Upgrading Railway parcel service critical to improving logistics efficiency

In India, the railways is witnessing a consistent decline in revenue from parcel operations due to lack of investments and inefficient operation. (File image)

The vegetable farmers in Varanasi can export ‘bhindi’ by air to Dubai (2,700 km away). But they cannot access Delhi (860 km) market. Horticulture produce starts rotting in six hours and Delhi is a minimum of 13 hours by road. Reefer vehicles are costlier than air freight. With necessary modifications, the humble parcel van attached to express trains could have been a perfect low-cost solution for the fast movement of value goods. E-commerce, which is now solely dependent on road, could have been the biggest beneficiary. 

The parcel is a money churner for many foreign railways including in China. In India, the railways is witnessing a consistent decline in revenue from parcel operations due to lack of investments and inefficient operation. If rightly managed, it could have been a boon for Indian Railways, which loses 43 paise on every rupee spent on passenger movement. There is no dearth of inter-government proposals in this regard either. But the railways have to agree. They did deliver parcels for e-commerce during the first phase of the lockdown in 2020 when there was zero passenger traffic. The Rs 25,000 crore express industry, catering to top domestic and foreign etailers, was keen to see some changes in the system. Since then, it's all quiet. 

Monumental Inefficiency

Railways carry parcels in break vans, assistant guard’s cabins, etc in passenger trains. They also run parcel express trains. However, the system is plagued with many adequacies. In a July 2020 study, which was submitted to the Railway Board, the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry pointed out:

—Contrary to global practices, in India there are multiple leaseholders for parcel spaces in individual trains and respective routes. Parcel rates are not uniform and vary depending on the respective leaseholder’s agreement. There is no transit time guarantee either. 

—The multiplicity of leaseholders leads to inconsistent service quality and a lack of investment in necessary infrastructure. The railway goods sheds do not have access to professional handling facilities. There are no CCTV cameras to stop pilferage. 

The only time when railways served e-commerce, the internet was flooded with videos of pilfered boxes and rough manual handling of packages, having costly consumer electronics inside, in railway facilities. That’s not all. The express industry delivers everything right from TV and fridge to furniture, sold through e-commerce. For the sake of efficient operation, they need smooth entry and exit, truck parking bays, mechanised trolleys and loading devices and modern warehousing in stations. These are mostly unavailable. Part of it – like the lack of smooth entry and exit suitable for mechanised loading and unloading – is due to design inadequacies. This can be corrected. Pt Deen Dayal Upadhyay Junction (Mughalsarai), which is 45 minutes away from Varanasi by road, for example, has access to a huge parcel yard which can be modernised with due investments. 

In any case, remodelling facilities in about 20-25 stations across the country can give a major revenue boost to the parcel business. It would make longer-haul transport cost-efficient. For shorter distances and doorstep delivery, there is no alternative to road movement. Design issues apart, there are serious vested interests which block the modernisation of the railway parcel business. Railway unions prevent the deployment of specialised ground handling agencies, as in airports, and the use of machines. The net result is declining revenue from the parcel business vis-à-vis rising demand for transport from e-commerce. Between 2015-16 and 2018-19, railways’ earnings from parcels declined by 15 percent to a meagre Rs 1,253 crore. 

Corporatise Parcel Business

Improvement in goods transport by railways is crucial for the success of Prime Minister’s Gati Shakti project and, for closing the ranks with China in logistics efficiency. Together they are critical for industrialisation and economic growth. Over the last nine years, India (38) closed ranks with most of the Association of Southeast Asian Nations (ASEAN) neighbours in the World Bank Logistics Performance Index. However, we are still far behind China (19) and Malaysia (25). As India is now aiming to harness the full potential of e-commerce through measures like Open Network for Digital Commerce (ONDC), which would democratise access to platforms, it is imperative to bridge the logistics gaps. 

 The commerce ministry study felt that Indian Railways can optimise its potential by bringing the parcel business under a single agency, which would take charge of both front and backend infrastructure development and deliver quality services to the consumer. To give the agency operational flexibility in taking business decisions, the study proposed the creation of the Indian Railway Parcel Corporation to expand the railway parcel business by four to five times. 

Modi-Yogi Attention

Making railway bureaucracy move is no easy task. What can perhaps change the game is the attention of India’s two powerful leaders, prime minister Narendra Modi and Uttar Pradesh chief minister Yogi Adityanath. Both are focused to restart the growth engine in the economically backward districts of eastern Uttar Pradesh. In the absence of industry; they are relying on logistics to rev up activities in tourism and the farm sector. The region is witnessing huge activities in granting farmers better market access opportunities. The Agricultural and Processed Food Products Export Development Authority (APEDA) has taken several initiatives for agri-exports.

What is lacking is improved logistics for greater access to India’s vast domestic market. With huge investments directed at improving the track capacity in the golden quadrilateral to a seamless 130 km per hour by 2024; the railway parcel van can open a sea of opportunities. Farmers can put value horticulture in low-cost cool boxes and send them to Delhi or Kolkata in six odd hours by fast trains. The in-train cooling facility will be a bonus. In Germany, even high-speed trains carry parcels. 

Pratim Ranjan Bose is an independent columnist, researcher, and consultant. His Twitter handle is @pratimbose. Views are personal, and do not represent the stand of this publication.