Automakers look beyond roadways to ferry finished goods

The sharp increase in fuel prices, have led many automakers including leading market player like Maruti Suzuki to move their mode of transport for finished goods beyond roadways. Automakers are also looking beyond roadways as they look to clamp down on emissions. As a result, more than a fifth of all passenger vehicles produced in India are now transported via railways, about a five-fold increase from 4.5% in fiscal 2018.

The increase use of railways, has helped automaker reduce their overall logistics cost, and help efficiently transport multiple batches of vehicles while meeting the sustainability targets.

Using railways as a means of transport is also enabling automakers to reach faraway destinations in half the time compared with roadways. With destination terminals at Agartala and Silchar, they are able to take vehicles to locations in Northeast India in about eight days, which would otherwise take 16 days.

Rajesh Menon, director-general of industry body Society of Indian Automobile Manufacturers (SIAM)m said: “The auto industry has been able to increase the modal share of railways in overall vehicle transportation, as its efficiencies have also been improving over the years, especially for distances of more than 1,000-1,200 kilometres. As per our estimates, 4.5% of new passenger vehicles manufactured in India were being transported through railways in 2017-18, while it grew to about 20% by 2021-22.

He said the railways had created the necessary siding infrastructure at many auto-manufacturing plants for minimising last-mile connectivity issues, he said. “Railways have also been proactive in introducing more rakes to meet the growing demand of the Auto Industry.”

Last year, Maruti Suzuki used railways to dispatch 335,245 units— the highest in a fiscal year and nearly 43% more from the year before. The company further looks to increase the share of rail transportation and said it will move an incremental 100,000 vehicles via rail every year over the next few years.

Rahul Bharti, executive officer (corporate affairs) at Maruti Suzuki, said over the past few years, the company had been undertaking several measures to increase the focus on green logistics. “Aligned with the government’s efforts to minimise carbon emissions in logistics, we plan to systematically increase dispatches by close to 100,000 units annually in the coming years”,

Bharti said. To achieve this, the company is adopting practices like enhancing dispatches to shorter distances, utilising railway rakes and increasing the use of digitalisation in planning for dispatches.

The share of railways in the total number of vehicles transported by the company more than doubled to 17% in the last financial year, from 8% in FY19.

Apart from Maruti Suzuki, Transport Corporation of India, APL Vascor, Adani NYK, IVC Logistics and Joshi Konoike Transport & Infrastructure have also secured AFTO (Automobile Freight Transport Operator) licences to cash in on the potential in the space.

Highlighting that automakers are leading the way in being conscious and responsible corporate citizens, Bharat Joshi, chairman of Joshi Konoike, said “Rail is a cleaner mode of transport than road, and safer — the statistics regarding road fatalities in India are well known,” he said.

The pickup in economic activity and a steep hike in fuel prices has put the road freight rates on a rise. While on the other hand the rail freight rates have relatively remained stable since the Indian Railways unveiled the AFTO policy in 2013. It is only recently that freight rates have been hiked by the railways, leading to some concerns among automakers. SIAM’s Menon said the about 20% increase in rates for automobile freight trains with effect from April 1 could impact the feasibility of operating these trains by automakers.

In 2013, Maruti Suzuki was among the first Indian automobile manufacturer to obtain an AFTO licence, allowing the company to fabricate and operate high-speed, high-capacity auto-wagon rakes on the Indian Railways network. Maruti Suzuki has 40 railway rakes, with a capacity of 300-plus vehicles per rake.

The company so far has transported more than a million vehicles via rail, has this way offset over 5,250 million tonnes of carbon dioxide emissions in the last eight years. The increased focus on using railways for vehicle transport additionally helped it save 175 million litres of fossil fuel by avoiding truck trips in this period.

The railways liberalised the AFTO policy in 2018 to encourage private investment in special wagons. The registration fee for the scheme was reduced to Rs 3 crore from Rs 5 crore. It also relaxed a condition mandating a minimum procurement of three rakes under the scheme to one rake. At present, the rail operator has around 119 rakes for automobile transport (private and government), compared with 19 in FY18.

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