Improving logistics access for MSMEs could unlock huge rail freight opportunity
Improving rail accessibility for micro, small and medium enterprises (MSMEs) could unlock significant rail freight growth by lowering logistics costs and adding a customer segment for rail services, a report said on Thursday.
The report from FICCI and KPMG in India said many MSMEs remain dependent on road transport despite rail’s structural cost advantage because of fragmented consignments, limited cargo aggregation, inadequate terminal access, first? and last?mile constraints, service unpredictability and difficulty accessing suitable rolling stock.
The report said rail freight offers a strong structural advantage, with average transport costs at Rs 1.96 per tonne?km by rail against Rs 3.78 per tonne?km by road and a national network operates on a common technical and digital platform.
MSMEs contribute over 31 per cent of India's GDP, 35 per cent of manufacturing output and nearly half of the country's exports, making them an important driver of future freight demand, the report noted.
The report recommended strengthening freight aggregation platforms, modernising common-user terminals, improving digital visibility and customer interfaces, enhancing first- and last-mile connectivity, and adopting demand-led wagon planning to improve rail accessibility for MSMEs.
"Moreover, rail operates across the country on a uniform operating system on a non-discriminatory basis and is therefore capable of offering competitive logistics services to them. By addressing accessibility concerns, rail and MSMEs can gain symbiotically and play a pivotal role in India's freight ecosystem and economy,” said Sameer Bhatnagar, Partner and Lead - Mobility & Logistics, KPMG in India.
Union Minister of Road Transport and Highways, Nitin Gadkari in April said that India's logistics cost will drop to 9 per cent at the current robust pace of road infrastructure development.
The Union Minister said that research by IIT Bangalore, IIT Kanpur and IIT Chennai completed six months ago showed road?infrastructure improvements had already reduced logistics costs by 6 per cent to about 10 per cent, a statement said.
