The corridor to prosperity

Published: 23rd July 2012 12:40 AM  |   Last Updated: 23rd July 2012 12:44 AM   |  A+A-

The ministry of railways has embarked on an ambitious project of connecting the four metro cities of Delhi, Mumbai, Kolkata and Chennai through the Dedicated Freight Corridor (DFC). The existing capacity on the trunk routes between these cities is over-saturated, and needs to be freed up for transporting higher volumes of freight traffic. The first phase of the project will consist of two routes: the Eastern Corridor from Ludhiana to Dankuni and the Western Corridor from Jawaharlal Nehru Port, Mumbai to Dadri near Delhi. These will comprise mostly of double track railway lines capable of handling 32.5 ton axle load, longer trains and also double stack containers. When completed, they will provide a faster, and safer transport system that will run at reduced unit cost, enhancing not only railway’s share of the freight transport business but also releasing capacity for the large passenger market in the densely populated regions. It will also reduce the level of emission of greenhouse gases by encouraging a modal shift from road to rail.

With the surge of containerised maritime freight, and development of more efficient freight distribution systems, freight corridors are receiving a growing level of attention. The idea behind a rail corridor is rather simple: just like trucks, the trains must have the opportunity to run in one move from the originating point to the destination. Several countries are now veering round to the view that greater freight volumes can be carried by creating dedicated railway lines to goods traffic and eliminating bottlenecks and interference with passenger trains. At the same time, the cost of rail transport must be reduced in order to make it competitive with road transport. By linking major hubs to which freight flows converge, these transport corridors help in serving the markets better. They lead to better integration between production and distribution centres and also a greater reliability of distribution. By bringing about greater efficiencies in production systems and supply chains they accelerate the pace of economic development. There is also the objective of optimising railway’s role in the multi-modal transport chain and services and developing valuable synergies with shipping companies, ports, inter-modal operators, freight customers and all stakeholders in the global logistics system.

In some regions, which have a grouping of many smaller countries, speedier freight transport can lead to closer economic integration. In the European Union, for instance, construction of dedicated freight corridors is high on the agenda. The Community of European Railways (CER) has promoted special studies on six major European corridors dedicated to freight on which the project European Railway Infrastructure Master Plan (ERTMS) is proposed to be implemented. In signing the Rotterdam Declaration (2010) ten European transport ministers have reinforced and confirmed their intent to cooperate in the development of European rail freight corridors and allow them to grow together into networks.

In US, because of a huge surge in demand for freight haulage in the country, which is predicted to increase by 92 per cent between 2002 and 2035, billions of dollars are being invested to build new corridors for handling cargo that is increasing as a result of a rising population and the accumulating supply of commodities. It is also felt that there will be huge fuel savings by switching freight from highways to rail. US economists estimate that a 10 per cent shift from road to rail can cause national fuel savings of more than a billion gallons a year, and reduce greenhouse gas emissions by more than 12 million tons.

China too is moving in a big way in expanding capacity for rail freight by creating 12,000 kms of high-speed dedicated passenger lines between major provincial centres. The existing tracks will then be used to accommodate growing demand for freight that will more than double the rail transport capacity in such corridors. It is the other way about in India where a freight-only corridor has been preferred over the dedicated passenger corridor, as it is estimated that the investment required for the latter will be much greater, and with relatively lower returns. Additionally, heavy investments will be required for augmenting capacity on existing networks to handle the growing freight business.

The World Bank and Japanese financial agencies have extended loans to the Indian Railways to finance identified segments of the project. However, there is no clarity as yet on the source and availability of the balance funds. Delays in execution of the project also have to be factored in as these can escalate the costs further. The cost for the two corridors has escalated to nearly `77, 000 crore from the originally estimated `28, 000 crore. With the marked slowdown in the economy the forecasts of traffic growth and revenue may also require to be reworked to more realistic figures.

As the cost and time overruns of the project were rising beyond acceptable levels, the Prime Minister’s Office stepped in and conducted a detailed review of the project last February. Thereafter, it took the decision to monitor its progress directly, clearly conveying its annoyance to the railways for the latter’s lackadaisical approach in handling this project. While this should stir the railways to action, it is equally important that the public is at all times kept informed of what is being done to expedite completion of the work. This will serve as an image building exercise for the railways, because all said and done, DFC happens to be one of the biggest infrastructure projects that is being undertaken in the country.

Freight corridors with the potential of carrying high volumes for longer distances, that can help reduce costs sufficiently to compete with road, form a very small minority of route kilometres on most national railway networks, and in some countries do not exist at all. If, therefore, the DFC is able to achieve its performance targets, it will on the one side accelerate India’s GDP growth, and on the other, establish benchmarks that other countries, still in the process of planning similar corridors, can aim at. The government must, therefore, ensure that the project continues to move in top gear.

S N Mathur is former MD, Indian Railways Finance Corporation.



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