Freight Marketing by Indian Railways

Presented By :
Rajneesh Jain
Ritu Shukla
Smita Choudhary
Vinayalatha S.
S.Sagar
A.K.Mahtha
 Indian Railways – A success story
• Largest network in Asia and
2nd largest in the world
• Covers the length & Breadth
of the country – 63000 route
kms
• Everyday transports – 1.8 m
people and handles 2.2m
tons freight
• Railways Turn around – a
favourite case study of B-
schools across the world
 IR Surplus Generation

25000
20000
Rs Crores

15000
10000
5000
0
2004-5 2005-6 2006-7 2007-8
Year
 Revenue share
• Freight traffic Share of revenue on IR
Rs crores
accounts for 65% of
total revenue Misc, 5837,
• Passenger traffic 8%

contributes 27% of Passenger,

20075, 27%
total revenue
Goods,
47743, 65%
 Services offered by Railways
• Passenger Service
Passenger Earning Segmentation
– Mail/Express
– Ordinary Suburban, Upper
1427, 8% Class, 3424,
– Urban/Suburban – 20%
Ordinary,
Local/ EMU, MEMU, 3294, 19%
METRO

2nd M/E,
9030, 53%
 Services offered by Railways
• Goods Service
– Bulk Subsidized (Fertilizer,
food grains, coal, iron –ore)
– Other Bulk (POL, Cement,
Steel)
– Piecemeal/Small -Value
added (Perishable,
Finished goods)
• Other Bulk and High value
Freight services- Cash Cows

Passenger and Bulk subsidized Traffic are cross subsidized

by other Freight services
Freight Segmentation
Freight Revenue segmentation

Other, 4890,
12%
Coal, 15886,
39%
POL,Iron
Ore,Cement,
Steel, Foodgrain,
14587, 36% fertilisers
etc, 5515,
13%
 Traditional Approach -Production
Orientation
• Pricing :Objectives
– To Meet social obligations subsidies were resorted to
– Single undifferentiated rate- w.r.t route, direction,
volume, season
– Ease of Administration
– No customer focus
• Consequences
– Overfull demand of subsidized segment
– No surplus for capacity building
– Degeneration in quality of service
– Non subsidized traffic diverted to Road/Air
– Railways in Financial stress by late 1990s
Emergence of New Thinking
• Switch over to marketing orientation
– Railways in Financial stress
– Losing high value freight to Road
• In 1951, Road carried 18% of freight Traffic and
Railways 70%
• Today, Road carries 65% and Railways carry
only 35%
– High -end Passenger traffic being diverted to
Airlines (LCC)
– Opportunity with emergence of new
business partners (PPP)
Segmenting, Targeting and positioning
• Freight gives 2/3rd of revenue
and uses only half the
resources.
• Freight Service is the key to
viability of IR
• Bulk Freight viz POL, Cement,
Imported Iron Ore are main
profit earners
• Small and Piecemeal freight
can offer substantial business
(Low Volume, high value
Freight)
• Sunrise items like perishables-
fruits, vegetable, fish, milk etc
and finished goods like
FMCGs offer new dimension of
business
 Who are Railways Prime Customers ?
• POL – to be lured back
• Bulk Traffic from/to ports ( imported iron ore from
ports to steel plants) – emerging market
• Small piecemeal Container traffic
– Perishable goods (fruits, vegetables, flowers fish)
– High value FMCG products
Growing & Highly profitable
Marketing Orientation-Customer is
the king
• What customers demand
?
– Low Tariff
– Seamless and need
tailored service
– Reliable and timely
service
– Information
(traceability/tracking)
– Door to Door Delivery
– Courteous treatment from
service provider
 Marketing Oriented Approach
• Capacity Building with partnership
• Offering complete logistics for last mile service
through partnership
• Competitive Pricing Strategy
• Powerful Information dissemination for traceability
• Friendly Customer interface
• Connecting with customer
 Capacity Building through
Partnership
• PPP model
– Dedicated Freight Corridor.- additional tracks
– Terminal Development Plan-more freight
yards
– Liberalised wagon Investment Scheme-
additional wagons owned by private co.
• “own your wagon scheme”
• Leased by freight forwarder or private bulk
transportes
• Maintained and moved by railways
 Complete Logistic
Provisioning
Role of Freight Forwarder
Destination
Source for for piecemeal
picemeal

Road Road
Railway Route For
Private rake movement
yard1 Private
yard2

Source2

Source2
 Logistic Provisioning
• Door to door delivery and seamless
service
• Appointment of freight forwarder
• Running of express parcel train
– freight trains run on a time table
– Timely delivery
• for perishables goods in refrigerated rakes
• for supply chain management
 Competitive Pricing strategy
• Competitive tariffs for non subsidized segment
– rationalization and reduction of tariffs
– for POL, ,imported iron ore, cement etc.
• Utilization of empty rake movement for revenue
earning
– incentive scheme for traditional empty flow direction(
30%discount)
– incentive scheme for return booking (15% discount)
• long term special incentive scheme (15% less)
• Incentive scheme for incremental traffic
(volume discount) in lean season -20% discount
 Information For Traceability
• Implementation of Freight Operating
Information System (FOIS)
– Rake Management system (for tracking
movement)
– Terminal Management System (For Billing,
record keeping, claim processing etc)
• Information Dissemination through Web
and call centre.
We connect emotionally to the
We connect to people who feel
strongly about…...
• Speed and reliability of service
• Power of Information
• Energy security
• Rising Import Oil Bill of the country
• Rising Pollution level