What are dedicated freight corridors?

[ecis2016.org] Here is all you want to know about dedicated freight corridors

Freight are goods transported by ship, plane, train or truck. The system of transporting goods in one of the mentioned ways is also known as freight. A dedicated freight corridor (DFC) aims to provide seamless connectivity from one place in a country to another, to send goods and produces.

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To act as an exclusive network of high-capacity freight movement tracks, dedicated freight corridors also ensure utmost safety and security for users and provide the basic infrastructure required for the mediums of transport to run.

With the Novel Coronavirus, transportation of goods has become even more crucial when most people are relying on e-commerce to purchase items of everyday need. This fast movement of goods from one place to another in a really short time has only been possible because of the presence of dedicated freight corridors in the country.

Dedicated Freight Corridor Corporation of India

Plans have been underway to build DFCs running a total length of 3,300 kms, since 2006. However, construction on the ambitious projects could start only by 2011.

In view of the need to provide companies with robust connectivity, the government of India established the Dedicated Freight Corridor Corporation of India Limited (DFCCIL) under the Railway Ministry, with a mission to ‘build a corridor with appropriate technology that enables Indian Railways to regain its market share of freight transport, by creating additional capacity and guaranteeing efficient, reliable, safe and cheaper options for mobility to its customers’. The organisation is also responsible for setting up multi-modal logistic parks along the dedicated freight corridors.

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Dedicated freight corridor India and its importance

The Indian Railways carries the fourth highest tonnage of freight globally at over 1,200 million tonnes. Items that see huge movement include coal, steel, petroleum products, iron ore, cement, fertilisers, foodgrains and containers. However, in the absence of dedicated lines, freight trains in India operate on the same railway lines as passenger trains, whose movements are invariably prioritised over freight trains.

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“Passenger and freight trains run on a common network in India. With the railways having to accord priority to passenger trains, the transit speed and time of freight trains have been a big issue,” reported CRISIL.

The movement of goods in the country would be much faster with dedicated freight corridors. Industry experts are of the view that the DFCs will allow the cargo carried by one lakh trucks in a single day once they are fully functional.

“Once this seamless, new, freight-oriented infrastructure becomes operational, it is expected to be a game-changer for railways and India’s logistics,” CRISIL noted.

According to India Ratings, the DFCs will reduce the transaction time involved in the shipment of goods and logistics costs, thereby, bolstering India’s overall economic growth. However, any disruption in its services could adversely affect the country’s growth profile.

Nearly 70% of the freight trains are expected to be transferred to the DFCCIL network, where they will be running at an average speed of 60 to 70 kilometres per hour, as against the current speed limit of 25 kilometres per hour.

According to the Railway Ministry, the corridors will double their freight capacity from 5,400 tonnes to 13,000 tonnes while also doubling the length of the trains. The length of freight trains in India is currently 700 metres which is expected to become 1,300 metres when they have a dedicated route.

Apart from enabling e-commerce companies and automobile companies to transport their goods at a much faster speed, the DFCs would also help farmers in India send their agricultural produce to markets across the country.

The upcoming DFCs in India will substantially reduce the cost of logistics in India, which currently stands at 13%-15% of the cost of the goods. This is in major contrast with the global average of 6%. This move will also mean a clear path for more passenger trains, helping them maintain punctuality.

Accelerating the project, prime minister Narendra Modi inaugurated the 351-km Khurja-Bhaupur section of the Eastern Dedicated Freight Corridor (EDFC) and the 306-km Rewai-Madar section of the Western Dedicated Freight Corridor (WDFC) in December 2020 and January 2021, respectively.

Upcoming DFCs in India

DFCCIL is currently developing two key freight corridor projects – the Western DFC and the Eastern DFC.

Western Dedicated Freight Corridor

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The proposed 1,506-km Western Dedicated Freight Corridor (WDFC) will run between Dadri in Uttar Pradesh and Jawaharlal Nehru Port Trust (JNPT) in Mumbai, Maharashtra. The dedicated freight corridor will hasten the movement of goods and produces to and from Uttar Pradesh, Gujarat, Haryana and Rajasthan to major business hubs and ports in the Greater Mumbai region. The Japan International Cooperation Agency is funding a major part of the WDFC.

Eastern Dedicated Freight Corridor

The proposed 1,839-km under-construction Eastern Dedicated Freight Corridor (EDFC), connecting Punjab and West Bengal, starts at Sohnewal in Ludhiana, Punjab and ends in Dankuni, West Bengal. Upon completion, the eastern corridor will decongest train routes in Uttar Pradesh, Bihar and West Bengal, while connecting India’s most populous states with the industrial hubs of Punjab, Haryana, Bihar, Jharkhand and Bengal. The World Bank is funding a major part of the EDFC.

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Dedicated freight corridor status

There have already been multiple construction delays, forcing authorities to shift the completion date of the project multiple times since 2016. Cost escalation has also played its part in this delay. The total cost of construction of the two corridors is billed at Rs 95,238 crores, with funding from multilateral agencies through the public-private partnership model.

According to a progress report submitted by DFCCIL to the Prime Minister’s Office in 2021, the cumulative contractual progress till May 2021 was worth Rs 40,477 crores. All contracts of the EDFC and the WDFC worth Rs 56,952 crores have been awarded to proceed with the work.

Once the two routes are ready for operation, the centre expects to generate nearly Rs 20,178 crores by monetising the two DFCs between 2023 and 2024. The NITI Aayog has called for monetising 673 kms of the entire length of the two DFCs over these two years.

The ongoing CIVID-19 pandemic might interfere with the timelines. However, these corridors are expected to be completed by June 2022.

Plans are also underway to build a north-south (Delhi-Tamil Nadu), east-west (West Bengal-Maharashtra), east-south (West Bengal-Andhra Pradesh) and south-west (Tamil Nadu-Goa) dedicated freight corridors in India.

Impact of DFC on real estate

The dedicated freight corridors are likely to have a positive impact on residential real estate in India, increasing the values of properties close to the areas they run. The construction of the DFCs will also help in the appreciation of property values of land in states like Uttar Pradesh, Bihar and Jharkhand, which are currently lower than their counterparts in Punjab, Haryana, Maharashtra and Gujarat. On the whole, the DFCs will have a positive impact on land values in all the eight states they are likely to pass through.

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