NEW DELHI : Automakers are increasingly looking beyond roadways to ferry finished vehicles across the country to reduce emissions as well as to cut costs amid a sharp increase in fuel prices.
As much as 16% of all passenger vehicles produced in the local market were transported via railways in the last financial year, a four-fold increase from 4.5% in FY18, shows data available with Indian Railways.
The country’s largest carmaker Maruti Suzuki led the shift and last year dispatched over 233,809 vehicles through railways – the highest in a fiscal. This is an increase of 23% over 188,656 vehicles transported via rail in FY21. The company is working at increasing the share of rail transportation from the current level of 15%, industry officials said.
While road freight rates have been on a rise due to an increase in economic activity and a steep hike in fuel prices, rail freight rates have remained stable since the Indian Railways unveiled the Automobile Freight Transport Operator (AFTO) policy in 2013.
In fact, the railways, which has been working at diversifying its freight basket, offers 20% discount on freight rates for distances between 600 km and 1,200 km and special rates on auto freight movement to the Northeast. to attract more automakers to use rail transport.
“Automobile transportation through railways is more economical, especially over long distances,” a senior industry executive said on condition of anonymity. Apart from savings on logistics cost, auto makers have sustainability targets, which can be met better through use of railways for vehicle transport, he added.
To be sure, Maruti Suzuki, which has transported more than a million vehicles (approx. 1,100,000 units) through Indian Railways, has offset over 4,800 million tonnes of carbon dioxide (CO2) emissions in the last eight years. The increased focus on using railways for vehicle transport additionally helped the company save 174 million litre of fossil fuel by avoiding 156,000 truck trips in the same period.
“Railway logistics offers a significant potential in lowering the carbon footprint,” a Maruti Suzuki spokesperson said. “By dispatching cars through railways, the company is not only reducing its carbon footprint but also enhancing the country’s energy security by reducing the consumption of fossil fuel. The company is working on enablers by collaborating with various stakeholders to maximise the use of rail transport for dispatching cars.” The company had earlier said it aims to move as much as half of its vehicles via rail by 2030.
Railway transportation also helps Maruti Suzuki reach its customers in Southern and Northeastern states in about eight days while road transportation normally takes 16 days. Presently, Coimbatore from Gurgaon is the longest rail route for Maruti Suzuki. Other routes with rail distance over 2,000 km include Gurgaon to Agartala, Gurgaon to Bengaluru, Gurgaon to Chennai, Gujarat to Guwahati, Gujarat to Coimbatore, and Gujarat to Siliguri.
Apart from Maruti Suzuki, Transport Corporation of India (TCI), APL Vascor, Adani NYK, IVC Logistics and Joshi Konoike have also secured AFTO licences to cash in on the potential in the space.
“Railways has emerged as an important mode for transportation of finished vehicles within the country and also supported movement to some of the neighbouring countries,” said Rajesh Menon, Director General of industry body Society of Indian Automobile Manufacturers. “SIAM is engaging closely with various departments of Government of India to improve the overall logistic cost of various modes of transportation, including road and waterways,” he said.
Maruti Suzuki is India’s first automobile manufacturer to obtain AFTO license in 2013, which allows the company to fabricate and operate high speed, high capacity auto-wagon rakes on the Indian Railways network. The company has 41 railway rakes, with a capacity of 300+ vehicles per rake.
The railways liberalised the AFTO policy to encourage more private investment in special wagons in 2018. Registration fee for the scheme was reduced to Rs 3 crore from Rs 5 crore. The railways also relaxed a condition mandating a minimum procurement of three rakes under the scheme to one rake. At present, the railways has around 119 rakes for auto transport (private and government), compared to 19 rakes in FY18.