Railways to strengthen services, will be helpful for ecommerce in India

Logistics is the backbone of the ecommerce industry, but not without its share of problems. Etailers face multiple hurdles like inefficiency on the part of logistics players which leads to delayed or misplaced parcels and high costs due to dependency on air transport to adhere to short delivery times promised to customers.

Railways were considered to be a more economic and feasible solution to delivery problems in the ecommerce space. But again, due to problems that occur in railway transportation, the option was probably never explored much.

But now, railways are ready to offer their services on a silver platter to the ecommerce industry. Instead of using road transport for heavy volumes, railways will give special scheme to etailers for transferring their heavy volume parcels.

If reports are to be believed, etailers like Amazon and Flipkart have been approached by the railways department to help boost their parcel business.

Tying up for whose benefit?

The move comes at a time when the railways are supposedly going through a financial crisis. 2013-14 witnessed an operational ratio of 93.5% will little funds left to utilize for the much-needed upgrade and modernization of infrastructure.

Currently, railways get upto Rs 2,100 crore from parcel business. By tapping into emerging businesses, the revenue can go upto Rs 5,000 crore in three years.

“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.”

So with the right kind of schemes in place, it will be a much-needed support for both – cost effective logistic solution for ecommerce companies and revenue generation for railways.

How can railways help ecommerce?

Currently, only about 5% of white goods transported via road are through railways. However, with improved services in place, at least 25% of goods can be transported between points through railways.

• Parcel tracking system has been initiated so that customers can keep track of their goods, a key element in ecommerce. The system has already been operational in the Delhi-Howrah route for the past three years.
  
• Parcel vans are already attached to express and premium trains.
• Private operators and logistics players who want to transport heavy volumes can lease out trains.

Transport of large volume goods through railways becomes a revenue booster for railways, while also helping ecommerce players to handle heavy white goods at 50% of the cost they would otherwise have to shell out.

Definitely worth giving a shot, don’t you think?