FOREWORD

Indian Railways is truly the lifeline of the Indian economy. Lacing 66,687 route
kilometers, the Railway transported 22.20 million passengers and 3.03 million tonnes of
cargo per day during 2015-16 and produced a transportation output of 1143 Billion
Passenger Kilometers (PKMs) and 654 Billion Net ton Kilometers(NTKMs) per annum,
by operating 13,313 passenger trains and 9,212 freight trains every day.

This staggering transportation output is serviced by an asset base of 1,19,630 track

kilometers, 11,122 locomotives, 70241 coaches, 2,51,256 wagons and a manpower base of
1.33 million Centrally administered by the Railway Board and a vertically integrated
organization, Indian Railway produces its own locomotives, coaches and runs its own colonies
and hospitals. It also operates its own security staff and is truly a mammoth organization, by
any standards.

Despite these staggering numbers, the growth in both the freight and passenger
business segments of Indian Railways is showing a sluggish trend in the past decade. To
appreciate the relevance of the DFCs to Indian Railways, it is essential to lay down a contextual
discussion on the current state of its’ core businesses – both the passenger and the freight
segments of its businesses – at a reasonable level of detail.

Trends in Freight Business Segment of Indian Railway :

(i) Long term trends in Originating freight of Indian Railways:

The originating freight traffic on Indian Railways for the decadal years up to 2010-11 as well
as for the past five years is shown below:

Table 1: Decadal originating freight Table 2: Yearly originating freight-5 yrs

Decadal Actual loading in the Year Actual loading in the

Year year( in million tons) year( in million tons)
1950-51 73.2 2010-11 921.73
1960-61 119.8 2011-12 969.05
1970-71 167.9 2012-13 1008.09
1980-81 195.9 2013-14 1051.64
1990-91 318.4 2014-15 1097.58
2000-01 473.5 2015-16 1104.17
2010-11 921.73

The CAGRs for different long range time frames are analyzed to uncover the current trends
more objectively.
Table 3: Decadal CAGR of freight loading

30 year time frame CAGR(%)

1950-1980 3.34%
1960-1990 3.31%
1970-2000 3.52%
1980-2010 5.30%

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 It can be seen from the above Table 3, that the CAGR of freight traffic on Indian
Railways, during various 30-year time frames from 1950 onwards was less than 4% in the first
three “sliding” window periods of 30 years. It was only during the 30 year time frame of 1980-
2010, that a CAGR of 5.3% was achieved, which represents an increase of 56% over the
average CAGRs of the previous three 30-yr periods. Also a working for the 25 year period,
1990-2015 (marking the post-liberalization period), shows up a CAGR at 5.09%. To probe
further the periods of growth which led to the spurt in the 30-yr CAGR during 1980-2010, a
decadal analysis was carried out and the results are shown in Table 4 below.

Table 4: Decadal CAGRs of originating freight

Decadal Period CAGR(%)

1950-1960 5.05%
1960-1970 3.43%
1970-1980 1.55%
1980-1990 4.98%
1990-2000 4.05%
2000-2010 6.89%

A closer analysis of the 30 year CAGR by considering the decadal CAGRs, shows that,
while right from 1960 onwards, in every 10-year time frame thereon upto the Year 2000, the
CAGR’s were less than 5%, it can be deduced clearly that it was the decadal CAGR for (2000-
2010) at 6.89%, which pushed up the 30-year CAGR for the 30 year period (1980-2010) to
5.3%. A further yearly analysis of originating freight for the past five years is carried out to
uncover further insights. The AAGR for the past five years for the originating freight traffic on
Indian R,ailways stood as:

Table 5: AAGR of originating freight – 5 yrs

FY YoY-
AGR(%)
2011-12 5.13%
2012-13 4.02%
2013-14 4.32%
2014-15 4.36%
2015-16 0.60%

From the above, it can be seen that during the past five years, the AGRs for freight on
Indian Railways have been a minimum of 4%, except for the latest FY 2015-16. With loading
expected to be almost at the same level as the last FY in 2016-17, there is a clear stagnation
that is being experienced, in the current decade 2010-2020, compared to the previous decade
2000-2010, when the CAGR stood at 6.89%

(ii) Railway freight and Indian economy – Recent Trends

The trends in the freight business segment of Indian Railways can be assessed from an
analysis of the growth in GDP and more importantly by analysing the growth in the core

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sectors relevant to Railways and the rail-coefficients of movement of cargo by rail in these
core sectors.

While Indian Railways growth stood thus, the GDP of the country in the past few years,
had grown by an AAGR of 6.75% with the FY 2015-16 logging a y-o-y growth of 7.6%

Table 6 : GDP(at constant price of 2011-12)

2012-13 2013-14 2014-15 2015-16

GDP(in Rs-lakh Cr) 92.27 98.39 105.5 113.5

% growth(y-o-y) 5.62 6.6 7.2 7.6

The growth in the core industries relevant to Railways freight business is shown
sector-wise for the past five years.

Table 7: Growth(%) in Core industries

Sector 2011-12 2012-13 2013-14 2014-15 2015-16

Coal 1.3 4.6 1.3 8.1 4.6

Refinery 3.1 - 1.5 0.3 3.8
products
Fertilizers 0.4 -3.4 1.5 -0.1 12.1
Steel 10.3 4.1 11.5 4.7 -1.5
Cement 6.7 7.7 3.1 5.6 4.8

From the above Tables 6&7, the 3-year AAGR in above core sectors is deduced in
Table 8 and it can be seen that while the core sectors of coal, cement, steel, fertilizers grew in
the range of 4.5% - 5% per annum, growth at less than 2% was relatively low only in refinery
products sector.

Table 8: 3-year AAGR of core industries relevant to Indian Railways

Sector 3-Year AAGR

Coal 4.66%
Refinery products 1.97%
Fertilizers 4.5%
Steel 4.9%
Cement 4.5%

The following table shows the rail–coefficient on the percentage of commodity carried
by rail over the total availability (product plus imports) and is an indicator of the trend in the
modal share of Indian Railways.

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The rail coefficient - i.e. the percentage of freight carried by rail over the total availability,
which itself is calculated as a sum of internal production plus imports - is an index of the
market share of the railways in the industry. Shown below in Table 9 is the rail coefficient for
the past five years of select major commodities carried by the Indian Railway.

Table 9 : Trends in Rail Coefficient of select commodities

Year Coal Iron Ore Cement Food Fertilizer POL

Grains Products

2011-12 70.91% 61.75% 47.74% 17.89% 86.12% 18.16%

2012-13 70.70% 79.76% 41.81% 19.06% 85.32% 17.39%
2013-14 69.35% 81.33% 42.74% 20.79% 86.06% 17.33%
2014-15 65.88% 79.98% 40.36% 22.01% 85.22% 16.95%
2015-16 65.82% 71.79% 36.99% 18.04% 87.53% 16.20%

Share of 50.1 10.6 9.56 4.15 4.74 3.93

Commodity in
Indian Railways
freight basket
during 2015-16

The graphical representation of the trends in rail coefficients of major commodities

carried by Indian Railways and the proportionate share is indicated below, to gauge the
weighted effect of changes in rail coefficients to the overall volumes carried of each of the
major commodities.

Chart 1 : Trends in Rail Coefficients of Major commodities transported by Indian Railways

100.00%

90.00%
Fertilizer, 86.12% Fertilizer, 86.06% Fertilizer, 87.53%
Fertilizer, 85.32% Fertilizer, 85.22%
80.00%

70.00% Coal, 70.91% Coal, 70.70% Coal, 69.35%

Coal, 65.88% Coal, 65.82%
60.00%

50.00%
Cement, 47.74%
Cement, 41.81% Cement, 42.74%
40.00% Cement, 40.36%
Cement, 36.99%

30.00%

Food Grains, 20.79% Food Grains, 22.01%

20.00% Food Grains, 19.06%
Food Grains, 17.89% Food Grains, 18.04%

10.00%

0.00%
2011-12 2012-13 2013-14 2014-15 2015-16

Coal Iron Ore Cement Food Grains Fertilizer POL Products

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 Chart 2 : Share of individual commodity in the total freight basket of Indian Railway

% Share of Commodity in Indian Railways freight basket during 2015-16

60

50.1
50

40

30

20

10.6 9.56
10
4.15 4.74 3.93

0
Coal Iron Ore Cement Food Grains Fertilizer POL Products

Clearly, from the above Charts 1 and 2, and Tables 8 & 9, it can be inferred that while
the core sectors relevant to Railways have grown in the past five years by an AAGR of - 4.66%
in Coal, 1.97% in POL, 4.5% in fertilizer, 4.9% in steel and 4.5% in cement, the rail shares in
each of these core sectors has been declining rapidly, except in ‘fertilizer’ segment which is
subsidized by the Government and has a low share of 4.74% in the basket of commodities
carried by Indian Railways.

An average drop of 1.02% per annum in past five years in the market share of coal,
which constitutes 50.1% of our freight basket is a cause for concern. Similarly, a annual drop
in average market share by 2.2% in cement and 1.91% in Iron ore, with each contributing
nearly 10% to the freight basket of Indian Railways, points to the rapid erosion in our freight
business, indicating a need for radical course corrections.

(iii) Graphic insights into the freight business of Indian Railways:

At this juncture, it is apt to discuss to a degree of graphic detail the nature of freight
carried by Indian Railways and the network issues.

Frequent reference would be made in this report to a “Linear Network Diagram of

Indian Railways”, which is the Linear form of the Indian Railway network – the lines in GREEN
depicting the electric lines; the lines in RED denoting the diesel rail lines; the lines in DOTTED
PINK showing the MG/NG lines. The lines in BLUE depict the Ongoing Works of newlines,
additional lines (Doubling/Trebling/Fourth line) and Gauge Conversion.

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 Chart 3 : Linear form of Indian Railway Network

It can be seen from the figures below that the major Iron Ore and Coal belts are
geographically localized in concentrated sectors, thus warranting movement of raw material
and finished products from these sectors to different parts of the country. Similarly, the
location of Ports along the coast, too determines the pattern of flows from/to hinterland.

Chart 4 : Coal Belts, Power houses and Ports Chart 5: Iron Ore Belts

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 The Originating and Terminating load in each of the Zonal Railways during 2015-16 is
shown below:

Chart 6 : Originating and Terminating Freight (In Million tons) on Indian Railway : 2015-16

The above diagram depicts a pictorial representation of the Originating (O) and
Terminating traffic (T) in million tons during the FY 2015-16 on each of the sixteen zones.
Also indicated is the Internal loading i.e. traffic originating and terminating within the zone
itself (I). Consequent on this characteristic of very high proportions of originating traffic
terminating on the Railway itself viz 57% on CR, 54% on ECoR, 49% on SCR, 48% on SER and a
moderate 34% on SECR

Thus, there exist distinct patterns of rail flows, in each of the 16 Zones. The originating
freight and the interdependencies of Zones is shown in Chart 7 and Chart 8 – both by volume
and by percentage share respectively.

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 Chart 7 : Freight dependencies across Zonal Railways

It can be inferred that in the Railways originating over 100 million tons per annum viz.
ECoR, SECR, SER, SCR and ECR, the internal movements within three of these Zones

Chart 8:

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are nearly 50%, with ECoR logging 54%, SER 48% and SCR 49%. It is only from ECR and SECR
that long lead movements originate beyond the respective Zones to the extent of over 65%.
This internal movement within the Zones has an impact on the average length of hauls of rail
traffic. With emphasis on Pit-head generation and mushrooming of Ports leading to carving up
of hinterlands, the “lead” of Indian Railways is further likely to spiral down from its current
level of 594 kms in FY 2015-16.

Also as an aside, the originating leads i.e the average length of haul of terminating
traffic on the envisaged three new DFC corridors – East Coast, East-West and North South - is
considerably less than the all India average freight leads – character, which is quite in variance
with the characteristic leads in the Freight Corridors on the Eastern DFC and the Western DFC.
This factor , as a principle, assumes importance in terms of identifying sub-corridors within
the overall corridors for taking up dedicated freight corridor projects.

Chart 9: Average lead of freight traffic on Indian Railways – Zonal Railway wise

1400 Average lead (in Kms) of Originating Freight Traffic on each Zonal Railway for the FYs
2014-15 and 2015-16
1154

1200
1121

1039

1049
1036
1010

973

1000
877

843
755

800
729

692

665

660
637
633
626
620

549
536
540

600
510
517

498
507

483
491

459

436
418

416
415

400

200

0
ECR

ER
NER

SECR

SER
NR

NCR

ECoR
WR

NFR

SR
NWR

WCR
CR

SWR

SCR

2014-15 2015-16

The above graph depicts the average leads (in Kms) for originating traffic on each Zonal
Railway, in the descending order for the FY 2015-16 and FY 2014-15. Clearly the top five

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originating Railways, viz. ECoR, SER, SCR, SECR and ECR – all fall in the trailing end of the
graph. With ECoR and SER logging average leads of sub-500 Kms (491 kms and 416 kms
respectively in FY 2015-16), the corresponding figures stood at sub-600 level at 507 kms over
SCR and ECR, while on SECR the leads were marginally above 600 kms at 633 kms. The
declining length of haul y-o-y at an average rate of 10 kms per annum in the past five years,
should also be a cause for concern for the implications on the revenue earning potential of
Indian Railways.

The decadal figures and the past three years figures of freight carried, the average
length of haul and the average freight speeds on Indian Railways is shown below :-

Table 10 : Freight Output Indices on Indian Railways

Year Tons (In NTKM Lead(Km) Average Freight

Millions) (Billions) Speed(BG)
Km/h
1950-51 73.2 37.5 513 17.4
1960-61 119.8 72.3 603 16.1
1970-71 167.9 110.7 659 17.9
1980-81 195.9 147.6 754 19.7
1990-91 318.4 335.8 741 22.7
2000-01 473.5 312.4 660 24.1
2010-11 1008.09 649.7 644 25.6

2013-14 1051.64 665.8 633 25.9

2014-15 1095.26 681.7 622 23.8
2015-16 1101.51 654.5 594 23.4

While as discussed above, “lead” on Indian Railway is showing a declining trend, the
drop in average freight speeds – which is a crucial KPI for the freight customer - too is a cause
for concern. Ever increasing passenger traffic, coupled with the factor of slow pace of
implementation of capacity augmentation works, especially the works of doubling, and tripling
had primarily led to this drop in freight speeds.

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Chart 10 : Growth in Number of trains on critical corridors – 1

Chart 11 : Growth in Number of trains on critical corridors - II

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The Charts – 10 and 11 above, clearly show the ever increasing trends in passenger traffic
and freight traffic on the dense corridors. But with passenger trains being timetabled, lack
of adequate capacity has had its impact on the average freight speeds. Shown in the five
charts below, Charts 12-16, are the average freight speeds in 2015-16 on the High Density
Network (HDN) corridors :

Chart12: Average freight speeds on HDN1 corridor : New Delhi-Howrah and its
feeders

Chart13: Average freight speeds on HDN2 corridor : Mumbai - Howrah and its
feeders

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Chart14: Average freight speeds on HDN2 corridor: New Delhi – Mumbai and
its feeders

Chart15: Average freight speeds on HDN4: New Delhi – Guwahati and

HDN 5 – Chennai – Delhi

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 Chart16 : Average freight speeds on HDN6: Chennai-Howrah and
HDN 7 – Chennai – Mumbai

High volume freight running at very low speeds is a clear pointer to lack of capacity,
while high volume freight at junction areas, while pointing to requirement of debottlenecking
through capacity augmentations, also an indicator of the need to rationalize the processes in
the vicinity of these areas. This factor is illustrated through a Case Study of Waltair Division in
Part V of this report.

Suffice herein this foreword to point out that inadequate capacity due to delayed
project implementation is a major factor for the poor freight speeds on the dense corridors of
Indian Railways.

Apart from inadequate capacity, the other generic reason for the flight of freight from
Indian Railways is its structure. The tenet of cross subsidization of passenger business by
freight is depicted graphically below as can be seen in the Unit cost and Unit price charts
(Paise) per Passenger kilometre(PKM) and for (Paise) per Net Ton Kilometre (NTKM) carried
for passenger and freight respectively.

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 Chart 17: Unit Price Vs Unit Cost – trends in passenger business of Indian Railways

Chart 18: Unit Price Vs Unit Cost – trends in freight business of Indian Railways

Clearly, the ever increasing input costs, and stagnant passenger fares have led to an
ever increasing yawning gap of upto 90% between cost and price for passenger traffic, while
the freight business operates at prices over 66% of average costs.

Apart from these generic factors of delayed implementation of projects and skewed
pricing, there have been some fundamental shifts in the logistics industry in India in the past
decade, which had significant impact on the fundamental patterns of rail freight flows of
Indian Railways.

In case of coal, the fundamental trends which affected the pattern of freight movement by
rail in the past decade are:-

(i) Initial emphasis on imported coal by GOI during 2008-2014 altered the
fundamental pattern of rail – based OD flows from coal mines  power houses

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 to ports  powerhouses while significant portion still remained mine-based
movement. This change led to re-orientation of rail flows.
(ii) With increasing efficiencies of power transmission, thrust on pit-head
generation in past few years and continuity has led to low PLF of hinterland
power houses thereby reducing rail movement.
(iii) Ban on Iron-ore movement from Hospet-Bellary sector and restricted
movement of iron-ore from Omina/Chattisgarh States.
(iv) Prohibitive rail pricing of port-based (in terms of “Port congestion” surcharge)
cargo led to migration of cargo to road during 2014-15, especially the short-
lead segment.
(v) Restrictions by MoEF for movement of low grade coal beyond 500 kms, had
also affected long-lead movement of coal by rail.
(vi) Current policy of GoI, of phasing out ‘coal’ imports, reduces coal inflows into
ports and thus constricts absolute volumes of rail flows. This combined with a
continuing thrust on pit head generation, led to stagnant growth in coal traffic
by rail.
(vii) Current installed capacity of power in India is 3,05,554 MW as on 31st Jan 2016
with coal based power at 58%.

Chart 19: A decisive shift from Coal to….Cleaner sources of Energy

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 A fundamental shift in energy mix through a committed “Green Initiative” of GoI of
generating 1,75,000 MW of renewable energy capacity by 2022 – 1,00,000MW from solar
power, 60,000 MW from wind energy, 10,000MW from biomass and 5,000 MW from small
hydro-power projects – marks a distinct shift away from coal based generation, which would
further reduce the growth in ‘coal’ segment of rail traffic, if not the absolute volumes.

In the case of cement, with all other factors affecting cement movement by rail
remaining the same, a drop in diesel prices in Aug 2014 has been a prime driver in the drop of
rail coefficient by 3.4 percentage points from a share of 40.36% to 36.99%.

Chart 20: Trends in diesel prices….Railways’ delayed response

Pricing of freight in saturated sections needs to be differentiated from pricing in under-

utilized sections. Concept of marginal costing needs to be institutionalized towards this end. In
this context, the capability of Indian Railways and the structural processes that exist within
the Railways in responding dynamically to the changing external economic environment needs
to be reviewed towards creating more responsive structures.

Other trends in the movement of ‘bulk-cement’, RMC smaller ‘parcel’ size movements
(high capacity ‘volvo’ trucks; highly developed roads specially in Central and South India) are
all factors which point to issues of robust, customized and sustainable service design that need
to be addressed by Railways, if it has to make any meaningful ‘dent’ in this sector.

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 Other fundamental trends which had an impact on rail movement in general are :

(i) Growth of private ports – Even as recent as in 2008, the 12 major ports held
sway over the hinterland markets. Starting from 2008, within a span of 2-3
years, the ports of Karaikkal, Katupalli, Krishnapatnam, Kakinada Deep
Seawater Port, Gangavaram Dhamra have sprung up on the East Coast, while
on the West coast – Mundra (new port), Pipavav, Dahej, Dighi, Rewar, Navlakhi
and at least 20 other significant minor ports were expanded/commissioned.
This phenomenon of mushrooming in the number of ports, not only “carved”
up the markets of major ports, but has significantly reduced the ‘leads’ of
Indian Railways. In many a case, the shortened leads had led to rail flows being
uneconomical.

(ii) Coastal Shipping :- Similarly, the growth in coastal shipping and the recent
policy changes in ‘Cabotage laws’ has increased the ‘pendulum’ movements of
cargo along the Indian coast and threatens ‘rail’ traffic, unless Railway
responds to complement those initiatives in an “integrated” manner.

(iii) The Sagarmala initiative of Ministry of Shipping of ‘Port-led development’ is

another initiative of Ministry of Shipping that requires “complementary”
logistic initiatives by the Indian Railways.

In segments like Automotive industry and its ancillaries, FMCG sector, etc., the
“product” and “service” design of Railways had not been adequate enough to meet the market
requirements, with current rail coefficients at <3%.

Thus, each segment, be it coal, cement, steel, food-grains or container, has its own value
proposition to the customer along different dimension viz., price, transit speeds,
availability of wagons, reliability of services, seamlessness of the information, physical and
financial flows before / after services (i.e. the PAPD and the PDPA factors), Safety and the
psychological comfort of dealing with a particular transport mode.

Given the above discussion of an expanding core sector of the Indian economy and a
shrinking rail market share, there is an urgent need to restructure our business processes so
that all the KPIs (Key Performance Indicators) in each sub-segment of freight – i.e. price,
transit options, availability, reliability, seamless (information, finance and cargo) flows in
PAPD ad PDPA processes, safety and psychological factors are addressed in their entirety in
the ‘design’ of the ‘product’ and ‘service’ customized and tailored to each specific customer so
that we attempt a quantum leap in our freight performance.

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Passenger segment of Indian Railway

The decadal figures and the past three years figures of passengers carried is shown
below :-
Table 11 : Passenger output and efficiency

Year Number of Passenger Kilometres Average lead

passengers (in Billion) (km)
(In Billions)
1950-51 1.28 66.52 51.8
1960-61 1.59 77.67 48.7
1970-71 2.43 118.12 48.6
1980-81 3.61 208.56 57.7
1990-91 3.85 295.65 76.6
2000-01 4.83 457.03 94,6
2010-11 7.65 978.5 127.9
2013-14 8.39 1140.4 135.8
2014-15 8.22 1147.2 139.5
2015-16 8.10 1143.04 (141)

Here too, as in case of the freight segment, it can be seen that there is a stagnation with
reference to number of passengers carried.

While there is almost an ‘unlimited demand’ in passenger traffic, ability of Indian

Railways to run ‘sustainable’ passenger services is in general, constrained by

(i) Inadequate capacity;

(ii) Lack of a ‘sustainable’ ‘profitable ‘ model.

In fact, operation of passenger and freight services in a ‘mixed’ mode on the same
tracks has a ‘detrimental’ effect on both the segments of our business.

Take the case, of the East-West alignment from Mumbai to Kolkata, for a brief case
study in this context.

East – West Corridor: A case study in impact of a mixed operation in high density freight
corridors

The chart below shows the average daily number of trains – freight, passenger and
others – run section-wise on the East –West Corridor during 2014-15. As can be seen,
passenger train services, especially the suburban services dwarf the freight movement near
the terminals of Mumbai and Howrah, as represented by the BLUE bars.

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 Chart 21: Actual number of trains run each way on East-West corridor

Average Number of trains run each way daily during 2014-15 on the East-West Corridor

It can be seen from the chart that beyond Kharagpur towards Nagpur, the density of
freight movement is much higher, and tapers off considerably from Nagpur towards Mumbai.

Chart 22: Actual number of freight trains run each way on East-West corridor

Average Number of freight trains run each way daily during 2014-15 on the East- West Corridor

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 As can be seen from the chart above, the highest density of freight trains on the Indian
Railways is prevalent in this corridor, especially the sub-corridor from Nagpur to Kharagpur.
While in fact the entire section between Andul –Uluberia-Kharagpur-Bhusaval has freight
density of at least 23 pairs of trains each way, the sub-sections TATA-Ghamaria, Sini-
Rajkharswan, Jharsaguda Bhilai have a super dense freight traffic ranging between 40-70
freight trains each way.

Chart 23: Average freight speeds on East-West corridor

Typical Average Speeds of freight trains during 2015-16(I Qtr) on the East West Corridor

On this corridor, as can be inferred from the speed chart above, the speeds of freight
trains are very low, ranging from (10-18) kmph. These low freight speeds are much less than
the overall Indian Railway average freight speeds of 23.8 kmph (in 2015-16). The poor freight
speeds herein are reflective of the “delayed” implementation of critical projects on this
corridor, pointing again to the need for more robust implementation and delivery systems
within the Railway rather than simple planning systems, with no bearing on the
implementation schedule.

Clearly segregation of freight and passenger corridors and speedy implementation of

these projects is imperative. Thus the effect on freight speeds while operating trains in mixed
mode in freight corridors is thus evident.

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 Similarly, Allahabad Division of North Central Railway provides us with a clear example
of how “mixed operation” affects punctuality of passenger services.

Eastern Corridor : A Case study on the Impact of mixed operation on “Punctuality”

performance in high density passenger corridors:

As can be seen from the charts below, the number of passenger carrying trains in the
section between Mughalsarai to Ghaziabad have gone up by an average of 15-17 trains per
day each way over the past one decade with little or no addition to the infrastructure, while
the number of freight trains have remained stagnant or even have reduced by 2-3 trains each
way per day.

Chart 24 : Actual number of passenger trains run each way on Eastern corridor : 2005-06

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Chart 25: Actual number of passenger trains run each way on Eastern corridor: 2015-16

Chart 26: Actual number of freight trains run each way on Eastern corridor: 2005-06

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 Chart 27: Actual number of freight trains run each way on Eastern corridor: 2015-16

It is an acknowledged fact that Allahabad Division of NCR is the most stressed Division
on Indian Railway, as far as punctuality is concerned, with punctuality figures averaging below
40% annually. With freight trains “blocking” the loops in the vicinity of important stations
where passenger trains stop, there is a phenomenon of ‘cascading’ detentions to passenger
trains due to these ‘artificially’ extended block sections. With a ‘high’ density freight movement
on the same corridor, the ‘cascading’ effect further gets exacerbated. Even a “small
unsatisfactory feature” in operation invariably leads to snowballing delays in such super-
saturated sections, as can be evidenced from the punctuality performance of Allahabad
Division.

Clearly, the reliability of train services is a crucial KPI for passenger segments which
are sensitive to the value proposition of ‘time’ and this tends to drive a majority in this
segment to the “roads”. Also the ever-enlarging geographic spread of ‘Civil Aviation’ sector on
both long-distance and medium distance traffic is a matter to be dealt with upfront.

Thus, herein the passenger segment, like in the freight segment, all the KPIs in the value
proposition of each segment and sub-segment of passenger traffic needs to be addressed
holistically, if Indian . Thus the elements of value proposition to the passenger customer viz.-
price, transit times, availability (frequency), reliability, seamless flow of information,
finance, seamless flow of passengers in the PAPD and PDPA processes; safety; psychological
experience - overall and additional factors like hygiene, comfort, catering, bedrolls and other
amenities need to be addressed in their entirety. Each sub-segment of passenger traffic – the
commuter segment, short – distance segment, medium distance and long distance segment

24
have different valuation against each of the KPI metrics and these need to be addressed in
their sub-segment wise in a customized manner. Listed below in Table 12 are the indicative
qualitative details of expectations of the freight and passenger customer .

Table 12 : Customer Expectations against various dimensions of the

value preposition

Elements of Value Passenger Business Freight Business

proposition
Price Overall price should match Overall price should match WTP
willingness to pay (WTP) of the
customer. Overall price = { Net Tariff Rate
(NTR) [= Basic rate + Busy season
Overall price = Basic fare + surcharge surcharge (15% ] + (Development
+ (Reservation fee) Surcharge (5% NTR)+ (Service Tax
4.5%) + (Terminal charge)
Transit time Expects desired commercial speed in Expects desired commercial speed
each sub-segment in each sub-segment.

Current Speeds: Mail/Express – 50.9 Current average speed :

km/h; EMU 41 km/h; Passenger 33.9 23.4 km/h
km/h
Availability Expects frequency of service as Expects wagons on demand
desired without delay – Route and
Terminal restrictions, red-herrings
Reliability Expects no delays against scheduled Expects cargo to reach in time and
times, Accidents, Equipment failures, not to be affected due to
other unsatisfactory process to be accidents, equipment failures and
minimised other unsatisfactory features
PAPD Process Hard factors Soft factors Hard factors Soft factors
(Pre-Arrival Post-
Departure process) Ease of Information flow Seamless Ease of
Access about status of trains, transit, multi- registration
to/from bookings, etc. modal facilities E-D
station Ease of booking (e- from/to
ticketing) terminals

PDPA Waiting facilities and process – access Seamless Electronic RR;

to platforms; escalators, lifts, etc., transit Payment facilities
waiting halls, - Ease of discharge from
trains
Psychological Every touch point – minimal and Every touch point minimal and
Experience technological needs to be technological itself; needs to be
exhilarating/pleasant delightful for customers
On Board Experience Hygiene, comfort, bed-rolls, Information flow – for tracking of
ergonomics, catering are important consignments when in transit
factors

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 An indicative value proposition along each of the KPIs of each segment and sub-
segment of passenger and freight business is shown in the tables below, along with the
“spider” diagram.

Table 13: Value proposition in passenger business

Commuter Inter-city Inter-city Inter-city Intercity Branch

Segment (short (medium LD LD (two line /
KPI of value distance) distance) (over- nights) Town
night) services

Price Intercity Suburban Medium Medium Low High

Transit Time Very Very high Very High Low Low

high high
Availability High High High High High High
Reliability Low Medium Very High Medium Low
High
PAPD process Low High Medium High Very High Low

PDPA process High High High High Very High High

Safety High High High high high Medium

Psychological Low Medium High High Very high Low

experience
Competitive Metro Road Buses Civil Civil
factors system Aviation Aviation
road ‘Volvo’ ‘Volvo’
bus Bus
Comfort,
Hygiene,
catering,
amenities

Table 14 : Value proposition in freight business

Segment Coal Cement Container Fertilizer POL

KPI of value

Price Medium High Very High Low

Transit Time Medium High Very High Medium
Availability Medium High Very High Low
Reliability High High Very High Medium
PAPD process Medium High Very High Medium
PDPA process High Very High Very High Medium
Safety High High Very High High

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 Psychological Medium High Very High Low
experience
Competitive Road policy Road sector Road …… Pipelines
factors chargers “Volvo” Coastal
Coastal truck shipping
shipping

Value Nets are mental maps which indicate the relative desired /actual levels of value
along different dimensions of value proposition to the customer – price, speed, reliability, etc.

Indicative value nets of passenger and freight business are depicted herein the “spider”
charts below:

Chart 26: Value-nets for Indian Railway’s passenger business

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 Chart 27: Value-nets for Indian Railway’s freight business

DFCs in IR Context:

Thus, each segment and sub-segment of our businesses in passenger and freight have
differentiated requirements of value proportion along various dimensions. Addressing each of
these segments in an integrated manner along each of the above depicted dimensions in a
customized approach holds the ‘key’ for our growth. Stagnation of growth and migration of
traffic to other modes is an indicator of erosion amongst one or many dimensions of the above
depicted ‘value’ proportion in each segment/sub-segment.

It is in this context of

 stagnant growth
 inadequate capacity
 mixed mode operation
erosion of value proportion among various dimension and

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  lack of a sustainable ‘profitability’ model

that the two Dedicated Freight Corridors are being constructed and three more are on the
anvil.

These DFC projects are designed for a maximum speed of 100kmph, with Axle loads of
25T/32.5T and for train length of 1500m, with carrying capacity of each train upto 13000 T
as against current maximum speeds of 75 Kmph, Axle loads of 22.9T, train length of 750M
and load per train at a maximum of 5000T on the Indian Railway. With segregation of freight
traffic and being operated on “Automatic Signaling” (except for the single line stretch between
Ludhiana to Khurja) , the DFC which envisages a “level-crossing” less environment, is slated to
operate a maximum of 120 freight trains per day, at an average speed of (70-80) km/h.

Chart 29: Layouts of the Eastern and Western Dedicated Freight Corridors

With stations spaced at an average of 40Kms apart on the DFC and with state-of-art
operations and maintenance backbones the long-term operating costs on the DFC would be
substantially low as compared to the present Railway system for the predominantly bulk
freight traffic on Eastern Corridor , as also on the Western DFC , which is being planned with
high-rise OHE, fit for recurring of Double stack containers.

With average speeds on the DFCs, expected to range from 70-75 kmph, the quantum leap
in freight speeds, by a factor of 2.5 to 3, over the current average speeds on Indian Railway
network at 23.4 kmph, would accrue multiplier benefits to all the stakeholders. While the
freight customer, gets a quantum leap in transit speeds of cargo, the inventory levels of cargo
in transit too goes down by a factor of 2.5 to 3, thus substantially reducing the unit cost of
logistics for the freight customer. For Indian Railways, for freight services involving DFC
sectors, the increase in speeds over DFCs by a factor of at least 2.5, reduce the requirement of
rolling stock (locomotives and wagons)and attendant manpower(crew and guard) goes down
substantially. With lesser number of locomotives and wagons deployed for servicing, a
specified volume of traffic between an origin-destination(O-D) pair, the overall energy and fuel
requirement reduces substantially implying substantial improvement in Return on
Assets(RoA) due to higher Asset Turn Over(ATR), thus having a significant positive impact of
the Return on Capital Employed(ROCE) (or Return on Capital Employed (ROCA)) by Indian
Railways.

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Chart 30 : ROCA/ROCE Tree for Indian Railways – A strategic framework

But, the DFCs are currently planned as sandwiched networks, wherein most of the
originating and terminating traffic is from the terminals directly connected to the current
Indian Railway network, i.e. the Origin-Destination(O-D) pairs are predominantly on the
Indian Railway network.

The predominant interface with the freight customer would thus continue to be Indian
Railways. Thus, while DFC delivers on the key KPIs of transit time, reliability and availability in
its jurisdiction, up gradation of the Loading density and transit speeds on the feeder routes is
the responsibility of Indian Railways. Similarly, with most terminals located on the IR network,
fuelling the demand is an issue that needs to be addressed jointly by IR and DFCCIL. ‘Service
design’ and ‘Integrated Marketing’ is the need of the hour. The current delivery processes in
‘marketing’ , ‘pricing’ and ‘new product development’, service design and implementation
needed for each market segment needs to be objectively analyzed with reference to their
efficacy in fuelling the demand for optimal use of the huge capacity being generated on the
DFC corridors availability and reliability.

The freight too would be collected by Indian Railway and a portion of it would be shared
with DFCCIL as a “Track Access Charge” – TAC for accessing the DFC network. Thus “Pricing”
on Indian Railway network too needs to be addressed concurrently, to truly leverage on the
benefits of the huge capacity and freight speeds that the DFC delivers upon. In the same
vein, issues of ‘seamless’ transit, multi-modal transport need to be addressed by Indian
Railway, as most of the freight terminal would continue to remain with Indian Railway. Thus,
the PAPD and PDPA process too need to be streamlined on Indian Railway to leverage on the
benefits of the DFCs. On the ‘reliability’ KPI too, while DFC is expected to deliver on this KPI,
with ‘terminals’ predominantly on IR, frequent ‘terminal restrictions’ and ‘route
restrictions’ erode the value proposition of the freight customer on the ‘reliability’ KPI as
well.

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 Thus, to leverage on the ‘huge’ capacity that is to be generated on the DFCs, it is
imperative that the current processes of marketing; pricing; approach to ‘terminals’; reliability
and availability issues on IR networks be analysed threadbare and suitable initiatives in these
areas assessed and “delivery” mechanism be instituted in the coming few months, to make
maximum use of the capacity on DFCs, no sooner than they are commissioned. Thus the
market strategy for market defence, market attraction and market capture assume utmost
importance, in this context.

Chart 31: Market strategy- A schematic for Indian Railways

With average freight speeds set to more than double on the DFCs, Indian Railways
stands on the verge of “unprecedented opportunities” towards customer service, the
likes of which it had never experienced in its 160-year old history, of serving customers
at very high velocities. This also opens up opportunities for logistic design and DFCs. If
leveraged well, Indian Railway could re-invent itself as a giant in the logistic industry of
the future. Surely, quality delivery of DFC projects, could make the elephant dance and
the giant fly!

The report herein addresses these aspects in Part V : Capacity Utilization of DFCs
after commissioning of the DFCs. Case studies, data analyses are liberally resorted to
illustrate certain key issues in the area and a BLUEPRINT laid out towards addressing the
theme of capacity utilization of the DFCs.

With the commissioning of the DFCs, at least 70% of the “available” freight traffic on
corresponding alignment of Indian Railway is mandated to be transferred onto the DFC
corridors thus generating huge capacity on the sections of Indian Railway on the
corresponding alignment. This aspect is dealt comprehensively in Part IV of the report titled
Capacity Utilization of IR network after commissioning of the DFCs.

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Even with a conservative “Transform ratio” of 1:1 i.e. with a premise that each freight train
moved away to DFC would generate paths for one passenger carrying train on IR network, it is
estimated that, at a “Transfer ratio” of 70% atleast,

15-20 paths each way on the Eastern Alignment – A route (Dankuni-Sonenagar-Mughalsarai-

Allahabad-Kanpur-Khurja-Dadri)
10-15 paths each way on Eastern Alignment – B route (Mughalsarai-Varanasi-Lucknow—
Rosa- Ambala-Ludhiana)
10-12 paths each way on the Khurja – Saharanpur section
15-20 paths each way on Western alignment Main route(JNPT-Vadodara-Ratlam-Kota-
Sawaimadhopur)
12-15 paths each way on alternate Western alignment(Palanpur-Jaipur)
12-15 paths each way on Mathura-New alignment would be generated on the Indian Railway
network.

The section of Indian Railways, wherein the additional capacity would be generated,
consequent on commissioning of the DFCs is shown in the linear network diagram of Indian
railway:

Chart 32: Sections where capacity would be released consequent on commissioning of

the DFCs

A logical utilization of the thus generated capacity in these sections is to operate

passenger services. In this context, the assessment of passenger demand, ‘Origin-Destination’
pair wise and to segment the services in these demand sectors as –commuter, inter-
city(Short), inter-city(medium) and inter-city(long distance), etc. is a relatively easier task.

32
 But to operate these identified services at current service levels of average speeds,
reliability and availability would mean increase in frequency only and thus improving the
“availability” KPI in the value proposition of the passenger. (i) Without commensurate
upgradation of speeds on the Indian Railway network; (ii) without improving the reliability
of the system – in terms of minimal equipment failures, unsatisfactory features and Zero
accidents; (iii) without addressing the cost-structure of passenger services having a bearing
on the ‘price’, given the loss making proposition of operating passenger services and the
characteristic feature of Indian Railway’s passenger services business being cross-subsidized
by freight business (iv) without addressing the “terminal” constraints that abound at every
major terminal on Indian Railway; (v) without addressing the PAPD and PDPA processes at
terminals – merely operating more services would not address the issue comprehensively.

Thus to uncork, the ‘real’ potential that exists in the area of passenger-services that can
be operated on the residual IR network after commissioning of the DFCs, the entire set of
elements that comprise the value proposition of the passenger in each segment-commuter,
inter-city(short, medium), long distance(overnight), long distance(Double night) – needs to be
addressed along the dimensions of – Price, Speeds, Reliability, Availability and the Terminal-
PAPD and PDPA process.

Thus, Part IV of the report seeks to address the issue of “Capacity Utilization of IR after
commissioning of the DFCs” in a comprehensive manner by

i. Identifying the demand sectors of passenger flows O-D pair wise, by an

extensive data analysis of the PRS, UTS and Suburban Data. Further analysis of
the Civil Aviation OD-Data is resorted to identify the threats and opportunities
that exist.
ii. Identifying value maximization strategies aimed at price discovery and cost
recovery.
iii. Identifying the strategic and operational initiatives that need be undertaken
towards “speed up-gradation”.
iv. Identifying systemic tools for improving reliability and availability of services.
v. Identifying ‘critical’ terminals in terms of infrastructural and procedural
constraints that exist in terms of flexibility of movements, availability of
platforms, pitlines, etc. and planning to diffuse such bottlenecks in a systematic
and time-bound manner
vi. Identifying the crucial PAPD and PDPA processes that play a vital role in the
value of “time” of the passenger and suggest suitable plans .
vii. Laying out a spectrum of possibilities that exist in the PPP domain in delivery
of upscale passenger services.
viii. Taking into account the probable dates of commissioning of different stretches
of the DFC and consequent phase-wise release of capacity on residual IR network,
a commensurate phased plan for passenger services as suggested and finally
ix. Laying out a comprehensive “Way forward”-detailing the strategic and
operational initiatives and corresponding plans and tasks that need be
undertaken in a time bound manner, so that the huge new capacity that would be
generated on the residual IR network after commissioning the DFC is optimally
utilized.

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 The next 24 months in the period (2017-2019) would thus be crucial towards
implementing the strategies laid out in the passenger and freight segment, so as to leverage on
the huge new capacity that would be generated simultaneously, both on the DFCs and on the
residual IR network.

Also, it is pertinent to point out that Mission : Capacity Utilization has multiple
interfaces with the other seven Missions – Mission : Raftar; Mission : Beyond Book Keeping;
Mission : PACE; Mission : Zero Accidents; Mission : Hundred Terminals and Mission : 25T
Wagons. While Mission : Raftar addresses the KPI of Speed/Transit times; Mission : Beyond
Book Keeping addresses issue of Costing and Pricing; Mission : PACE addresses innovative
sourcing aimed at high-quality maintenance; Mission “ Zero Accidents – addresses the KPI of
reliability of services; while Mission : 100 terminals addresses the issue of “Terminal
Infrastructure” in freight segment and finally –Mission 25T Wagon is aimed at improving
throughput, which in turn optimizes capacity utilization. In delivery of the key KPIs of – price,
speed, reliability, availability, terminal processes, etc. - Mission : Capacity Utilization also plays
the role of a strategic integrator amongst all Missions.

Chart 33: Mission Capacity Utilization – An Integrative Mission

Thus Mission : Capacity Utilization is an integrative, strategic and transformative mission.

In Part VI : titled Mission : Capacity Utilization – an integrative, strategic and
transformative Mission, a delivery mechanism towards delivering the strategic goals is laid
out using an innovative Customer- Operations-Strategy Framework.

34
 Chart 34: The C-O-S Framework

The commissioning of the DFCs, thus provides us with tremendous opportunities in

transforming both the passenger and freight business of Indian Railways.

The timely delivery of the DFC projects in their fullest quality is thus imperative for the
future growth of Indian Railways.

Thus, the BLUEPRINT –segmented into six parts – opens with a review of the DFC
projects – both the construction aspects and the POMS frameworks that need to be in position
before the commissioning of the DFC projects, before addressing the core issue of capacity
utilization.

The report is thus segmented into six distinct parts :

Part I : Status of the DFC Project - Construction Aspects and the Way forward

Part II : Status of the DFC Project – Pricing, Operations, Maintenance & Safety (POMS)
framework and the Way forward

Part III : Current Capacity Utilization and Estimated Line Capacity on residual Indian
Railway network after commissioning of DFCs

Part IV : Capacity Utilization of residual IR network after commissioning of the DFCs

Part V : Capacity Utilization of DFCs themselves and

Part VI : Mission: Capacity Utilization – A Strategic, Integrative and a Transformative

Mission

35
Part I: Status of the DFC Project - Construction Aspects and the Way forward - details
the findings of a critical study undertaken on the physical and financial progress achieved
in the construction of the ongoing DFC corridors – the 1318 Kms Eastern Corridor from
Sonenagar to Khurja and from Ludhiana to Khurja (excluding the 538 kms corridor from
Dankuni to Sonenagar, which is envisaged on a PPP mode) and the 1504 kms Western
corridor from JNPT to Dadri. A data driven approach was adopted to home in on the critical
issues that would have an adverse impact on the project and suggests suitable alignment
and monitoring mechanisms that need to be instituted for timely delivery of the project.

Part II : Status of the DFC Project – Pricing, Operations, Maintenance & Safety (POMS)
framework & the Way forward - reviews the status of the proposed pricing regime of the
“Track Access Charges” and the necessary framework of Operations, Maintenance and
Safety mechanisms that needs to be put in place before the scheduled commissioning in
2019 and highlights the critical areas that need immediate resolution.

Part III: Current Capacity Utilization and Estimated Line Capacity on residual Indian
Railway network after commissioning of DFCs - details the current capacity utilization
of IR network with specific reference to the Eastern and Western DFC alignment and
estimates the section-wise capacity that is likely to be released on the residual Indian
Railway network, using empirical and practical models of estimation.

Part IV: Capacity Utilization of residual IR network after commissioning of the DFCs
and the Way Forward– discusses the various options of passenger services that exist for
utilization of the residual Indian Railway network after commissioning of the DFCs.
Maximizing the utilization requires identification of not only the services that need to be
operated, but also the service levels, pricing, terminal constraints and network reliability
aspects are to be dealt with in this context. Through an extensive data driven analysis of the
OD flows of passenger traffic in the rail and the civil aviation sectors, the potential OD pairs
are homed in. Speed upgradation of the routes, the pricing and procurement aspects are
discussed with due reference to the interfaces that exists with the three other Missions of –
Mission: Raftar, Mission beyond Book-keeping and with Mission: PACE (Procurement and
Consumption Efficiency). The section on “Way Forward” details in a time bound manner
the initiatives segmented along the five levers aforementioned - Marketing/Pricing;
Operational Effectiveness; Capital Expenditure ; Rationalization of Management practices
and People - that need to be institutionalized in the next two years, so as to reap the
benefits of the huge capacity that’d be released on the Indian Railway Network

Part V: Capacity Utilization of DFCs themselves and the Way Forward - analyses the
current freight scenario in India and leverages on various recent reports conducted by
DFCCIL and independent market surveys on the future freight growth to assess the
potential that exists in the area. The levers of growth – marketing, pricing, terminal
development, rationalization of processes and development of quality human resource
with desirable skills sets are identified towards the aim of fuelling growth in rail share in
the freight sector. Case studies in automotive sector, cement, ports, etc are used as
illustrations to identify the gaps in existing skill sets and point towards building sustainable
systems towards this end. The interfaces that this Mission has with the section on “Way
Forward” delineates the initiatives by segmenting them into the five identified levers of

36
growth for Indian Railways - that Marketing/Pricing; Operational Effectiveness; Capital
Expenditure ; Rationalization of Management practices and People and lays out a time
bound map for institutionalizing these initiatives within the Indian Railways in the next
couple of years, so that the capacity created in the DFCs could be leveraged to the
maximum benefit of the Indian Railways.

Part VI: Mission – Capacity Utilization: An Integrative and a Strategic Mission –

emphasizes the strategic dimension of the Mission Capacity Utilization and the integrative
nature with the Missions of Raftar; Beyond Book Keeping; PACE; 25 Ton Axle load; 100
Terminals; and Zero Accidents. Discussions herein emphasize the need for alignment
mechanisms that need to be institutionalized amongst these missions in a reinforcing
framework to achieve the strategic goals of the Indian Railway. Finally herein a delivery
mechanism is suggested using an innovative framework of Customer – Operations –
Strategy (C-O-S) – the “Trikon” Naksha for Indian Railway.

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38