SWOT Analysis for Rail Logistics

The domestic cargo container movement is still at a very initial stage in India. The road transport is mainly in the hand of highly unorganized players. Further rising fuel prices and axel load reduction are making road transport uneconomical over a long haul. There is a movement of 30 percent of Exim containers by rail, and the remaining is transported by road. Till 2005 CONCOR was a sole service provider for rail transportation of containers.

Container Rail Logistics – SWOT

Strengths

Indian Railway is the world’s third largest railway network under a single management and covers about 64,015 route kilometers.
The country’s expansive railway network traverses throughout the nation’s frontiers and is the primary mode of transport for passengers, freight, cargo and natural resources such as coal.

A total of 1.7 MTEUs were rail borne, out of which the North contributed 0.71 MTEUs and the West 0.23 MTEUS.

Weakness

This is a highly capital intensive business and the cost of rolling stock is around Rs.13 corers/rail. The cost of operating an inland container depot is around Rs. 100 cores. The entire infrastructure such as yard/containers/ signals is still provided by one service provider namely Indian Railways.

There is a long gestation period and the project may take sometimes up to 10 years to achieve break even. There is high concentration of traffic at selected port/hinterland.

78 % of the total container cargo is handled by west coast ports. 70 % of total traffic at the west coast is handled by a single port, i.e. Jawaharlal Nehru Port Trust (JNPT). 60 % of the traffic of the west coast moves to the northern hinterland, which leads to a heavy congestion along the routes.

Opportunities

With the growth of containerization due to growing GDP, there exists huge potential in the form of a largely virgin market. With the congestion at the existing road linkage ICDs and limited scope for excavation, there is an opportunity for development of competing facilities. There is a potential for running double stacked trains with the lower haulage charges and better utilization of rolling stock and track capacity.

Threats

This industry is highly dependent on external agencies such as Indian Railways, port terminal operators and shipping lines. There are still several unresolved issues on operational matters, such as stability of rakes, service guarantee and dedicated freight corridors. With regards to double stacked operations due to the lack of a developed infrastructure, this may take time to take off in a larger way. There exists fragmentation on volumes due to multiple operations and there is no control on haulage cost.