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Railways to engage Amazon, Flipkart to expand parcel business


Railways to engage Amazon, Flipkart to expand parcel businessNEW DELHI: The railways parcel business is all set to get an e-commerce push with the national transporter planning a special scheme to attract online retailers that use road transport to transfer heavy volumes.

The railways earns around Rs 2,100 crore from its parcel business, which could go up to Rs 5,000 crore in three years if it manages to tap the emerging businesses. The move comes at a time when the railways is battling its worse financial crisis ever. It reported an operational ratio of 93.5 per cent in 2013-14, leaving it with little funds to finance upgrade and modernization of rail infrastructure.

"We are working on a special scheme to tie up with emerging ecommerce companies for transportation of their parcels," said a senior railway board official, who did not wish to be identified. "Initial deliberations have been held and suggestions will be sought from all major online retailers including Amazon and Flipkart before a detailed plan is firmed up." According to a Morgan Stanley projection, India's e-commerce market will grow to $100 billion (about Rs 6 lakh crore) by 2020 from $3 billion (about Rs 18,000 crore) in 2013.

Shares of logistics companies such as Blue Dart and Gati have been among the best performers on stock markets in anticipation of this boom, in which the railways has a very small stake. "Railways get a minimal share of 5% for white goods as rest is transported through road. It could easily be expanded to 25% with e-commerce companies on board," the official added.

The railways is already scaling up its tracking system to allow consumers to track individual parcels, a key consideration in ecommerce where buyers want to keep tab on the time of delivery.

Parcel tracking system has been operational only on the Delhi-Howrah route for the last three years. Traditionally, the railways has parcel vans attached to all express and premium trains. Under railway minister Suresh Prabhu, the national transporter is looking at innovative ways of expanding its revenue stream. The railways will also encourage private operators, logistics operators and aggregators for lease of such trains. "We must offer full logistics service to its users by engaging these service providers at each location," the railway board official said.

The automobile freight train operator policy of the railways is also being tweaked to encourage more auto companies to use the railways. Firms can invest in specially designed wagons to offer transport services.

The railways feels it can offer significant cost advantage, particularly over long haul transport. "We can offer a cost advantage of up to 50% over road to these companies, especially for distance up to 500km," said an official from the freight traffic department. Experts say the move has the potential to make the supply chain in the country more efficient. "It will not only help the railways improve its traffic in various segments, including increasing its share in white goods, but also help e-commerce to diversify into bulky products, which can be economically transported over the railways," said Jaijit Bhattacharya, partner, infrastructure. and government services.

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