniguage, the higgest 'Single devevelopment programme of Indian Railways, the Railways completed 5000 kms of guage conversion. Guage conversion done l1.!1Jl\der Project uniguage since 1.4.1992 is 5000 kms (against the target of 4000 kms) as compared to 3100 kms of ,guage conversion done between 1950 to 1992. Coupled with the policy 01 economic reforms, project uniguage is expected to usher in a new era of development and progress in. hitherto less developed areas reducing regional imbalances in economic development.

Since the announcement of the uni-guage programme in 1992, the railways have identified 15,000 km of meter guage line to be converted into broad guage , in which 5000 kms of guage conversion work has already been completed and converted into broad guage.

Project uni-guage,i.e., one uniform guage, converting the. entire metre and narrow guage railway routes of 28,000 km into broad guage, was resorted to, as Indian Railways have three guages of varying width, namely broad guage (1.676 metre), metre guage (1.0 metre) and narrow guage (varying between 0.762 to 0.610 metre). Presently, the route knT on broad guage account for 34,000 (55%), metre guage 23,600 (38%) and narrow guage 4,200 (7%). The uni-guage policy is justified on the grounds of energy conservation,minimising transport bottlenecks and transhipment hazards.

The major programme of country-wide guage oonversion is being mostly financed from internal resources. The guage conversion programme is intended to be the main vehicle of economic liberalisation, besides helping in the removal of regional economic imbalances by redrawing the investments flows to the backward areas. It would facilitate direct linking of mineral sources with industrial and rommercial centres on broad guage and also improve the overall efficiency of the railway system. It is also connecting various ports to the hinterland areas on broad guage which would help in boosting the economy by facilitating movemenf of export and import cargoes. Parlivaijnath via Beed is also being taken up for the benefit of the backward regions of Marathwada in the state of Maharashtra . In Punjab, construction ot the bea&-Goindwal line to link the new industrial township of Goindwal as also the construction of Rajpura-Chandigarh line to fulfill the longstanding demand for a direct link between Ludhiana, Patiala and Chandigarh have been taken up. Kashmir valley is also being brought under the railway network by extending the Jammu-Udhampur line up to Srinagar and Baramulla.

The Indian Railways most ambitious project, the Konkan Railway Project is the largest railway construction project in the Indian subcontinent during the present century. The Konkan Railway has a 760 km of railway line, with 179 major bridges and 1670 minor bridges with 288 grade separators, and 92 tunnels over some of the most difficult terrain in India. 92 tunnels with a total length of 83.6 km out of which 82.7 km of tunnelling is completed. Total waterway is 26 km. It has a tallest viaduct in Asia - 64 metres, and the longest tunnel 65 km. New technologies used for the first.time in India include jet fan ventilation in long tunnels and fully computerised train monitoring system with fibre-optic communications system throughout 760 km length. Designed for modern high speed trains, the project will provide significant savings in both travel time and cost. The project will save the nation Rs.300 aore each year in fuel costs alone.
In this era of global economic integration, the railways have identified international trade as a major marketing thrust area. The main objective of the marketing strategy is to capture high rated non-core sector traffic is througp multimodal container services. According to the Economic Survey 1995-96, there has been a rising trend in international trade in recent years. In this sphere, the Container Corporation of India (Concor) is playing a vital role. The bulk of Corncor' s business comes from export-import trade requirements.

As a millennium gift to its freight customers Indian Railways have successfully launched a computerized FOIS covering almost the entire Indian Railways network. The design, development, and implementation of the system is a totally indigenous effort which has been accomplished jointly by CMC and CRIS.

It is most credible that FOIS is a 100 per cent indigenous effort, uses state of the art technology and has ample scope for evolution as a harbinger of IT revolution in railway management systems of a magnitude that has not yet been tried on any of south Asian railway systems. Once all the phases / modules of the planned operating information system (OIS) are integrated and implemented it would catapult Indian railways at par with any other railway system even in the most developed countries of the world.

For any railroad company / organisation continuous cargo visibility is viewed as the most critical component of its physical distribution system. FOIS enables freight customers to have instant access to information regarding the current status of their consignments in transit, allowing them to implement just in time inventory management systems and better logistics management. It is a system for management and control of freight movement that also assists managers to optimize their asset utilization.

Strategic advantages

Freight Operation Information System

The FOIS has been designed to give major strategic advantages to both Indian Railways and its customers, some of them are:
  • Extension of the current business practice of bulk movement of freight traffic in trainload formations to piecemeal traffic to increase the market share by clubbing and moving together similar type of stock in 'Hub and Spoke' arrangement.
  • Global tracking of consignments in real-time, whether in rakes or in individual wagons
  • Facilitate acceptance (customer's orders), billing and cash accountal of freight traffic from identified nodal customer centers which may not necessarily be the handling terminals.
  • Foundation for a complete logistics management system furnishing real time information on the chain of physical distribution, an essential element in reducing inventory costs, is being laid through FOIS.

The system in use already performs the following functions online:
  • Live monitoring of all freight trains giving their current position in computerised territory and their expected time of arrival at destination.
  • Commodity wise flow of freight trains for customers like power houses, refineries, fertilisers and cement plants, steel depots and public freight terminals, enabling the recipients of consignments to have an accurate forecast of cargo arrivals, giving them adequate time to complete preparatory arrangement to handle the cargo.
  • Monitoring of out bound loaded rakes in the same manner.
  • Monitoring of detachments from block rakes to track wagons getting detached at a location or missing.
  • Analysis of total demand for rail transport and its logical matching with incoming rakes to optimise supply of empty rakes for loading.
  • Generates as many as 163 managerial reports.

With the use of the system there has been a visible reduction in the anxiety levels, mental stress amongst operating staff. The voluminous and repetitive exchange of data on telephones round the clock has now been replaced by minimum data input. The improved work environment has significantly simplified planning and execution of assigned tasks.

The lead taken by some of the zonal railways like northern and western in using the system information to club less than train load consignments into train load has helped them earn additional revenue besides being lauded by the trade. The words of appreciation from bulk customers like FCI and IFFCO who are being advised through e-mail the status of their consignments regularly, is a clear indication that the anticipated benefits from FOIS have already begun to accrue.

The Indian Railways have agreed to participate in the Trans-Asian Railway link between Europe & South -East Asia, via Iran,Pakistan,India,Bangladesh, Myanmar,Thailand & Malaysia. This Trans Asian Railway project is being considered by United Nations Economics & Social Commission for Asia & the Pacific (ESCAP) under the Asian Land Infrastructure development project. The main objective of this project is to identify & evaluate the development & operation of a network of routes between South Asia & Europe, south China & Europe, Thailand & Europe. These routes are supposed to run thru Bangladesh, Myanmar, India, Pakistan, Iran & Turkey.


Rick J said...

I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.

Take a look at


Anonymous said...

I want to know, if we have any websites, wherein, we can track movement of wagons, which carries goods, if so it will be very useful for us to plan our sales accordingly

Bakhtiar Ali said...

I visted your site,very infomative.
Will you please have some say about the opretional working of trains,and what procedure is adopeted in case of total failure of communction between two block stations. If the wireless phone are used for line clear working?if so, is not a risk?
Agha Bakhtiar Ali

dangerous goods training said...

A lot of dangerous goods (such as gunpowder)are (ever since railways were made) being delivered through railways and I think that employees and workers handling such cargo should have a good dangerous goods training as it will help them work better and keep the safety in the process.