Marketing Strategies for Freight Traffic on Indian Railways - A Systems Perspective

Abstract

Indian Railways (IR) had lost its market share in high rated freight commodities especially cement, POL, and iron and steel. IR was missing an overall strategy for freight business, which was overcharged without sensitivity to competition. Over time, other transport modes, especially road (and pipeline in the case of POL) captured a very significant share of freight due to their faster and door-to-door deliveries. Several initiatives have been taken in the recent past to make IRs’ strategies market oriented like increased axle loading, better pricing strategy, and improved services. In 2005-06, IR loaded 667 mt of revenue earning freight traffic, marking an increase of 110 mt over 2003-04. Additional freight revenue was Rs 9172 crore during the same period. IR still has a tremendous potential in the freight business, but it needs to be examined with an appropriate framework for segmentation of the market. Like in any other transport business, an origin-destination (OD) based systems perspective could be used. The primary categorization of origins would be industry/collection centre, mine and port. The primary categorization of destinations would be industry, port and distribution center. An attempt was made by the authors to do an OD analysis on the 666.5mt (602.1 mt) of freight traffic of 2005-06 (2004-05). The above analysis has implications for leveraging the four Ps of marketing; product (service attributes), price, promotion, and place (logistics). This paper attempts to evolve marketing strategies for freight traffic, based on the OD market analysis specified above.