Automakers are looking beyond the road to moving finished goods

The sharp increase in fuel prices has led many car manufacturers, including market leaders such as Maruti Suzuki, to shift their mode of transport of finished goods away from the road. When it comes to reducing emissions, automakers are also looking beyond the road. As a result, more than a fifth of all passenger cars produced in India are now transported by rail, a fivefold increase from 4.5% in FY2018.

The increasing use of rail has helped automakers reduce their overall logistics costs, helping to transport multiple batches of vehicles efficiently while meeting sustainability goals.

By using rail as a mode of transport, car manufacturers can reach even faraway destinations in half the time compared to road. With destination terminals at Agartala and Silchar, they are able to get vehicles to locations in North East India in around eight days, which would otherwise take 16 days.

Rajesh Menon, Director General of the Society of Indian Automobile Manufacturers (SIAM), said: “The automotive industry has been able to increase the modal share of rail in total vehicle transport as its efficiency has also improved over the years. especially at distances of more than 1,000-1,200 kilometers. According to our estimates, 4.5% of new passenger cars manufactured in India were transported by rail in 2017-18, while this share rose to about 20% by 2021-22.

He said the railroads have created the necessary track infrastructure at many car plants to minimize last-mile connection problems, he said. “Railways have also been proactive in introducing more rakes to meet growing demand from the automotive industry.”

Last year, Maruti Suzuki shipped 335,245 units by rail – the highest figure in a fiscal year and almost 43% more than the previous year. The company wants to further increase the share of rail transport and announced that it will gradually transport 100,000 vehicles by rail every year over the next few years.

Rahul Bharti, executive officer (corporate affairs) at Maruti Suzuki, said the company has taken several actions in recent years to increase its focus on green logistics. “In line with government efforts to minimize carbon emissions in logistics, we plan to systematically increase shipments by nearly 100,000 units per year in the coming years,” said Bharti. To achieve this, the company is adopting practices such as expanding dispatching to shorter distances, using railroad rakes and increasing the use of digitization in dispatch planning.

The share of rail in the total number of vehicles transported by the company more than doubled in the last financial year from 8% in financial year 2019 to 17%.

Besides 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) licenses to capitalize on the potential in this space.

Bharat Joshi, Chairman of Joshi Konoike, stressed that automakers are at the forefront of adopting conscious and responsible corporate citizenship, saying: “Rail is a cleaner mode of transport than road and safer – the statistics on road fatalities in India are well known.” said.

The revival in economic activity and a sharp increase in fuel prices have led to an increase in road freight rates. On the other hand, rail freight rates have remained relatively stable since Indian Railways unveiled the AFTO policy in 2013. Freight tariffs have recently been raised by the railways, which has raised some concerns among car manufacturers. SIAM’s Menon said tariffs for car freight were up about 20%
Trains effective April 1 could impact the feasibility of automakers operating these trains.

In 2013, Maruti Suzuki was among the first Indian car manufacturers to receive an AFTO license, which allowed the company to manufacture and operate high-speed, high-capacity car rakes on the Indian Railways network. Maruti Suzuki has 40 railway rakes with a capacity of over 300 vehicles per rake.

To date, the company has transported more than a million vehicles by rail, offsetting over 5,250 million tons of carbon dioxide emissions in the last eight years. By focusing more on using rail for vehicle transport, an additional 175 million liters of fossil fuel could be saved during this period by avoiding truck journeys.

The railways liberalized AFTO policy in 2018 to encourage private investment in special wagons. The registration fee for the program has been reduced from 5 crore to 3 crore rupees. In addition, a requirement has been relaxed that requires a minimum purchase of three rakes per rake under the program. Currently, the rail operator has around 119 data centers for car transport (private and state), compared to 19 in fiscal 2018.

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