2. Challenge - Uncertain transit times owing to Oversaturated Rail network: Since less priority is given to freight as compared to passenger trains, it is difficult for the transporters to minimize the transit time when choosing railways over roadways as the freight trains spend a considerable amount of time waiting for for the permission to run. This is because the railway network is oversaturated after witnessing a huge increase in the passenger traffic as well as freight traffic. No considerable expansion of existing railway network has been carried out since Independence.
Solution: Develop a parallel network exclusively meant for freight traffic with Public Private Partnership with the major transporters being stakeholders in the network and also expand the existing railway network so as to accommodate the increasing traffic.
3. Challenge - Lack of flexibility: Since the railways require the transporters to follow certain norms while designing their containers, there is no flexibility in it for firms that wish to transport special products. Moreover, the firms who cannot provide full coach load to transport end up paying the fixed cost of one coach as container sharing system has not yet evolved in India. This forces the transporters seeking flexibility to depend more on roads.
Solutions:
• Allow the firms to develop their own containers as the transported product demands
• Allow mixed transport of goods and container sharing systems to make the cost less prohibitive.
4. Challenge - Poor railway terminal quality: The terminal quality and the handling of goods at these terminals is extremely poor and inefficient which leads to damage of considerable amount goods which is not well-received by the transporters facing already high transport costs.
Solutions:
• Automation of offloading and loading activities with PPP.
• Dedicated skilled staff for freight at each terminal so as to reduce the damage to goods.
Airways: The air freight traffic in India is 0.3 times that in developed countries owing to high fuel costs which, in presence of low volumes, is a deterrent factor. Moreover not enough facilities for air transport are available in all the parts of India and connecting transport to the existing airports is costlier. In order to kick-start the concept of air freight in India, we believe, it is necessary that the government takes some initiative to subsidize and promote the air freight as an effective means of transport.
Waterways: Despite being blessed with a number of major rivers, internal waterways of India are underutilized even though they provide a cheaper and faster mode of transport owing to lesser distance to be covered. Encouraging the use of waterways for private transporters would be a welcome move that would surely pay off in the longer term.
Warehousing Issues: Warehousing forms an important link in the overall logistics value chain. It accounts for circa 5% of the Indian logistics market .Warehousing in India has been evolving rapidly from being traditional “godowns” with inadequate ventilation and lighting, poor hygiene conditions and lack of inventory management or solutions such as warehouse management systems into modern setups with storage and handling points where raw material, intermediate and manufactured goods are collected, stored and then distributed to the point of consumption and sale. The size of the Indian warehousing industry is pegged at about INR 560 billion .The industry is growing at over 10% CAGR.