Expected transformation in Indian transportation modal mix bodes well for use of Rail Logistics

Many of the development efforts to improve the capabilities of various types of transport in India will lead to a transformation in transportation modal mix for logistic users, says the Frost & Sullivan analysis. Apparently, this shift is expected to favour the railways, which is already a popular mode of transport for freight movement owing to its cost advantageous, despite stumbling blocks including perennial delays, elaborate procedures and inefficient connectivity.
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The analysis finds that the railways’ cost-effectiveness in long-distance, high-volume cargo movement has ensured it remains a preferred mode of transport for logistic companies. In fact, rail transport is likely to gain transportation share at the cost of the road mode by 2017. The latter’s share is expected to decrease by around six percent.
‘With rising containerization and the development of dedicated freight corridors, the rail mode presents an ideal blend of capacity and cost-efficiency,’ A Frost & Sullivan Automotive and Transportation Analyst said. “Schemes such as freight discounts and incentives is expected to encourage private participation, along with procedural improvements through the use of the Internet, which will sustain the popularity of rail transportation”, he pointed out.
Logistic service providers are looking to acquire multimodal capabilities to cater to end users that increasingly demand integrated transport solutions. Various projects promoting multimodal transportation, such as the construction of roads linking ports to the highway network, are expected to positively impact the Indian rail transportation industry.
Insufficient connectivity
While multimodal transport solutions are possible, insufficient connectivity to every corner of the country restricts the railways to being an independent mode for moving consignments. What is more, the lack of integration with most other transport modes, limits the scope of rail use only to long-distance cargo movement.
“Therefore, developments in the country’s logistic infrastructure, including the construction of container rail terminals, logistics parks and railway links with Indian sea ports, are critical for better connectivity and reliability. These expansions will persuade end users, particularly those dealing with large container volumes, to sway in favor of rail transport and use roads for just first and last mile connectivity”, the analyst further pointed out. Grants for customers that bring high-value and high-volume business will further promote the railways as an attractive mode for goods transportation in India.  Transportation Modal Shift in India and its Impact on Rail Logistics is part of the Transportation & Logistics Growth Partnership Service programme. Frost & Sullivan’s related studies include: Eighth Annual Indian Logistics Industry Benchmarking Study, Opportunities in Outsourced Logistics in India, IT Spend and Trends in Indian Logistics Market and Logistics Scenario Tracker on Indian Pharmaceuticals Industry. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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