Indian railway logistics1 aaditya 12mt07ind001

INDIAN RAILWAYS LOGISTICS

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12MT07IND001

overview

• Indian Railways is a departmental undertaking of Government of India, which owns and operates most of India's rail transport. It is overseen by the Ministry of Railways of the Government of India.

• Indian Railways has 1,14,500 km. of total track and about 7,500 stations . It has the world's fourth largest railway network after those of the United States, Russia and China. The railways carry over 30 million passengers and 2.8 million tons of freight daily. It is the world's fourth largest commercial or utility employer, by number of employees, with over 1.4 million employees. The freight segment accounts for roughly two thirds of railway’s revenues.

Classification of goods.As of today the following classes exist :• LR– 4 Bamboos, Coffee, Tea,Cotton.• LR – 3 Charcoal, Paper.• LR – 2 Fireworks.• LR – 1 Jute, Organic manure, Timber.• Class 100 Leather, Rubber & Plastic, Edible oil.• Class 110 De – oiled cake, Sugar, Salt.• Class 120 Clay, Chemical manure, Food grain.• Class 130 Bricks, Steel Pipes, Wire rod coils.• Class 140 Cement, Coal & Coke Slag.• Class 150 Molasses, Gypsum, Sand & Stones.• Class 160 Minerals & Ore, Metal scrap, Pig Iron.• Class 170 Bitumen, Iron Ore for domestic.• Class 180 Alloys & Metals, Iron & Steel, LPG.• Class 200 Acids, Alcohol, Petroleum products.• Class 200X Iron Ore for export.

Classification of railway freight rates1.Class rates Starts from 85 and end at 300 kg. Class rates per quintal (100kg) are given in the railway publication- the goods

tariff,part1,vol.2 for certain distances. They more or less increase proportionally.2. Wagonload rates commodities offered for freight in full wagonload quantites enjoy better rates in the

different classes mentioned above.3. Risk rates goods can be booked either at owner’s risk(O.R) or at railways risk(R.R). The R.R rates

are 20% higher than the O.R rates so owner normally book commodities of low value,perishables(like fruit) etc. under O.R to save the freight costs.

4. Station to station rates railway administration can also quote station to station rates in order to generate

more traffic in freight and to meet specific areas of competition. No reduction is permitted in the rates for commodities chargeable at lower class rates , or for movement for less than 150kms. For wagon load consignments and for less than 300kms and also no reduction in dangerous items.

5.Trainload rates trainload rates are about 10% lesser than wagonload rates . it is applied for

items like pulses and grains, coal, cement etc.6. Special rates there are also subsidised rates for defence material, postal traffic etc. as

mutually agreed upon time to time.7. Speed link service rates Involves movement of general goods traffic by point to point fast goods

trains. The delivery of goods is specified in specific time failing to which involves a refund of 5% over normal freight charge.

Railway freight structure• Indian railway freight structure does not have linear relationship either with the

tonnage carried or the distance hauled.• Considerations governing the freight structure are :1. Ability to pay principle a differential in the rates is observed for common consumption items like food

grains , building materials, coal etc.2. Speed a premium on speed is considered i.e freight carried by faster trains would

naturally cost more than that hauled by slower trains.3. Distance the longer the distance the greater will naturally be the freight amount but

relationship cannot be always linear.4. Type of wagons special rates applicable for different types of wagons. ( closed, refrigerated shock

absorbing)5. Nature of commodity -liability to damage -liability to explosion -size and packing, bulk and quantity.

Freight operationFour things stand out in the business environment in which the Indian

railways presently operate. They are:• Indian railways is confronted with the changing pattern of industrial

production and geography away from traditional industries and clusters towards a more dispersed pattern embodying high value and low volume manufactures.

• A transforming economy in India, which is shifting from a primary bulk commodity production system to a specialized manufacturing system with increasing contribution from the services sector.

• A global economy which is getting highly integrated and where the options to source raw materials, production source, intermediate finished goods and markets for finished goods can be varied and change from one cycle to another..

• A growing and urbanizing population in India, whose transportation needs are driven by an affluence leading to increased requirements of services.

Railway law and tribunal Ministry of Railways (MOR) has consistently maintained that

no external regulatory authority is required for deciding freight structure on IR.

• Section 33. (1) - There shall be a Tribunal to be called the Railway Rates Tribunal (RRT), for the purpose of discharging the Functions

• Section 35. – The Tribunal may sit at such place as it may find Convenient for transaction of its business.

• Section 36. – difference between commodity rate may differ at different station.

• Section 37 – classification or re–classification of any commodity.

• Section 38. – The Tribunal shall have the powers of a civil court under the Code of Civil Procedure,

COST OF LOGISTICS

A World Bank Study conducted recently says that the Indian logistics cost is one of the highest in the world. This study shows that as far as developing countries are concerned, these costs are 6 % to 8 % of the total value of goods. In China the cost is estimated at 10 % of total value of goods. By comparison, the cost of logistics in India is 14 % of the total value of goods. The freight costs for rail are quite high, for example:

The ton/km costs for Indian rail freight at three times that of China.

The following three factors are primarily responsible for the high cost of logistics in India:

• Congestion cost : Congestion at ports, inland and roads have rapidly increased – thus directly augmenting logistics cost and also resulting in overall high inventory cost as delivery time increases.

• Transaction cost : Administration costs including insurance and government taxes continue to be very high. The logistics cost could rise further due to supply and demand factors.

• Demand and supply factors : The continued rise in container traffic is leading to increased traffic congestion in the rail network, as exports and imports are growing 22 % to 25 % annually. The high cost of terminal development along with relatively latest innovation in finalizing strategies result in only moderate pace in the supply chain addition.

• There is also lack of proper rail infrastructure in the Class-B & Class-C towns. The lack of specific logistic professionals is also hampering the growth.

Challenges of Railway

• Strategic problems– Capacity planning (infrastructure)

• Tactical problems– Timetabling

• Operational problems– Train control– Dynamic scheduling– The railways are facing severe capacity constraints

Strategic problem• Capacity and manufacturing constraints in the two locomotive manufacturing units

at Varanasi and Chittranjan hampered locomotive augmentaion as compared to growth in traffic. Only 11 per cent of the envisaged external procurement was provided in the Rolling Stock programs, leading to shortage of locomotives.Procurement was not synchronized with requirements in the zones affecting the availability of locomotives in zones.

• Major freight terminals handling more than 30 rakes every month also suffered from inadequate infrastructure and are not receiving adequate importance. The envisaged modernization of freight terminals with enhanced facilities are not fully implemented in most of the terminals resulting in heavy terminal detentions to rolling stock.

• Unavailability of track to run the goods train on route ,has decrease the avg speed of goods train and now it is just 21 km per hour.

Tactical problem

Timetabling There is no time table for goods train in railway. Goods are transported without timetable , and

railway does not bear any responsibility of delivery of materials, goods at specific time duration.

Operational problem• Quality of periodic maintenance in locomotive sheds is poor

as a substantial 25 per cent of locomotives failed on account of poor workmanship. The time involved in train examination in wagon maintenance depots continued to be beyond the envisaged norm due to operational and manpower constraints apart from deficient infrastructure.

• Shortage of electric locomotives was observed in five (SER, ECoR, SECR, ER and ECR) out of the eleven zones, which had electric traction; two zones (SCR and NCR) had assessed that locomotives were surplus to its requirement, while locomotives were in proportion with requirements in the other four zones (SR, NR, CR and SWR). Similarly, shortage of diesel locomotives was observed in three zones (SECR, NER and ECR) while in three zones (SER, NWR and SCR) the locomotives were in excess of requirements.

Procedure for booking and delivery of consignments by rail

• First step is to make a request in the prescribed form to the carrier to this effect giving the necessary details like description of goods. This request is generally called FORWARDING NOTE.

• Carrier gives the consignor a receipt which serves as the contract of affreightment. Two copies are handed over-one the consignor’s copy and the other one is consignee’s copy.

• In case of transportation by goods train , this receipt is called Railway receipt (R.R) and in case of transportation by passenger train it is called parcel way bill(PWB).

• R.R can be ‘clean’ or a qualification R.R Clean. R.R is possible where goods are consigned in open or unpacked condition e.g coal, cement bags while qualified R.R prefixes the description of goods with the mark “S/C”(said to contain).

• Booking of wagonload consignment involves the wagon registration fee at the rates and are supplied on FIFO basis.

• The consignee’s copy is the document of title(i.e.,ownership) to the goods and can be declared in favour of any other person, to whom the title is automatically transferred.

• In the end consignee surrenders his copy of document at the destination station and takes delivery of goods.

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