Indian Railways targets 30% automobile freight traffic by FY2024

by Mayank Dhingra 23 Oct 2020


The Indian Railways has sensed potential for achieving faster growth in conjunction with the Indian automobile industry, more specifically transport of production-ready cars to different corners of the country, from Kashmir to Kanyakumari.

After deploying 731 rakes between April and September 2019, the Indian Railways network has attained speedy growth in its automobile freight transportation domain by loading 836 completely-stacked trains with new automobiles produced fresh off the assembly lines of different carmakers in the April-September 2020 period. That marks impressive  14 percent year-on-year growth, considering the fact that the initial months of FY2021 – April and May – saw business hugely impacted by the countrywide lock-downs to contain the spread of the coronavirus .

Common rail route to speedy, cost-efficient logistics
Clearly, India Auto Inc is finding good value in transporting its finished goods by the rail route rather than sticking to the conventional truck logistics model. Immediate benefits to OEMs is the Indian Railways’ expansive network, better reliability and cost efficiency compared to road logistics. Moreover, it also allows offsetting the carbon footprint as a single train can replace several trucks running on the road. For instance, in the case of Maruti Suzuki India, the company has saved 3,000 MT of CO2 emissions getting into the environment and 100 million litres of diesel by shipping over 670,000 cars by rail since March 2014.

Rail logistics for automotive freight, therefore, has come a long way in the country and what started off with Maruti Suzuki India in March 2014, carmakers including the likes of Tata Motors, Honda Cars India, Hyundai Motor and newcomers like Kia Motors India have also jumped on the bandwagon recently by despatching over 5,000 cars on the rail route from its plant in Anantapur, Andhra Pradesh to dealers all across the country.

The Indian Railways, which only loaded 429 rakes in FY2013-14, saw a total of 1,595 rakes delivering cars in FY2019-20, a CAGR of 24 percent. Betting high on the demand from the automotive industry including freight of newly manufactured automobiles as well as tyres, the Indian Railways is aiming to achieve a modal share of 20 percent by FY2021-22 and increasing it to 30 percent by FY2023-24.

In this regard, Minister of Railways, Commerce and Industry, Piyush Goyal, met automotive industry leaders on October 10 to assure OEMs and gain business for railways by enhancing automobile loading and transportation using the cost-efficient rail freight operation.

Two-wheelers inside a rake going from Kadakola in Karnataka to Changsari in Assam – a distance of nearly 3,000 kilometres. (Piyush Goyal/Twitter).

The minister also announced several measures taken by the Indian Railways to facilitate automobile loading on rakes, the major one being opening up of seven new terminals for automobile loading including Chitpur (Eastern Railway), Penukonda (South Western Railway), Nasrala (Northern Railway); three terminals on the Northeast Frontier Railway zone – Salchpara, Furkating and New Tinsukia – and Nautanva (North Eastern Railway) - for traffic to Nepal.

In total, approximately 52 railway terminals are now available for automobile loading and all private sidings, private freight terminals (PFTs) and inland container depots (ICDs) can handle automobile traffic.

The Indian Railways has assured the Society of Indian Automobile Manufacturers (SIAM) and Automotive Tyre Manufacturers’ Association (ATMA) that it will resolve all their concerns  on top priority. The industry professionals in the interaction were also informed about the long-term steps taken by the Railways which has contributed to its relentless growth and it includes:

- Steady haulage charges BCACBM rakes since May 2013
- Steady freight charges for New Modified Goods (NMG) rakes since May 2018
- Increase in the number of NMG rakes from 30 to 42 on April 1, 2020
- Permission grant of two-destination loading in NMG rakes
- Export of automobiles permitted to Bangladesh and Nepal in NMG rakes

What are NMG and BCACBM rakes?
NMG or New Modified Goods rakes are based upon older passenger wagons which are customised to accommodate cars. The Railways removes all seats and welds the windows and side doors to create an empty capsule to load cars from the rear end. A single rake or train with up to 27 wagons is able to carry up to 125 cars of all sizes.

BCACM and BCACBM double-deck rakes, on the other hand, have been specifically engineered by the Research Design and Standards Organisation (RDSO) to carry and transport automobiles by the Indian Railways. They offer 20 percent capacity enhancement over NMG rakes.

The BCACBM rakes offer a flexible middle deck that helps to accommodate all kinds of car models. Compared to BCACM rakes they offer a self ramp to unload cars from the upper deck whilst the former needs a manual ramp. Also, with 45 wagons over 27, the BCACBM rakes have 20 percent more efficiency.

SIAM, ATMA laud Indian Railways' efforts
In the meeting with Railways Minister Piyush Goyal, representatives of SIAM, Tata Motors, Hyundai Motor India, Ford India, Mahindra & Mahindra, Honda Cars India and Maruti Suzuki India, along with the Automobile Freight Train Operators (AFTOs) and Automotive Tyre Manufacturers' Association (ATMA) committed to partner with the Indian Railways to facilitate transportation of automobile through railroad.

The Railways Minister also relayed the message that as per the demands of the industry, more terminals are being opened up for automobile traffic some of which will include - Charodi (Western Railway), Bakshi Ka Talab (North Eastern Railway), Mesra (East Central Railway). Also, export to Bangladesh in BCACBM rakes is being planned in coordination with Bangladesh Railways. New taller design of auto-carrier wagons (using the envelope of Double Stack Dwarf Containers) is also being developed by RDSO in consultation with the industry.

Benefits of rail transport over road
A single freight train can replace several trucks, freeing up space on the highways and reduce their wear and tear as well as the pressure on the government for their rebuild and maintenance. From OEMs’ perspective, some of the key benefits are:

Cost efficiency – By transporting vehicles to far-flung corners of the country using the railways, OEMs can reduce their logistics costs substantially by as much as 15-40 percent. Improved railcar design, specialised railcars, and other factors have helped increase the amount of freight railroads carry.

More fuel efficient – On an average, railroads are three-four times more fuel efficient than trucks. With as much as 125 cars, OEMs are able to despatch large volumes at one go.

High level of reliability – Fixed travel schedules, not having to share public roads and highways with other traffic means trains can travel unhindered to their destination, in all weather conditions.

With increasing focus on sustainability and the need to go green across different operations of the business, expect more carmakers to gradually start adopting railroad to make their products reach customers faster and in an eco-friendly way.