FY2018 Study on business opportunity of High-quality Infrastructure to Overseas (India: Feasibility Study of Rail Transportation Technologies for Completed Vehicles That Contribute to Operation in India by Japanese Corporations)
Report
February 2019
Konoike Transport Co., Ltd. Japan Freight Railway Company
Table of Contents
Table of Abbreviations ...... 2 (1) Examination of benefits to India from the transportation of completed vehicles ...... 3 a. Envisioned state of transportation of completed vehicles and its effects ...... 3 b. Study of potential for Japanese corporations to establish operations in the vicinity of the DFC ...... 4 (2) Trends in Indian government policies and measures regarding completed vehicle transportation ...... 5 a. Trends in related policies and measures by counterpart national government, etc...... 5 Policies and measures in India ...... 5 Policies and measures of the Indian Ministry of Railways ...... 7 Policies and measures by state ...... 8 b. Study of the legal framework and related matters concerning completed vehicle transportation ...... 12 (3) Collection and analysis of information and formulation of hypotheses for the purpose of constructing a completed vehicle transportation network ...... 18 a. Ascertaining the actual status of infrastructure relating to completed vehicle transportation in India (status of improvement and progress) ...... 18 b. Ascertaining the needs and issues involved in completed vehicle transportation for concerned parties in India 20 c. Study of market scale and demand relating to completed vehicle transportation ...... 22 (4) Study, demonstration, and validation of technical aspects ...... 24 a. Data collection and validation concerning issues involved in operating freight trains of completed vehicles. . 24 b. Confirmation of the effects of rail transport technologies for completed vehicles in India ...... 26 c. Survey of Necessities for the Development of Cargo Collection and Distribution Networks around the DFC (including development trends, etc. for MMLHs scheduled for development around the DFC) ...... 42 d. Study of the Development Schedule for Related Infrastructure (including usage conditions, connectivity, etc.) ...... 46 (5) Calculation of project scale, etc., and study and proposal concerning financing ...... 47 a. Calculation of project scale, etc. (including operation, servicing, and maintenance costs) ...... 47 b. Study and proposal concerning financing ...... 49 Pattern of Japanese-affiliated companies expanding into India ...... 49 Study of financing methods ...... 51 a. Use of policy support, etc. potential for lateral extension to other countries, etc. and measures to promote extension ...... 58 b. Analysis of the superiority of Japanese companies (where necessary, moves by competing companies, and competitive advantages in comparison with them), prediction of benefits for Japan (economic effects) ...... 59 c. Response to Demands and Points Raised by Interested Parties in India ...... 60
e. Validation of Energy Source CO2 Reduction Effects ...... 62
1 Table of Abbreviations
Abbreviation Official Name AFTO Automobile Freight Train Operator CMVR Central Motor Vehicles Rules CTO Container Train Operator DFC Dedicated Freight Corridor DFCCIL Dedicated Freight Corridor Corporation of India Ltd. DMIC Delhi Mumbai Industrial Corridor DMICDC Delhi Mumbai Industrial Corridor Development Corporation Limited ECB External Commercial Borrowing EPC Engineering, Procurement and Construction GREEN Global action for Reconciling Economic growth and ENvironmental preservation GST Goods and Service Tax GVW Gross Vehicle Weight HQ Container High Cube Container ICD Inland Container Depot IR Indian Railway JBIC Japan Bank for International Cooperation JOIN Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development MCLR Marginal Cost of Funds based Lending Rate MMLH Multi Modal Logistics Hub MOR Ministry of Railway NEDO New Energy and Industrial Technology Development Organization PPP Public Private Partnership RBI Reserve Bank of India ROC Registrar of Companies RDSO Research Design and Standards Organization
2 (1) Examination of benefits to India from the transportation of completed vehicles
a. Envisioned state of transportation of completed vehicles and its effects
The Indian economy is growing at the rate of around 7%. By the year 2030, the urban population of India is expected to grow approximately 40% relative to 2014, and the number of cities with a population exceeding one million will reach eighty-seven. Economic activity in the cities makes up the greater part of India’s GDP, and this is estimated to expand to as much as 70% by 2030. As it achieves this kind of growth, India is attracting attention as a promising place to invest. As urbanization progresses, however, traffic congestion, traffic accidents, and environmental pollution have become serious issues. The increase in freight transportation volume that resulted from rapid economic growth in India has been accompanied by Indian government actions to formulate plans (10th and 11th Five-Year Plans) relating to improvement of the Dedicated Freight Corridor (referred to below as “DFC”) as well as to promote infrastructure improvement. The government has also engaged in construction of the Dedicated Freight Corridor, among other activities. In this context, regulations governing the heavy-duty trucks used for completed vehicle transportation in India have been tightened. The allowable length of such trucks has been reduced from 22 m to 18.75 m, and the number of completed vehicles that can be loaded onto one truck has also been reduced. While this regulatory tightening was underway, the unit sales volume of new completed vehicles in India in 2017 surpassed the figure for Germany to reach fourth place in the world. Unit sales volume of new automobiles is expected to continue, steadily increasing into the future. (See Figure 1) This reduction in the number of completed vehicles that can be loaded at one time on these heavy-duty trucks due to regulatory tightening occurs in combination with the increase in unit sales volume (increase in production volume) of automobiles within India. Consequently, there are concerns about a shortage of trucks for transporting completed vehicles from production plants and so on to the locations where there is demand for those products. Automobile Freight Train Operators (referred to below as "AFTO”), which use specialized freight cars for rail transportation of these completed vehicles, were freed to participate in the commercial market in 2013. This was in part because of the idea that it will not be possible to transport those products unless rail freight transportation is expanded. A large part of this transportation, whether by truck or by rail, is one-way (from production plants to consumption locations). As matters stand at present, almost no return transportation of automobiles takes place. In the case of AFTO operation of rail freight transportation, return freight is limited to motorcycle and automobile parts. If it is made possible to load goods other than motorcycle and automobile parts, however, then it will be possible to build efficient rail transportation. At the same time that raising the efficiency of transportation of fully assembled automobiles becomes an urgent issue for commercial enterprises and other concerned parties, the matter of improving transportation quality in terms of damage to freight and so on is also becoming an issue. Therefore high-quality service is coming to be sought in conjunction with improved efficiency.
3 (Unit: Vehicle)
5,177,000 4,894,277 4,630,347 4,380,650 4,144,418 3,760,959 3,439,338 3,458,226 3,474,912 3,136,360 3,216,184
年度 年度 年度 年度 年度 年度 年度 年度 年度 年度 年度 FY20112011 FY20122012 FY20132013 FY20142014 FY20152015 2016 FY2016 2017 FY2017 2018 FY2018 2019 FY2019 2020FY2020 2021FY2021
Figure 1. Changes in motor vehicle unit sales (automobiles and commercial vehicles) in India Sources: Created with information materials from the Society of Indian Automobile Manufacturers and Mizuho Research Institute. Figures up to FY2017 are actual and from FY2018 on are estimated. b. Study of potential for Japanese corporations to establish operations in the vicinity of the DFC
Interviews were held regarding the possibilities and adverse conditions for Japanese transporters of completed vehicles that have not established operations in India to establish operations in India. Their replies indicated that they are contracting to transport completed vehicles, but since the manufacturers of those completed vehicles have not established operations in India, they are not thinking of operating in India as independent transporters of completed vehicles. Automakers, which are expanding into India, anticipate sustained growth in numbers of completed vehicles produced, which is partly why some manufacturers are considering ways of connecting to the Western Dedicated Freight Corridor for rail freight transportation of vehicles. Going forward, the question of how to make active use of the DFC Western Corridor to engage in high-quality, efficient transportation of completed vehicles will become a key.
4 Delhi environs India Railway Network and Automobile Factories
Honda (motorcycles) Approx. 900 km Approx. 1,500 km Suzuki (motorcycles) Yamaha (motorcycles) Ahmedabad SML Isuzu (commercial vehicles) DFC Kolkata
Figure 2. India’s railway network and automobile and motorcycle factories Sources: Google Map and JETRO map information utilized
The red line on the left side of Figure 2 is the area along the DFC Western Corridor. Since there are passenger vehicle, commercial vehicle, and motorcycle factories located along this corridor, it can be assumed that this has potential as a location for Japanese corporations to establish operations.
(2) Trends in Indian government policies and measures regarding completed vehicle transportation
a. Trends in related policies and measures by counterpart national government, etc.
Policies and measures in India
India has been creating spending plans since 1951 by means of national five- year plans, and there is a history to date of the promotion of numerous measures that have contributed to the country’s growth. Since 2010, the economic growth rate in India has ranged between 5% and 10%, and continuing development is anticipated going forward.
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Meanwhile, Narendra Modi succeeded to the position of Prime Minister in 2014. Taking the view that it would be problematical to continue an approach imposing centralized authority for the purpose of supporting diversity across the vast Indian nation, he abolished the five-year plans. What was structured to replace the five-year plans was the National Development Agenda. The National Development Agenda differs from the five-year plans in that it was not formulated by the National Planning Commission, but rather by the newly established NITI Aayog. NITI Aayog is positioned as an advisory organization with the function of providing guidemaps that do not, however, have the force of law. At the same time, this does not alter the fact that the National Development Agenda provides guideposts for national policies and measures, and it is useful for obtaining a view of future infrastructure policies and measures in India.
The National Development Agenda has the function of presenting a view of national policies and measures classified under three components: the long-term, medium-term, and short-term views. On the other hand, public announcement of the long-term Fifteen-Year Vision (2017/2018 to 2031/2032) and the medium-term Seven-Year Strategy (2017/2018 to 2023/2024) has been delayed. The only component that can be confirmed as of January 2019 is the short-term action plan known as the Three-Year Action Agenda (2017/2018 to 2019/2020)1.
The Three-Year Action Agenda presents short-term and specific policies and measures of the national government. The chapter titled "Transport and Connectivity" is related to the present project, and it identifies the following issues faced by the nation in relation to transportation and connectivity:
1. The transportation network is not planned holistically. 2. Maintenance of different modes of transport infrastructure is poor. 3. The capacity of physical transport infrastructure is limited. 4. The transportation network has severe modal imbalances. 5. Transport safety, particularly road safety, remains poor. 6. The transport sector remains highly dependent on conventional sources of energy.
The Agenda also touches on the revision of railway fares on freight railways, improvement of efficiency, observance of railway timetables, and related matters. It is apparent that the central government intends to accelerate modal shifts by improving the convenience of the freight railways. The Agenda also declares a policy of showing consideration for the environment while advancing the development of infrastructure. When national transportation policies and measures are viewed in this way, the present project to promote increased efficiency and environmental consideration in freight transportation using the technology of Japanese corporations can be considered to be in line with the national vision drawn up by India's central government.
1 http://niti.gov.in/writereaddata/files/coop/IndiaActionPlan.pdf
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Policies and measures of the Indian Ministry of Railways
Policies and measures relating to railway infrastructure are formulated by the Ministry of Railways. Indian Railways is the business that handles national railway operations. The transportation and logistics network operated by Indian Railways is among the largest in the world. In a single day, it has 7,000 freight trains running. Freight transportation volume on the railways is increasing in proportion to the population, and it is anticipated that steps will be taken in the future to make further investment and improvement of services geared to user needs.
Under the long-term policy of the National Rail Plan 20302, the Ministry of Railways is acting in the short term on the basis of the Indian Railway Vision & Plans 2017-20193, which is a three-year plan. The plan presents nine themes clearly expressing a stance oriented to improvement of domestic transportation by the implementation of new policies and the promotion of attempts to improve services. The themes given in the Indian Railways Vision & Plans 2017-2019 are as follows:
1. Infrastructure is to be upgraded (Infrastructure upgradation) 2. Customer satisfaction is to be improved (Passenger experience) 3. Status as preferred freight carrier is to be achieved (Preferred freight carrier) 4. Non-fare revenue is to be increased (Non-fare revenue enhancement) 5. Fatal accidents are to be reduced to zero (‘Zero’ fatality) 6. Modernization is to be achieved by computerization and the most advanced technology (Modernization by digitization & cutting edge technology) 7. Organizational culture is to be reformed (Organizational culture) 8. Cost-focused management is to be implemented (Cost focus) 9. Sustainability is to be improved (Sustainability)
The new policies relating to freight transportation involve operation utilizing digital technology, review of pricing strategy, setting of timetables, and organizational improvements. In order to develop Indian Railways into a more preferred freight carrier, it will be important to formulate a roadmap for the active use of digital services to rebuild the freight rate model, to implement transportation services on a fixed schedule, and to reconfigure the organization with an emphasis on the market. The Ministry of Railways declares that it is engaging with policies for that purpose and is going to make every effort for improvement.
In August 2014, after the Modi administration came into office, the Cabinet allowed 100% foreign investment participation in high-speed rail, dedicated freight routes, suburban corridor rail networks, and other such railway infrastructure PPP projects. The context for this was the underlying government intent to bring about modernization of the railways by liberalizing direct investment with the aim of further expanding the network. The participation
2 http://pib.nic.in/newsite/PrintRelease.aspx?relid=155122 3 http://www.indianrailways.gov.in/Railways%20Presentation.pdf
7 of private enterprise in completed vehicle transportation by the railways has been progressively eased, and there are expected to be increasing business opportunities in the railway infrastructure field going forward.
Policies and measures by state
India has adopted a federal type of governance. The decentralization of power has been reinforced, and a wide range of authority and financial resources have been transferred from the central government to the state governments. The policies and measures in Haryana State, Gujarat State, Karnataka State, and Tamil Nadu State are of particular importance in examining the possibilities of the present project because they are closely related to the completed vehicle transportation business. Transportation policies and measures for each state are described in the following:
Haryana State
Haryana State is the location of the production centers (Manesar and Gurgaon) of Maruti Suzuki, which holds the largest share of automobile sales in India. According to the Government of Haryana Vision 20304, their share of domestic automobile production volume is approximately 50% (when motorcycles are included, approximately 60%).
Vision 2030 states the intention to reinforce efforts attracting investment to the Delhi Mumbai Industrial Corridor (referred to below as “DMIC”), where a Dedicated Freight Corridor is to be placed. The construction of Multi Modal Logistic Hubs (referred to below as “MMLHs”) is also planned as an element in the Vision. In May 2018, the state government approved the development of Nangal Chaudhary as a logistics hub, and the decision has been made to implement the project in two phases by around 2028. Construction of a logistics hub is aimed at simultaneously forming industrial clusters and heightening the efficiency of physical distribution, and this is expected to contribute to the creation of new bases for business in Haryana State. The Government of Haryana Vision 2030 also sets 17 sustainable development goals (SDGs). One of these, SDG 9: Industry, Innovation and Infrastructure, describes the sector vision in these words: "Develop state-of-the-art infrastructure to promote a conducive environment and provide a robust plug-and-play ecosystem for sustainable and inclusive industrialization…" The aim is to realize the following five goals:
1. Establish six electronics manufacturing clusters, six IT parks, three e-commerce logistics centers, and seven incubation centers 2. Construct 100 factories and 100 worker housing facilities 3. Procure an additional 8,500 buses for the public transport system 4. Construct elevated crossings at 15 locations, bypass roads at 20 locations, and roads (as elevated structures and under elevated structures) at 100 locations 5. Construct large-scale recycling plants at 17 locations, sewage treatment plants at 28 locations, and multi
4 http://esaharyana.gov.in/Portals/0/undp-2030.pdf
8 modal logistics hubs at five locations
When this project survey team visited the area in August 2018, the Delhi Mumbai Industrial Corridor Development Corporation (referred to below as “DMICDC”), which is in charge of development related to MMLH construction, appeared to be expecting to add passenger and freight railways, bus terminals, metro lines, car parking lots, and company office space to the facilities. That construction would heighten the convenience of freight railways and contribute to promoting modal shifts in Haryana State as well as to promoting the increase in volume of cargo handled by railways.
Karnataka State
With its capital in Bengaluru, Karnataka State is sometimes termed India's Silicon Valley, and multinational corporations have global strategic bases and research and development bases clustered there. The automobile and auto parts manufacturing industry is also growing, and corporations such as Toyota, Mahindra, Honda (motorcycles), and Volvo (buses) have production centers in place in this state, as well. The factories operated by Japanese corporations are located in an area centered in Bengaluru and extending approximately 80 km. Toyota Motor Corporation and its group companies have sited themselves in the Bidadi Industrial Area, Honda (motorcycles) and Aisin Seiki have sited themselves in the Narasapura Industrial Area, and Denso Corporation has sited itself in the vicinity of the Peenya Industrial Area.
The Nava Karnataka Vision 2025 states the long-term policy of Karnataka State. This vision for the infrastructure sector is: "To ensure…connectivity across Karnataka in order to achieve increased socio-economic development of the state." The document sets forth the following seven goals by which the vision is to be realized:
1. Enhance regional connectivity of roads ensuring first and last mile connectivity to all villages 2. Develop robust airport and airstrip infrastructure in the state 3. Augment rail connectivity across the state to deliver a seamless, accessible, multimodal, and secure transport offering 4. Develop quality port infrastructure and promote coastal shipping 5. Develop Corridor Infrastructure to augment cross-sector potential of the state 6. Attract large investments in the infrastructure sector 7. Improve accessibility and efficiency of bus public transportation system
In connection with the goal expressed as "Augment rail connectivity across the state to deliver a seamless, accessible, multimodal, and secure transport offering," in January 2019 the state government took the concrete step of approving the Bengaluru Suburban Rail Project, which is to link Bengaluru with four routes within the state. This is a move toward significant improvement of railway infrastructure. At the overall length of 64 km (Heelalige- Devanahalli corridor), a total of 80 stations will be linked. This is expected to increase railway utilization by the public and provide a positive impetus not only for passengers, but also for freight transportation.
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Southern Railways indicated the understanding that, under current circumstances, it is when the distance exceeds 2,000 km that the cost of rail transportation falls below the cost of other land transportation (i.e., truck). Thus the transportation distance can be considered a crucial factor in the rail transportation business.
Gujarat State
In Gujarat State, automobile production is being carried on by Maruti Suzuki and Peugeot, and there is great potential need for businesses that transport completed vehicles by railway. The Gujarat factory of Maruti Suzuki, which entered operation in January 2017, is located near Mundra Port, and the total volume of completed vehicle transportation there is also expected to increase. Metro line development centered on Ahmedabad, the former state capital, and a high-speed rail project between Mumbai and Ahmedabad are underway, while National Highway 8 connects to Delhi in the north and Mumbai in the south. Areas along these routes form a favorable investment environment, and further industrial activity is anticipated.
Present infrastructure policy and measures in Gujarat State are being pursued in accordance with the Blueprint for Infrastructure in Gujarat 2020 (BIG 2020)5 . (A BIG 2030 plan is being formulated but has not yet been announced as of January 2019.) This is the ten-year plan for the infrastructure field that was published in August 2009, and development of railway infrastructure in the state is also taking place on the basis of this plan. Gujarat State emphasizes improvement of infrastructure connectivity in BIG 2020, and sets forth measures to achieve the following goals in railway infrastructure, as well.
1. Strengthen connectivity from port and harbor facilities and industrial areas to DFC and DMIC 2. Implement priority measures for multi modal transportation projects that contribute to reduction of physical distribution time and costs 3. Provide efficient and rapid passenger service on important routes and at railway stations 4. Provide railway services geared to demand with the central city in the state as the starting point
Recognition of the importance of this state's railway infrastructure is apparent even from the amount of infrastructure investment from 2008 to 2017 as projected in 2009 (see Table 1). The state government was to implement fifty-four railway infrastructure projects during this period, and it had set up plans to increase the expenditure figure every year. Included in this was a plan to adopt a Japanese Shinkansen-type high-speed rail line between Ahmedabad and Mumbai, and implementation of this project is continuing as of 2019. If the railway infrastructure is fully upgraded, then modal shifts within the state can be expected to advance, and utilization of railways for freight transportation can be expected to accelerate, as well.
5 http://www.gidb.org/big-2020
10 Table 1. Infrastructure expenditure in Haryana State 2008-2017 (unit: 10 million rupees) Investment PPP projects Indian Railway Total period projects 2008―2010 552 1,541 2,093 (39.8 billion yen) 2010―2012 1,921 4,317 6,238 (118.5 billion yen) 2012―2017 39,645 37,633 77,278 (1,468.2 billion yen) Total 42, 118 43,491 85,609 (1,626.6 billion yen) *Conversion at rate of 1 rupee = 1.9 yen Source: BIG 2020 Tamil Nadu State
The automobile manufacturers that have sited production centers in Tamil Nadu State are Renault Nissan, Hyundai, Ford, and BMW. Many auto parts suppliers have also established operations there. Examples of Japanese suppliers among them include AGC, Bridgestone, Nippon Steel & Sumikin Materials, and Kyowa Altec. Growing numbers of foreign corporations have been establishing operations in recent years in Sri City in Andhra Pradesh State, which is adjacent to Tamil Nadu State, and the South Korean automobile manufacturer KIA announced in April 2018 that it would start production activities in the region by 2019. The automobile industry is expected to continue growing in Tamil Nadu State and its vicinity in the future, and a need for railway transportation of completed vehicles can therefore be expected to exist there.
Vision Tamil Nadu 20236, which is the ten-year plan for Tamil Nadu State, earmarks 150 billion rupees for a dedicated freight corridor project (between Chennai and Thoothukudi) as part of railway infrastructure investment, and 3,700 billion rupees for infrastructure investment in the state as a whole. The state has declared the following three goals for railway infrastructure, including the construction of dedicated freight routes to all ports and harbors:
1. All urban nodes with population of over 500,000 are to be connected with high speed rail corridors for both freight and passenger traffic 2. All ports and harbors are to be provided with connections to dedicated freight routes 3. Key routes are to be increased by a factor of two and electrified
The import and export of auto parts takes place mainly at Chennai Port. Most of the completed vehicles manufactured in the south of India are exported either through Kamarajar (Ennore) Port or through Chennai Port. The Adani Group, which is a major local logistics company, announced in December 2017 that it would build a new container terminal within Kamarajar Port and work on expanding the business of transporting completed vehicles. Meanwhile, Chennai Port has been experiencing conspicuous logistics backlogs in recent years, and attention has therefore been concentrated also on Kattupalli Port, which is near Kamarajar (Ennore) Port, as well as on Krishnapatnam Port, which is located in Andhra Pradesh State approximately 110 km from the Sri City Industrial Area.
6 http://www.spc.tn.gov.in/pdfs/TN_Vision_2023.pdf
11 b. Study of the legal framework and related matters concerning completed vehicle transportation
Per capita GDP in India has been increasing significantly in recent years, with the result that figures for automobile, motorcycle, and other such ownership have risen. In 2016, the number of vehicles in India exceeded 230 million units of which 27.9 million units (approximately 12% of the total) were automobiles and jeeps.
250 2,000 車両台数（左軸：百万台）Number of vehicles (left axis: millions of vehicles) 一人当たりPer capita GDP (right（右軸： axis:USD USD)） 200 1,600
150 1,200
100 800
50 400
0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Figure 3. Changes in number of registered motor vehicles and per capita GDP in India Source: Created with reference to information materials from Ministry of Statistics and Programme Implementation and World Bank
Table 2. Number of registered motor vehicles in India (2001-2016) Year Buses Taxis Goods Two- Cars & Others Total vehicles wheelers Jeeps
2001 633,900 634,357 2,948,300 38,556,026 6,423,367 5,795,076 54,991,026
2002 635,006 688,204 2,973,740 41,581,058 6,925,281 6,121,048 58,924,337
2003 720,696 825,416 3,491,637 47,519,489 7,774,223 6,675,823 67,007,284
2004 767,593 901,889 3,748,484 51,921,973 8,549,287 6,828,709 72,717,935
2005 678,521 939,738 3,877,622 58,799,702 9,380,576 7,825,560 81,501,719
2006 762,341 1,039,845 4,274,984 64,743,126 10,486,599 8,311,372 89,618,267
2007 1,098,422 1,042,347 5,118,880 69,128,762 11,606,832 8,712,017 96,707,260
2008 1,156,568 1,201,862 5,600,938 75,336,026 12,747,967 9,310,493 105,353,854
2009 1,205,793 1,307,805 6,040,924 82,402,105 14,004,781 9,989,625 114,951,033
2010 176,642 3,615,086 6,431,926 91,597,791 15,509,834 10,414,693 127,745,972
12 2011 1,238,245 1,789,417 7,064,495 101,864,582 17,441,726 12,467,142 141,865,607
2012 1,296,764 2,011,022 7,658,391 115,419,175 19,556,644 13,548,582 159,490,578
2013 1,418,763 2,216,453 8,596,762 132,550,294 22,636,282 15,026,675 182,445,229
2014 1,468,010 2,109,348 8,697,541 139,409,778 23,888,403 15,130,891 190,703,971
2015 1,527,396 2,256,619 9,344,464 154,297,746 26,354,717 16,242,347 210,023,289
2016 1,384,740 2,341,375 10,516,156 168,975,300 27,900,312 18,912,715 230,030,598 Source: Created with reference to information materials from Ministry of Statistics and Programme Implementation
The number of automobiles and jeeps increased by a factor of four over the sixteen years from 2001, reaching an annual growth rate of nearly 10%. As things are at present, the great majority of completed vehicles in India are transported using trucks. According to on-site interviews, rail transportation appears to account for no more than about 5%. Four major reasons that truck transportation accounts for the majority are as follows.
● It enables direct transport from the factory to the dealer. ● It is cost advantageous for short and medium distance transportation. ● Transport trucks exist in abundance. ● Transportation can be completed in a shorter time.
Trucks used to transport automobiles are generally customized. The rules regarding truck specifications are set forth in Rule 93 of the Central Motor Vehicles Rules (CMVR) of 1989.
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Central Motor Vehicles Rules (CMVR 1989) (Article 93: portions extracted from the source text) “(2) The overall length of a motor vehicle other than a trailer shall not exceed— (i) in the case of motor vehicle other than transport vehicle having not more than two axles, 6.5 metres; (ii) in the case of transport vehicle with rigid frame having two or more axles, 12 metres; (iii) iii the case of articulated vehicles having more than two axles, 16 metres; (iv) in the case of truck-trailer or tractor-trailer combination, 18 metres; (v) in the case of three axle passenger transport vehicles, 15 metres; (vi) in the case of single articulated (vestibule type) passenger transport vehicle, 18 metres (Please see the conditions given in note below); (vii) in the case of double articulate passenger transport vehicles, 25 metres. (3.A) The overall length of the construction equipment vehicle, in travel shall not exceed 12.75 metres: Provided that in the case of construction equipment vehicle with more than two axles, the length shall not exceed 18 metres. The overall height of a motor vehicle measured from the surface on which the vehicle rests,— (i) in the case of a vehicle other than a double-decked 142[transport vehicle], shall not exceed 3.8 metres; (ii) in the case of a double decked transport vehicle, shall not exceed 4.75 metres; (ii-a) in the case of tractor-trailer goods vehicle, shall not exceed 4.20 metres; (iii) in the case of a laden trailer carrying ISO series 1 Freight Container, shall not exceed 4.2 metres:” The Ministry of Road Transport and Highways has been supporting the transportation of vehicles in recent years by extending the allowed length of articulated vehicles from 16 meters to 18.758 meters. The permissible gross weight and safe vehicle weight by truck category defined by the Ministry are shown below:
Table 3. Permissible weight (GVW) and safe maximum axle weight by truck category Transport vehicle category Maximum gross Maximum axle weight vehicle weight (tons) 1. Rigid Vehicles Number of axles: 2 9.00 Front: 3 tons Number of front tires: 1 Rear: 6 tons Number of rear tires: 2 Number of axles: 2 12.0 Front: 6 tons Number of front tires: 2 Rear: 6 tons Number of rear tires: 2 Number of axles: 2 16.2 Front: 6 tons Number of front tires: 2 Rear: 10.2 tons Number of rear tires: 4 Number of axles: 3 25.0 Front: 6 tons Number of front tires: 2 Rear (tandem): 19 tons
14 Number of rear (tandem) tires: 8 Number of axles: 4 31.0 Front (2 axles): 12 tons Number of front tires: 4 Rear (tandem): 19 tons Number of rear (tandem) tires: 8 2. Semi-Articulated Vehicles Tractor (2 axles) + trailer 26.4
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Various different indirect taxes exist in India, in addition to which the taxation rates and frameworks differ from state to state. Consequently, the system used to be complex. On July 1, 2017, however, the Goods and Services Tax (referred to below as “GST") was introduced and seventeen indirect taxes were unified. India has adopted a dual GST scheme that is made up of Central GST (CGST), State GST (SGST), and Integrated GST (IGST). In-state transactions are subject to CGST and SGST, while interstate transactions and import transactions are subject to IGST (customs duties are imposed separately from GST). The GST Law takes an approach based on units of bases rather than of corporations. Every transaction between bases (in the case of a corporation unit, every internal transfer) is subject to GST.
17 (3) Collection and analysis of information and formulation of hypotheses for the purpose of constructing a completed vehicle transportation network
a. Ascertaining the actual status of infrastructure relating to completed vehicle transportation in India (status of improvement and progress)
1. Regarding current freight stations for completed vehicle transportation Visits were made to inspect Farukh Nagar Station and Nidavanda Station, which are currently being used to transport completed vehicles on freight cars for AFTO use. Farukh Nagar Station is a starting station for transporting completed vehicles while Nidavanda Station is a destination where completed vehicles arrive.
1-1. Farukh Nagar Station Visits were made to this station on both the first and second trips to India. Unfortunately, AFTO freight cars for the purpose of carrying completed vehicles were not present on this line. This station, we were informed, handles transportation amounting to 16-17 round trips per month. In the case of the newest AFTO freight cars that are dual-level carriers, trains departing from this station can carry approximately 320 mini vehicles. In the case of AFTO freight cars with improved passenger cars, however, they can only carry 240 vehicles. When completed vehicles are loaded at Farukh Nagar Station, loading takes about seven hours.
1-2. Nidavanda Station AFTO freight cars (BCMCBA type) with modified passenger cars had arrived in the station, so these freight cars were inspected. Information regarding departure from and arrival at this station is shown below: ● Carrying five vehicles per car, a 25-car consist can transport a total of 125 vehicles. ● Unloading the vehicles takes approximately seven hours ● There are 28 round trips operated per month, meaning roughly one round trip per day
2. Concerning characteristics of rail transportation involved in completed vehicle transportation The transportation of completed vehicles can be broadly divided into rail transportation that uses freight cars to carry completed vehicles (AFTO) and transportation of completed vehicles in containers (container train operators [“CTO”]).The distinctive characteristics of these two transportation methods are described below:
2-1. In case of freight cars for completed vehicle transportation When freight cars for the purpose of completed vehicle transportation are used, carrier cars are used to transport completed vehicles from the factory to the freight stations. The completed vehicles are held at the freight station, and after the freight cars arrive, the completed vehicles are loaded by driving them onto the freight cars. The freight cars for completed vehicle transportation are 73 feet in length and operate in 27-car consists. We were informed that loading and unloading the completed vehicles takes about seven to eight hours. At the arrival station, the completed vehicles are unloaded by backing them off of the freight cars. They are then held at the freight station until they are loaded onto carrier cars to be transported to the customer. Figure 4 shows a conceptual image of the process.
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Factory Delivery destination Freight Freight station station
Car pool Car pool Figure 4. Conceptual image of completed vehicle transportation by AFTO freight car
2-2. In case of container use for completed vehicle transportation When completed vehicles are transported using containers, the completed vehicles at the factory are loaded onto the container carrier chassis that have come to pick them up. They are then transported to the freight station. The containers are held at the freight station until being loaded onto container carrier cars and transported by rail. After that, the containers can be loaded onto container carrier chassis and transported by truck to the delivery destination. Figure 5 shows a conceptual image of container transportation. Pallets are used in order to load as many completed vehicles as possible into the containers, and the loading and unloading of the pallets is carried out at the factory and the delivery destination.
Delivery Factory destination Freight Freight station station
Figure 5. Conceptual image of completed vehicle transportation by container
The preliminary design of the freight stations is made on the basis of the distinctive characteristics of these two methods of completed vehicle transportation, one using freight cars and the other using containers that are for the purpose of completed vehicle transportation.
19 b. Ascertaining the needs and issues involved in completed vehicle transportation for concerned parties in India
During the two field visits made over the period of this study, interviews were held with automobile and motorcycle manufacturers, transport operators, freight car manufacturers, and other parties including private enterprises and organizations. In India, the terms cost competitive and price sensitive were heard from both private enterprises and organizations. A cost-sensitive stance was apparent on the part of both producers and consumers. The keywords of modal shift, green logistics, and eco-friendliness were not heard during manufacturer interviews, giving the impression that consideration for environmental problems is something that still lies far in the future, very far as penetration to the private enterprise level is concerned. Apart from price sensitivity, the factors of transportation quality and lead time were assigned varying orders of priority by different manufacturers. Among the kinds of manufacturers that are competing for top market share, however, an emphasis on high-volume transportation was found to be a key point due to the effort to achieve a larger number of units shipped, which is an element in the ranking of market share. In terms of this concern with high-volume transportation, rail transportation is capable of achieving dominance over trucking as a percentage of transportation. Therefore remarks were also heard to the effect that there were expectations for expansion of rail transportation. On the other hand, there are also numerous manufacturers that pursue an advance payment system in which they do not make shipment arrangements until receipt of payment from the dealer has been confirmed. Remarks on this side show that truck transport is preferable because it allows immediate arrangement to be made for small lots. The main means of completed vehicle transportation at present is transportation by truck. Some advantages of truck transport other than the above include the moderate cost and the predictability of lead time in comparison with rail transportation that does not have an operating schedule. As far as rail transportation is concerned, there was recognition that it is good to secure multiple means of transportation. At the same time, however, the following concerns regarding rail transportation indicated that the switch to rail transportation or expansion of the proportion of transportation by rail is unlikely to occur any time soon.
20 ● In the case of an advance payment system, the timing of product shipment is difficult to match with the timing of freight train departure. ● Adequate space has to be assured for loading and unloading at the departure and arrival stations.
It was found from these interviews that improvement with regard to the issues faced by rail transportation divides into two areas. One area, involving the creation of operating schedules, setting fares, and so on, will require that Indian Railways be approached to make improvements. In the other, which involves matters such as limiting the occurrence of damage to the product and raising transportation efficiency in order to reduce total cost, the transport operators can make improvements by providing new services.
21 c. Study of market scale and demand relating to completed vehicle transportation
(1) Domestic demand in India As noted earlier, domestic unit sales of automobiles in India are continuing to grow. Going forward, it can be anticipated that as incomes rise, there will be a progressive shift as people replace their motorcycles by purchasing automobiles, and replace their compact automobiles by purchasing medium-size and large automobiles. The distribution of automobile ownership can also be expected to expand from urban areas to outlying regions. Therefore the prospects are good that the need for completed vehicle transportation will also continue increasing in the future. The pyramidal population structure in India gives further reason to expect that India’s automobile industry will grow in the long term. (2) Demand from Japanese corporations It is also apparent from Figure 2 that Japanese automobile manufacturers have established their presence mainly in the north and south of the country. It is also the case that as manufacturers established operations in India, auto parts manufacturers followed suit. The JETRO study “About the Indian Automobile Industry (with a Focus on TN State)” (June 2018 edition) contains this statement: “There is also a growing trend for auto parts produced in India to be supplied to the world's automobile production centers, so India is playing a significant role in the global supply chain.” Parts manufacturers can be anticipated to continue expanding production and enlarging transport volume not only in order to acquire markets in India and the newly emerging countries around it, but to capture the global market.
Chennai vicinity and area ●AGC Inc. ●Nippon Steel & Sumikin Materials ●Bridgestone ● Alpha ●Sanoh Industrial ●Mitsuba ●Igarashi Electric Works ● Nippon Steel & Sumikin Pipe ●Yamaha Motor Electronics ●Marubeni-Itochu Steel ●Sumitomo Wiring Systems ●Unipres Corporation ●Usui Co., Ltd. ●Daido Metal ●Yorozu Corporation ●NTN ●Takata Corporation ●Aisan Industry (SriCity) ●Kasai Kogyo ●Nichias Corporation ●Kikuwa (SriCity) ●Kyowa Altec ●Nikki ●Tohoku Steel (SriCity) ●Kyowa Metal Works ●Nittan Valve ●Nippon Seiki (SriCity) ●GUN EI Chemical Industry/SAN-EI SILICA●NSK ●NHK Spring (Chennai, SriCity) ●Koito Manufacturing ●Nihon Tokushu Toryo ●Piolax, Inc. (SriCity) ●Kosei Aluminum ●Hitachi Automotive Systems etc.
Bengaluru vicinity ●Aisin Seiki ●Seiren Co., Ltd. ●Toyoda Iron Works ●Iida Industry ●TPR ●Toyota Boshoku ●Owari Precise Products ●Denso ●Nippon Piston Ring Co., Ltd. ●Keihin Corporation ●Sumitomo Riko ●Bando Chemical Industries ●Sanoh Industrial ●Tokai Rika ●Musashi Seimitsu Industry Co., Ltd. ●JTEKT ●Toyoda Gosei etc. ● Sumitomo Wiring Systems ●Toyota Industries Corporation
Figure 6. Examples of Japanese auto parts suppliers with bases in South India (for reference) Source: JETRO Chennai Office, “About the Indian Automobile Industry (with a Focus on TN State)” (June 2018 edition)
22 d. Hypothesis Formulation for Building a Completed Vehicle Transportation Network
This business model for a completed vehicle transportation fabricates tools for completed vehicle transportation, then uses those tools to transport completed vehicles on the outward leg, and motorcycles, general goods, etc. on the return leg. The current AFTO system carries completed vehicles on the outward leg, but it is limited to only carrying completed vehicles, motorcycles, and auto parts on the return leg, so the majority of operation is one-way transportation. We envisage changing the concept of completed vehicle transportation in India by developing and operating tools able to change one-way transportation to round-trip transportation. Currently, AFTO operators use freight cars to transport completed vehicles, and if they have no freight for the return leg (the freight cars are only being forwarded), the return leg carriage charge is reduced by 80% from the outward leg charge. That means rail transportation is viable even if there is no return leg freight, but it is not certain how long this arrangement will continue.
For the business model which we are considering, we are studying ways to run freight cars laden7 in both directions. This involves fabricating tools which yield advantages even in comparison with other modes of transport.
Factory Delivery destination
Freight Freight station station
Delivery destination Factory
Figure 7 Illustration of Two-Way Load Carrying
We feel it is necessary to carefully study the economy and risks of changing to two-way load carrying. To examine the economy, we will compare the carriage charges and fees of carrier cars and of transportation by AFTO freight cars, based on the costs of the containers and pallets used, etc. in this proposal. However, if two-way load carrying were achieved, there would be the risk that we cannot know how long the discount arrangement for AFTO freight car forwarding on the return leg will continue. Finally, the most important challenges for achieving two-way load carrying are fixed-time operation of freight trains, and obtaining return leg loads.
7 Operating trains that are loaded with freight.
23 (4) Study, demonstration, and validation of technical aspects a. Data collection and validation concerning issues involved in operating freight trains of completed vehicles.
On January 20, 2017, Japan’s Ministry of Land, Infrastructure and Transport commissioned Nippon Express to conduct a demonstration of rail freight transport over approximately 2,200 km between Delhi and Bengaluru in India, to promote the use of rail freight. This demonstration hired one 80 TEU freight train, from Indian Railways, to perform rail freight transportation. The demonstration was expected to compile a timetable that would reduce the journey, which usually took seven to ten days over that zone, to three days or less, substantially shortening lead time. The result, however, was that the service arrived seventy-two hours later than the scheduled timetable.
Envisaged demonstration project to encourage the use of containerized freight rail transport that employs joint cargo collection in India The current state of containerized freight rail transport in India
Building⚫ As a ageneral joint cargo rule, collectionforty-carriage scheme trains -> run Implementing between the regular departure-service and transportation destination station, - Multipleand the Japanese train does and not Indian depart forwarders if freight is jointly insufficient collect for freight forty from carriages, multiple so shippers the departure to collect sufficientdate is volumeunknown. for one train. -⚫ The Operation, optimum etc.departure prioritizes date passenger is set, and rail dates service, and times so the of time departure required and for arrival freight are journeys determined is throughunknown. discussion between IR (Indian Railway) and CTOs (Container Train Operators) -⚫ Collection The zones information and numbers is centrally of trains managed, available and for freightregular, location fixed-time information, transportation etc. is are provided limited. to each forwarder.* Regular services, of one train per week in two zones, started on June 15, 2016.
Building a joint cargo collection scheme -> Implementing regular-service transportation - Multiple Japanese and Indian forwarders jointly collect freight from multiple shippers to collect sufficient volume for one train. - The optimum departure date is set, and dates and times of departure and arrival are determined through discussion between IR (Indian Railway) and CTOs (Container Train Operators) - Collection information is centrally managed, and freight location information, etc. is provided to each forwarder.
Delhi Bengaluru
Figure 8 Illustration of a Demonstration of Using Joint Cargo Collection in India to Encourage the Use of Containerized Rail Freight Transport Source: Ministry of Land, Infrastructure and Transport press release (January 12, 2017, http://www.mlit.go.jp/report/press/tokatsu01_hh_000294.html)
As this demonstration showed, freight transportation in India still faces many challenges. The challenges facing rail transportation are as stated below:
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- Challenges of rail transport operation (1) Rail services and station cargo handling are performed by different operators, so it is difficult to prepare schedules for train services, and to stick to the scheduled service times. (Many freight trains in India do not have set arrival and departure times). (2) Rail transport operators cannot get involved in rail services, which makes it difficult for them to comply with what users want from rail transportation. (3) When a train runs on time in Japan, that means the train arrives at, and departs from, each station at a predetermined time. In India, however, there are set service times for some freight trains, but in practice, the trains do not run according to their timetables.
25 b. Confirmation of the effects of rail transport technologies for completed vehicles in India
1. Pre-travel survey We conducted a survey, drawing on information from the local corporation of Konoike Transport, and from the Internet, etc. of current means of completed vehicle transportation in India, and their issues.
Table 4 The Current State of Completed Vehicle Transportation in India Current completed vehicle transportation Advantages Disadvantages method Transportation by - Freight car procurement costs are - Low transportation efficiency dedicated freight cars low. These are former passenger (modified passenger Decommissioned passenger train carriages, so the interior is carriages) for auto rolling stock that is no longer used cramped and each can only carry transportation for that purpose can be given one level of completed vehicles. minimum modifications, which Therefore, the number of consists of removing walls between completed vehicles that can be carriages so that completed transported is small for the number vehicles can drive inside the rolling of carriages in the train. stock. Therefore, the procurement - One-way transportation costs for freight cars for completed These are former passenger vehicle transportation are low. carriages, so they do not have side doors and chassis strength intended for loading general freight. - Land is required for temporary storage at departure and arrival stations. Completed vehicles waiting for loading and departure at the loading and departure station must be stored temporarily, and they must be stored again at the arrival station before they are delivered, requiring land at each station. - Drayage8 is required to the departure and arrival stations Drayage by car carrier is required from the factory to the loading and departure station, and from the arrival station to the car pool that is the delivery destination.
8 When cargo is transported via intermediate sites, such as warehouses, rather than going directly from the loading point to the unloading point.
26 Time-consuming loading and unloading of the completed vehicles occurs repeatedly. Transportation by - Able to transport large volumes at - One-way transportation dedicated freight cars for once - Land is required for temporary auto transportation The design of the freight cars is storage at departure and arrival (BCMCBM type) specialized for completed vehicle stations. transportation, so they can carry - Drayage is required at the two levels of completed vehicles departure and arrival stations (they can simply carry twice as The above three points are the many vehicles at once as modified same as for transportation by passenger carriages), so they modified passenger carriage. appear to be the method with the highest transportation efficiency. Also, the intermediate floors are movable, so they can accommodate some degree of variation of vehicle types. Transportation by general - Moderate transportation efficiency - Cassettes must be returned purpose marine In India, this transportation - Empty containers must be obtained containers method is used by Adani. If the company does not already (40 ft HQ containers) This transportation method uses have its own containers for *HQ: Abbreviation for the Cassette System (referred to completed vehicle transportation, it “high-cube.” These below as “cassette”) developed by must obtain an ample supply of containers are 2,896 Kar-Tainer International of South containers for empty forwarding mm tall, which is 300 Africa. Completed vehicles are (“positioning”) to ensure stable mm taller than the loaded onto pallets, and vehicles completed vehicle transportation. standard container with their pallets are loaded into - It takes time to assemble and (2,591 mm), so they containers. Vehicles can be loaded disassemble cassettes. have more volume. 3-dimensionally, so each 40 ft HQ container can hold three to five completed vehicles, depending on their type. - There is no need to re-load completed vehicles The entire container can be transported from the originating factory to the destination, so re- loading within station yards is not required. - The containers used are regular 40ft HQ dry containers owned by shipping companies, and it is
27 possible to use containers that are forwarded empty (positioning) after carrying imported freight, so one-way use is also possible. - Less land is required for temporary storage Vehicles can be stored stacked in their containers, so parts of regular container yards can be used. - There are few restrictions on departure and arrival stations There is no need for a temporary storage area for completed vehicles within the station yard, and there are no problems provided the facilities can handle containers. Any container-handling freight stations in India can be used as the departure and arrival stations. Transportation by double- - Moderate transportation efficiency - Operation zones are limited stacked 40 ft reduced 2-3 vehicles (depending on the These containers are considerably height domestic model) are loaded in each larger than the size that can be transportation containers container, and the containers can be transported by rail, so they cannot double stacked on freight cars, so be transported if MOR approval each freight car can transport 4-6 cannot be obtained through an vehicles. investigation of transport - Containers can be loaded with feasibility. return freight They can be used as dry containers once the completed vehicles have been unloaded. Transportation by car- - Freight fees are low - This method causes traffic carrying truck trailer (car This is the transportation mode congestion, as well as atmospheric carriers) used with the largest volume in and other pollution. India, and there are many operators, so competition between them is intense and there is little scope for raising transportation unit prices. - Direct transportation is possible, with no re-loading between departure and destination.
28 We have studied transport modes of higher efficiency or lower cost that could replace these modes. The following three were the candidates in our initial deliberations:
① New dedicated freight cars for auto transportation, capable of more efficient transportation of large batches ② Introduction of Japan’s car rack approach in a containerized transportation system capable of two-way transportation ③ Reduced-height domestic transportation containers in a containerized transportation system capable of two- way transportation
1-2 Study of Transportation Tools 1 In this study, we interviewed automakers, the Indian Ministry of Railways, completed vehicle transportation operators, and others about the current situation, used tools such as concept sketches to exchange opinions, and searched for an optimum and feasible transportation model. The initial study preconditions, and the study proposal, are as shown below:
Table 5 Study Preconditions (initial) Item Content Transported goods Outward leg: Completed vehicles (completed vehicle overall height is assumed to be 1,500 mm or less) Return leg: Marine containers or motorcycles, general freight Transportation Whole of India zone Freight handling The developed tool is to be in the shape of a container, and is to be loadable onto a method freight car by using a top lifter or reach stacker, which are the handling equipment generally used for handling containers. The method for loading completed vehicles into the containers is to mount the container concerned onto a container transportation trailer chassis, carry it to the motor pool of the production factory, and load the vehicles under their own power. During forwarding, the whole container loaded with completed vehicles is delivered on its chassis to the motor pool at the destination or to the car dealerships. The vehicles are then unloaded under their own power. Overall container The length shall be 45 ft. length When the most major vehicle type of less than 4 m is transported in India, the necessary internal dimension of the container to carry three cars with spaces of 20 cm between them is 12.8 m. That does not fit in 40 ft, so 45 ft will be adopted. *45 ft is an ISO standardized size, and its use has been increasing in recent years. Container The structure shall be full cover. structure As a condition to ensure the quality of completed vehicle transportation, it is deemed necessary to protect the completed vehicles with full cover in all zones from origin to destination. Carrying freight A container freight car (BLL type) which can carry 45 ft containers car
29 Table 6 The Studied Transportation Tools and Their Summaries (initial) Type Summary New dedicated The DFC Western Corridor zone has permanent way equipment to support double freight cars for stacked transportation of HQ containers, and is able to carry larger than conventional auto transportation freight cars. (Adapted to the Using this fact, we will develop dedicated freight cars for auto transportation which DFC Western can be loaded on three levels, surpassing the previous dedicated freight cars for auto Corridor) transportation (the two-level BCMCBM type), for batch transportation of much larger volumes. Reduced height Completed vehicles will be placed in containers with lower overall height, which domestic will be transported double stacked. transportation Container height shall be around 1,900 mm (in which case, the internal dimension containers would be around 1,600 mm), so that when they are double stacked on container freight cars, the height above the rails will not exceed 4,800 mm. Structure shall be the same as for regular containers, so they can also be used as dry containers. Car rack To avoid one-way loading, the structure shall allow loading of the container for containers return cargo. In the interior of the car rack container, a movable intermediate floor is provided to allow loading completed vehicles on two levels. During container loading, the structure allows the intermediate floor to be housed in the floor of the container, to provide a flat floor. For container loading, the roof of the car rack container is the opening, and the containers can be taken in and out from above, using a reach stacker or a gantry crane. Multi-purpose These super-high containers are equipped with an intermediate floor that allows auto transportation loading with completed vehicles on two levels. The intermediate floor is movable containers and can be hoisted to stow in the ceiling when not carrying completed vehicles, allowing loading with general freight as return cargo.
The anticipated advantages and disadvantages of each proposal are as stated below:
Table 7 Advantages and Disadvantages of the Studied Transportation Tools (initial) Type Advantages Disadvantages New dedicated - This proposal maximizes the number of - This involves the development of a freight cars for vehicles which can be carried per train, new type of freight car, which auto enabling high-efficiency transportation. would require large amounts of transportation time and expense. (Adapted to the - There is no change from the DFC Western conventional mode of Corridor) transportation, so almost no effect in lead time improvement can be anticipated. - Transportation of return cargo is not
30 possible without bringing the freight into a station for reloading, and the cargo is restricted by the freight car structure. Reduced height - The structure is that of a container, - The structure is that of a container, domestic which is easy to manufacture. This so some degree of floor thickness is transportation method also appears to be low cost. required, sacrificing internal height. containers - Other than height, this is the same - Providing internal height means specification as a standard container, so that the overall height of the rolling its strength also supports use as a stock is higher when the containers regular dry container, with little are loaded onto freight cars (double restriction on return cargo weight. stacked). That would impose major restrictions on the passable lines and zones. Car rack - Containers can be loaded internally as - The structure is complicated, so the containers return cargo. manufacturing price may be - If there is cargo which can be loaded expensive. into containers, there is little constraint - The overall width and overall on the type or weight of cargo. Also height deviate greatly from the ISO usable for repositioning of empty standard. In particular, as the marine containers. overall width of the container is not - In completed vehicle transportation, this ISO standard, it cannot be handled method provides the greatest interior by existing container handling width, which is an advantage for equipment. allowing the drivers who load the - During container handling work, completed vehicles to board and alight, HQ containers are fully concealed and for wheel clamping work, etc. within the car rack container, so the lift operator cannot confirm their positions, etc. by eye. That necessitates some technique such as installing cell guides (fixtures to guide the container to the correct position). Multi-purpose - Structurally, this type has an elevatable - It is necessary to fit the auto transportation intermediate floor installed within the intermediate floor and floor containers container, which is not very difficult. elevating equipment within a small - Return cargo can be general freight, container interior, so this option has using the container as a regular dry the most cramped interior. That container. (Tonnage must be reduced by could be an impediment for just the weight of the intermediate floor) allowing the drivers who load the completed vehicles to board and alight, and for wheel clamping work, etc.
31
Investigation in the field studied the advantages and disadvantages of the above four proposals, to narrow down the transportation tool options.
Table 8 Assessment of the Studied Transportation Tools (initial) Feasibility Reason New dedicated Discussions with MOR, RDSO, and rolling stock manufacturers freight cars revealed that development would require a long time and high cost. ｘ They also revealed that there are no effects improving transportation methods or lead time. Reduced height The investigation found that another company has already domestic commercialized this idea as “Dwarf Container” and it has a track transportation ｘ record of use for transportation, though limited to operation between containers Dadri and Mundra. As such, this cannot be described as a new transportation tool. Car rack We checked with MOR and RDSO, and found that large dedicated containers containers able to fit inside the devised container would restrict the ｘ zones through which it could be transported by rail, and that such containers would be subject to increased charges. Therefore, we judged this option to be commercially non-viable. Multi-purpose auto We checked with MOR and RDSO, and found that the envisaged transportation multi-purpose container would be very likely to restrict the zones containers through which it could be transported by rail. Completed vehicle transportation operators and automakers expressed △ concern about the quality of transportation because the container interior is cramped, relative to the width of vehicles, raising the risk of damaging the completed vehicles when loading them under their own power.
32 Figure 9, provided by IR, shows the rolling stock gauge.
Figure 9 Rolling Stock Gauge (Maximum Moving Dimension) Source: Addendum & Corrigendum Slip (ACS) No.14 to the Indian Railways Schedule of Dimension (BG) 2004
33
1-3 Study of Transportation Tools 2 As stated in 1-2, all of the transportation tools initially proposed to the Indian side had many problems as directions to proceed in, so we reconsidered the container sizes and handling methods, etc.
Table 9 Study of Containers (Overall Length) 40 ft 45 ft Advantages Disadvantages Advantages Disadvantages Overall Can be transported on If completed vehicles Three completed It would be necessary length IR’s general-purpose 4 m long are loaded vehicles 4 m long can to buy new freight container freight cars on the level, only two be carried on the cars (BLL type) able (BLC type). Also, can be carried. level. to carry 45 ft existing delivery containers, and new chassis can be used. delivery chassis.
For the overall length, we were initially considering introducing containers in the 45 ft class, to load three completed vehicles 4 m long, horizontally and under their own power. However, the freight cars, and the trailer chassis for container delivery, are not common in India, and would have to be newly provided. As a result, many stakeholders took negative views on the grounds that initial investment would be excessive. Therefore, we opted for 40 ft containers.
Table 10 Study of Containers (overall height) Within 2,896 mm More than 2,896 mm (equivalent to HQ containers) Advantages Disadvantages Advantages Disadvantages Overall In zones where Container volume is Allowing additional These are large height container trains are small, which imposes space in container containers, which risk already running, no constraints on the volume would constraints on rail approval from IR is transportation of support larger and road transport required, and delivery larger completed vehicles in future. zones. Also, rail to any location is vehicles. charges would be possible. increased.
For overall height, we found in the course of the investigation that freight of sizes exceeding the rolling stock gauge could incur increased freight charges and transportation restrictions. However, regular HQ containers cannot support larger, future completed vehicles, and will not meet the expectations of cargo owners and others for the transportation of other vehicle types, such as SUVs. Therefore, we adopted the maximum dimension that, while larger than an HQ container, would not incur increased charges and would minimize restrictions on transportation zones.
34 Table 11 Study of Containers (overall width) 2,438 mm More than 2,438 mm (the same size as a regular container) Advantages Disadvantages Advantages Disadvantages Overall If the overall width is This is narrow Depending on the These are large width 2,438 mm, then in compared to vehicle overall width, it containers, which zones where widths, so if the becomes possible to risk constraints on container trains are vehicles are driven load by freely rail and road already running, no into the containers, driving the vehicles transport zones. approval from IR is drivers’ ability to get into the containers. required, and in and out of them transportation to any could be impeded. location is possible.
If containers of greater overall width are used, it is possible that existing handling equipment (reach stackers, etc.) operating at container-handling stations will not be able to handle them. There would also be restrictions on road transportation. Therefore, we decided to adopt 2,438 mm, the same dimension as a regular marine container.
Table 12 Study of Containers (Freight handling methods) Own power Palletized Advantages Disadvantages Advantages Disadvantages Freight Forklifts and pallets There is the risk of Vehicles are secured Equipment and handling are not required for damaging the to pallets outside the materials are method loading into completed vehicles containers, so there is required, in the form containers. Also, when opening their no risk of damaging of pallets and there is no doors inside the the completed forklifts for moving restriction on container to get in vehicles. pallets. unloading locations, and out, and when The work of moving provided there is a fastening the wheels. the completed ramp. vehicles onto and off pallets can be done separately from container arrival, so the time for container cargo handling can be shortened.
For the freight handling method, we were considering loading vehicles under their own power, because that does not require handling equipment at the loading and unloading locations. However, completed vehicle transportation operators expressed concerns over the risk that vehicle doors could be damaged by hitting the
35 container when drivers get in and out of the completed vehicles inside cramped containers, and that workers working in narrow gaps between vehicles and containers to fasten wheels could damage the vehicles. Therefore, we opted for palletized loading into containers.
Through the above deliberations, we decided to focus more on “container transportation systems which use racks to load completed vehicles,” and continue our deliberations. Also, the DFC Western Corridor zone was constructed to a standard that allows double stack transportation of HQ containers, so it has the potential to use larger containers than on conventional lines, enabling large batch transportation with higher efficiency. Therefore, we decided to study containers for the DFC Western Corridor zone, separately from containers for completed vehicle transportation on conventional lines. Figure 10 shows the rolling stock gauge diagram for the DFC Western Corridor zone.
Figure 10 Rolling Stock Gauge (DFC Western Corridor) Source: “Document on “Standard Schedule of Dimensions” for Dedicated Freight Corridors (Eastern & Western) of Indian Railways.”
36 3. Preconditions for Final Deliberations We employed the following preconditions when studying completed vehicle transportation tools for use in India: 3-1 Transportation subjects (1) Target routes ① Conventional line, ② DFC (2) Carried freight Other than completed vehicles, it must be possible to carry motorcycles and general freight as return cargo. (3) Assumed freight size ① Vehicles: (Length) 4,000 mm, (width) 1,800 mm, (height) 1,600 mm ② Motorcycles: (Length) 1,800 mm, (width) 700 mm, (height) 1,100 mm ③ General freight: (Length) 1,200 mm, (width) 1,000 mm, (height) 1,100 mm (4) Miscellaneous: In the course of this study, we will keep in mind the concepts of “working efficiency improvement,” “ensuring the quality of cars, motorcycles, etc.,” “higher-volume transportation,” and “continuity.”
3-2 Containers to use (1) Size There is a large size difference between containers which can be transported on conventional lines, and those which can be transported on the DFC. However, for containers used to hold and transport completed vehicles, constraints on cargo and handling conditions vary with size, so major differences could result in transportation efficiency, profitability, and other aspects. Business significance can be found in the DFC Western Corridor zone, where large containers could be used to enable highly efficient transportation in large batches, and in the conventional lines, which are capable of direct transportation of completed vehicles to consumption centers in all parts of India. Therefore, we decided to study both, and to examine the following three types of container: Table 13 Assumed Container Types Target routes Container size
Conventional lines Maximum transportable size on main routes
Maximum transportable size in container units DFC (Western Corridor) Maximum transportable size with double stacking
4 Car and Motorcycle Transportation on Conventional Lines 4-1 Completed Vehicle Transportation Modes for Cars (1) The loading method for cars is to have the vehicles inclined to make maximum use of container interior space. Each container will hold one horizontal car and three inclined cars, for a total of four. The completed vehicles are inclined so that they can be loaded with small overlaps at both ends. (2) Cars are to be loaded with a combination of horizontal and inclined positions within the container, so we will develop two types of pallet, one for horizontal loading and one for inclined loading.
37 (3) Horizontal loading pallets can load a completed vehicle 4 m in overall length horizontally. The base of the pallet also serves as fork pockets (forklift tine insertion holes). (4) Inclined loading pallets consist of a pallet body which also serves to provide fork pockets, and a floor panel on which a completed vehicle 4 m in overall length can be loaded. (5) An inclined loading pallet forms a ramp with the center of the floor panel lifted up and the bottom end fixed. The center support is a pinned joint, so that when the fixing of the bottom end is released, the floor panel is free to rotate around the pins at its center. If the floor panel is placed in a horizontal position, and the legs housed in the back of the floor panel are pulled out and fastened to the pallet, the floor part on which the completed vehicle is loaded can change into a pallet forming a level intermediate floor at a height of around 1,500 mm. (6) The floor panel can be changed between inclined and horizontal positions by human effort. (7) The wheels of the completed vehicle are bound to the pallet with cargo fasteners, to handle vibration in transit.
4-2 Motorcycle transportation mode (1) Motorcycles are loaded into the containers for the return leg. They are transported on two levels to raise load efficiency. (2) When loading with motorcycles, the floor panel which carries cars in the inclined car loading pallets is moved into its horizontal position (motorcycle transportation mode) by the procedure described above. Three pallets are lined up in that position, to form an intermediate floor running the whole length of a 40 ft container, which can carry motorcycles. (3) The wheels of the motorcycles are bound to the floor panels with cargo fasteners and retaining fixtures, to handle vibration in transit. (4) The pallets are to be fastenable to the containers, to prevent any pallet displacement due to vibration, etc. in transit. (5) The number of loaded motorcycles per pallet is seven on the lower level and eight on the upper level, for a total of 15.Three inclined loading pallets can fit into one container, so one container can hold 45 motorcycles.
4-3 Cargo handling area facilities (1) To provide the necessary approach angle for loading cars onto inclined pallets, the inclined pallets are mounted on loading stages and the resulting slope is used to load the completed vehicles. (2) The forklifts used for pallet handling We expect a pallet carrying a car to weigh a total of around 2 t. If the overall length of the pallet is 4 m, and we assume that the combined center of gravity of the pallet and loaded car is close to the center, that would require an allowable load of 2,000 kg at the 2,000 mm position, close to the tips of the forklift tines. Therefore, it appears that forklifts with 5 t or more of capacity and tines at least 2,300 mm long will be required for pallet handling.
38 5 Car and General Freight Transportation in the DFC 5-1 Envisaged new containers We propose two sizes for the new containers for the DFC. One is the largest single container that can be transported in the Western DFC zone, and one is the largest size that can be loaded in a double stack system.
5-2 Envisaged car loading method If we aim for the largest size of container that can be carried singly on the DFC, it can be very much larger than a container for use on conventional lines, so we can even consider multiple levels in the container interior. Therefore, we have considered design cases with two and three internal levels. - The two-level type could carry four cars on the lower level and four on the upper, for a total of eight. - The three-level system could carry three cars on the bottom level, three on the middle, and three on the top, for a total of nine. - With the double stack type, four cars can be loaded in each container (eight cars per double stack).
5-3 Envisaged pallets The number of cars that can be loaded directly into a container is limited. One way to increase the number is to adopt a palletized system, in which level pallets and inclined pallets are used to make the most effective possible use of the space in the container.
5-3-1 Pallet types We envisage two pallet types, level and inclined, both having structures which can be fastened to the floor when loaded into the container.
5-3-2 Pallet usage Pallet usage for the two-level system will place two level pallets and two inclined pallets on each level, to carry a total of eight cars. Pallet usage for the double stack system will combine two level pallets and two inclined pallets, to carry a total of four cars. Pallet usage for the three-level system will place two level pallets and one inclined pallet on each level, to carry a total of nine cars on three levels. With a three-level structure, the height per level inside the container is lower, so the base of the inclined pallet could touch the adjacent cars. To avoid that contact, the base is made shorter. The structure of the level pallets is basically the same as for the other patterns.
5-4 The process of transportation with the two-level system 5-4-1 Loading method We considered the series of tasks involved when completed vehicles from automakers, etc. are being loaded or unloaded as follows, with the aims of performing the tasks as efficiently as possible and ensuring quality in
39 aspects such as never damaging the cars. - To shorten loading work time in the series of tasks, we made it possible to work on the first and second levels at the same time. - We decided that cars should be placed onto pallets by driving them into position and then fastening them. - The system for loading inclined pallets is to drive the cars onto them while they are level, fasten them in place, and then raise the pallet to an inclined position using a hydraulic cylinder. - The structure for loading pallets into the container is to use a cable winch to pull pallets into the container from the side opposite the container loading entrance.
5-4-2 Unloading method - Basically, the procedure reverses the sequence of loading tasks.
5-4-3 Transfer rail structure We decided to use a cable winch system to facilitate the work of moving pallets into and out of containers. We also decided to provide transfer rails on the container floor, and wheels or rollers on the pallets, to raise the working efficiency of this system by reducing friction between the pallets and the container floor. This method would also be able to eliminate problems such as damage to cars. This method can eliminate problems such as damage to cars.
5-5 Intended system for loading and unloading with a three-level system 5-5-1 Slope method Each level will be provided with a slope and working area, so that work on each can proceed in parallel. The methods for loading, unloading, and moving pallets on each level are the same as for the two-level system and double stack system.
5-5-2 Lift system A lift will be used for pushing pallets into, and pulling them out of, each level. At that stage there are restrictions on space available for the lift, so the cable winch is mounted to it immediately before these operations, and dismounted afterwards. The equipment for moving the pallet between inclined and level positions is to be installed on the outside of the lift, not on the inside.
5-6 If a single cable is used for “inclining and leveling” and for “loading and unloading” Depending on workplace conditions, there could be constraints on the forklift and the installation of ground- based equipment, etc. so we considered using a single cable to perform both pallet inclination and movement of pallets into and out of the container interior.
5-6-1 Equipment capable of inclination and leveling It is foreseeable that track specifications and other factors could make it difficult to align the levels of the
40 track-side withdrawal opening of the container and the receiver opening on the ground-based equipment. Therefore, the adopted structure includes beams to serve as a base, built into the entrance of the container. When used, they are tipped forward and coupled to the ground-based equipment. Also, the pallet movement method is to be a cable winching system, in a structure applying a worm gear between the handle and the winding drum. The structure also allows pulleys in the container interior to be attached and detached with single-step operations. We also made the same equipment usable by the driver to board and alight, and to fasten and loosen wheels.
5-6-2 When pulling empty pallets out of the container The structure is used by stopping the container (truck) at the specified position, tipping the “cradle beams,” which are housed in the columns of the container, forward, and setting related parts in place. Empty pallets inside the container are pulled out by human effort. On this point, the adoption of a system of transfer rails and wheels or rollers was intended to reduce contact resistance, so that pallets can be moved by human effort alone.
5-6-3 Method for mounting level pallets and pushing them into place The structure is intended to allow vehicles to drive up onto the pallet under their own power before having their wheels fastened. It also enables fastening the pallet to ground-based equipment, so that it does not shake when a car moves onto it under its own power. Furthermore, the structure is designed so that after wheel fastening is complete, the cable winch is used to push the pallet into the container.
5-6-4 Method for mounting inclined pallets and pushing them into place The pallet is placed in its level state, the car moves onto the pallet under its own power, and then the wheels are fastened, and then one side (the container side) of the pallet is hoisted by the winch to incline it. An “auxiliary tool” is attached to the pallet to lock it in the inclined position. After that, one of the pallets is pushed into the container, then the opposite side is lifted in the same way, and locked with an auxiliary tool. After the pallet has been made into an inclined pallet, the winch is used to push it fully into the container. The same procedure is used subsequently, to push the pallets into place sequentially.
5-6-5 When moving an inclined pallet to a level position After arrival at the destination, the method for unloading pallets and the timing for the drivers entering the cars to drive them off the pallets are as stated below: - Connect with the ground-based equipment. - Use a cable to raise one side of the inclined pallet, then remove the auxiliary tools. - Use the cable to pull the pallet out further, to the tilting table. - Use a cable to hoist one side of the inclined pallet, then remove the auxiliary tool from the opposite side, and lower the pallet to the level position. - The driver enters the car and moves it under its own power. - The same operations are repeated.
41 - Cars on the last remaining level pallets move by driving over the row of pallets under their own power.
5-6-6 Inclination and leveling method for the three-level system The system for inclining pallets, as elsewhere, is that pallets are to be hoisted up by winding the cable. When hoisting, the cable is attached to the base, and an attachment is mounted to make sure the cable does not touch the car. After the pallet is inclined, the auxiliary tool is mounted and the attachment is removed. The procedure is reversed to return the pallet to the level position.
5-7 Locking pallets Considering situations when the train is in motion, longitudinal and lateral swaying can be expected to occur within the container, so it is necessary to devise measures to prevent swaying in both level pallets and inclined pallets. We considered the following methods to that end: - For level pallets The structure uses a “locking fixture” to lock the pallet to the floor of the container. The structure also provides “receptacles” on the container floor to receive bolts. - For inclined pallets Inclined pallets have numerous joints, so lateral swaying can be expected in the pallet itself. Therefore, the structure is to use locking fixtures. The structure also provides “receptacles” on the container floor and walls to receive bolts.
5-8 When transporting general freight When loading general freight, it is preferable to keep the top surface of the pallets as level as possible, so it is necessary to make the inclined pallets, in particular, foldable. For this purpose, the inclined pallets are to allow disassembly by manual labor, and their structure houses their parts within their empty internal space while they are carrying general freight. The structure is designed so that general freight is loaded onto inclined pallets after they have been made level, and is then fastened with ropes, etc.
c. Survey of Necessities for the Development of Cargo Collection and Distribution Networks around the DFC (including development trends, etc. for MMLHs scheduled for development around the DFC)
In the secondary field survey, we visited the DMICDC and received briefings about development trends, such as the state of infrastructure development in three places in the DMIC area, along the Western Dedicated Freight Corridor.
At the DMICDC, MMLHs and other logistics facilities, etc. with added value have come to be called “freight villages.” These freight villages are more than terminals which just load and unload cargo. As logistics facilities with functionality and added value, they have warehousing, customs clearance, maintenance workshops, insurance, bank offices, and other service functions.
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i) The Freight Village in Nangal Chaudhary, Haryana State (887.78 acres)
As shown in Figure 12, this facility is planned for a site on the NH-148B national highway and adjoining Nizampur Station, between Ateli and Dabla stations, along the Rewari - Phulera Chord of the Western Dedicated Freight Corridor. The Indian government and state government are working towards the construction of this freight village, and have completed the acquisition of approximately 80% of the land. We have been told that agreement has been reached with the DFCCIL about connection to the Western Dedicated Freight Corridor.
Figure 11 The Freight Village in Nangal Chaudhary, Haryana State (887.78 acres) Source: DMICDC ii) Dadri Freight Village in Uttar Pradesh State (847 acres)
This plan is for a freight village to be situated at the terminus of the Western Dedicated Freight Corridor. It is to have DFC freight rail transportation functions as a collection area for industrial freight related to cars, manufacturing, textile products, retail products, consumer goods, agricultural products, and as an ICD (Inland Container Depot) for import/export freight. This plan has also been budgeted by the Indian national and state governments, and 80% or more of the land has been acquired.
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Figure 12 The Freight Village in Dadri, Uttar Pradesh State (847 acres) Source: DMICDC
We visited this land with the DMICDC, but at present it is mostly farm land. The Dadri ICD for CONCOR is located close to this freight village. We checked with the DMICDC about the relationship between the two, and were told that it knows about the presence of the CONCOR Dadri ICD, and is planning to discuss cooperation with CONCOR, but will build the freight village separately. iii) The Freight Village in Sanand, Gujarat State (500 acres)
This is still in the planning phase, but as the Western Dedicated Freight Corridor passes through the Sanand area, the plan will enable rapid transportation of containers, cars, and freight through its connection with the Western Dedicated Freight Corridor. Apparently the proposal is being deliberated upon concerning who will cover the expenses. Figure 13 illustrates the area.
Figure 13 The Freight Village in Sanand, Gujarat State (500 acres) Source: DMICDC
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We plan to continue studying these three plans, through ongoing information exchanges, to see whether they can be used as sites for completed vehicle transportation. Making the MMLHs that are being developed along the Western Dedicated Freight Corridor into sites for completed vehicle transportation will require the construction of cargo collection and distribution networks for completed vehicles. As necessities to that end, we must consider laying private rail lines linking directly to automakers’ factories, developing motor pools, and adding facilities to MMLHs, such as buildings for mounting accessories and equipment.
45 d. Study of the Development Schedule for Related Infrastructure (including usage conditions, connectivity, etc.)
In India, the transportation capacity of existing freight rail is said to be close to its limits. The Indian government has written a freight rail development plan, and announced route expansion, the introduction of high-speed freight rolling stock, and other measures. Japan followed the 2005 Joint Statement between India and Japan by providing a yen loan in 2008 for the construction of the Western Dedicated Freight Corridor. Construction has started, aiming to be ready for use from 2019, as one element in that plan.
We are checking the state of progress of the Western Dedicated Freight Corridor. Figure 14 is a map of the planned route of the Western DFC.
Figure 14 Map of the Planned Route of the Western DFC Source: DFCCIL website
The state of progress of the Western Dedicated Freight Corridor can be broadly divided into Phase 1, between Rewari and Vadodara, and Phase 2, between Vadodara and JNPT port, and between Dadri and Rewari. Within that, progress in civil engineering works on the Rewari - Ikubaruga section in Phase 1 was at 45.5% in January 2017, but has not been completed as of June 2018. The project is under way, with the goals of completing the Ikubaruga - Vadodara section that is the remainder of Phase 1 by March 2019, and completing Phase 2 by October 2019.
46 Even if it proceeds on schedule, the construction of the Western Dedicated Freight Corridor will complete in October 2019, so it will be necessary to talk with the DFCCIL, in parallel with talks with automakers, about the usage conditions for completed vehicle transportation on this route.
(5) Calculation of project scale, etc., and study and proposal concerning financing
a. Calculation of project scale, etc. (including operation, servicing, and maintenance costs)
The scale of investment for doing business is estimated at around JPY15 billion, and the scale of the business is estimated at JPY15-30 billion.
1 Scale of investment According to interviews in the field, the outlook is for India’s auto production to expand to around 10 million cars in 2030, and some take the view that rail’s share of completed vehicle transportation will rise to around 30%. In that case, the number of completed vehicles using rail transport per year in 2030 would be as follows:
⚫ Number of completed vehicles using rail transport in 2030 = Annual number produced: Approx. 10 million x proportion on rail transport: Approx. 30% = Approx. 3 million ……①
If we examine the number that could be transported by rail per year, each train on conventional routes consists of 45 wagons for 40 ft containers, and each 40 ft container can carry 4 completed vehicles. Therefore, it is possible to carry 180 cars (45 wagons x 4 cars) on one train, and double-decked transport is usable, to carry double the cargo of a conventional route, for 360 cars. Also, existing routes can provide transport once per week, but considering the fact that the average speed of transport on the DFC route is around double that of conventional routes, it could be expected to enable transport twice per week. Therefore, the number of cars which can be transported per year per train is as follows:
⚫ Number of cars which can be transported per year per train on conventional routes = 180 cars per train x 1 transport service per week x 4.3 weeks/month x 12 months = 9,288 cars ⚫ Number of cars which can be transported per year per train on the DFC = 360 cars per train x 2 transport services per week x 4.3 weeks/month x 12 months = 37,152 cars
When we consider shares of transportation between conventional routes and the DFC route, the five main patterns of transportation routes for completed vehicles are between Delhi and Mumbai, between Delhi and Chennai, between Delhi and Kolkata, between Mumbai and Chennai, and between Chennai and Kolkata. Therefore, if we simply assume that one fifth is on the route between Delhi and Mumbai (the DFC route), the shares for the conventional routes and the DFC route are 80% and 20% respectively and the number of cars which can be transported per year is as follows:
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⚫ Number of cars which can be transported per year per train in India = 9,288 cars per year on conventional routes x 80% proportion on conventional routes + 37,152 cars per year on DFC routes x 20% proportion on DFC routes = 14,860 cars ……②
Therefore, if we divide the number of completed vehicles using rail transport in 2030 (①) by the number which can be transported per year per train in India (②), we can calculate the necessary number of trains as follows:
⚫ Number of trains necessary to transport the number of completed vehicles using rail transport in 2030 = Number of completed vehicles using rail transport in 2030 (①) / Number of cars which can be transported per year per train in India (②) = Approx. 202 trains
If we assume that the business captures a 30% share of the 202 trains necessary to transport the number of completed vehicles using rail transport in 2030, the investment scale of the business would be as follows. We also assumed the investment value per train to be around JPY250 million, based on the local freight car market.
⚫ Number of trains necessary to transport the number of completed vehicles using rail transport in 2030 (202 trains) x 30% share x investment value of approx. JPY250 million per train = Approx. JPY15.2 billion From the above, the investment scale is calculated as around JPY15.2 billion. Operating the business would also require separate license fees.
2 Scale of business If we assume, based on local discussions, the scale of the business (annual revenue) to be in the range of JPY250- 500 million per train, the size of the market for completed vehicle transportation by rail in India in 2030 can be calculated as: JPY50.5-101 billion ((JPY250-500 million) x 202 trains). If the business captures a 30% share, the scale of the business (annual revenue) would be JPY15.2-30.3 billion ((JPY50.5-101 billion) x 30%).
48 b. Study and proposal concerning financing
Pattern of Japanese-affiliated companies expanding into India
When foreign companies, including Japanese companies, expand into India, there are the following five main patterns:
① Local subsidiary Under Indian corporate law, the three forms of company shown on table 14, which differ in the ranges of responsibility for shareholders and company employees, are permitted. Companies limited by shares are further divided between public companies and non-public companies, according to their capital values and stipulation of their articles of association.
Table 14 Forms of establishment of local subsidiaries Company limited by A form of company in Public company shares which the burden of A company that has at least Rs500,000 of paid- responsibility is in capital, and is not a non-public company limited to the Non-public company subscription price of Between 2 and 200 shareholders, prohibited the shares owned by a from public offering of shares and bonds, with shareholder at least Rs100,000 of paid-in capital Company limited by A form of company in which the shareholder liability is limited to the guarantee value stipulated in advance in the articles of association Unlimited company A form of company in which there is unlimited joint and several liability, together with the company, to its creditors Source: Prepared with reference to the Indian Investment Environment Report (Japan Bank for International Cooperation)
After a local subsidiary receives a corporate charter, opens a bank account, receives capital from shareholders, and must then report the value of transferred capital to the Reserve Bank of India (RBI) within 30 days. Shares must be issued within six months of receipt of the nominal capital, and the information must be similarly reported to the RBI within 30 days of completion.
② Branches Branches can engage in nearly the same business as local subsidiaries, other than not being permitted to manufacture and borrow, but care is required because they pay a higher rate of corporate tax than local subsidiaries. To establish a branch that will be treated as a foreign corporation, it is necessary to first submit an application to the RBI, and then after receiving RBI’s approval, register the establishment with the Registrar of Companies (ROC).
49 ③ Project office A project office is established to work on a specific project, and cannot engage in business not related to that project. It is positioned as a temporary site, to be closed on completion of the project, and is deemed to be a foreign corporation. In common with a branch, care is required because project offices pay a higher rate of corporate tax than local subsidiaries. To establish a project office, it is necessary to first submit an application to the RBI, and then after receiving RBI’s approval, register the establishment with the ROC, as for a branch.
④ Representative office A representative office is mainly established for the purpose of understanding the local business environment. It is prohibited from engaging in sales and trading, either directly or indirectly. To establish a representative office, it is necessary to submit an application to the RBI, and then after receiving RBI’s approval, submit an establishment application to the ROC. The permit from the RBI usually has a term of three years, and a new application must be made to extend the term.
⑤ Limited liability partnership A limited liability partnership (LLP) enables direct foreign investment by the same method as for a company form. For the local freight transportation of completed vehicles, there are two possible approaches: Purchasing the freight cars and owning them directly, or leasing them through a leasing company. In general, batch purchasing and leasing have the advantages and disadvantages shown on Table 15:
Table 15 Advantages and Disadvantages of Batch Purchasing and Leasing Advantages Disadvantages Batch Enables free design of the Requires high initial investment purchasing product Difficult to change the design after purchase. Leasing Keeps the initial investment low The total payment is higher If the lease can be terminated It is difficult to design the product before completion, it allows freely adaptation to obsolescence of the design in the long term
In India there are freight car leasing companies such as Touax Texmaco Railcar Leasing Ltd. (a joint venture between a European leasing company and a local company) and GATX India Private Ltd. (a US-affiliated leasing company), and adequate lease selection terms are available.
50 Study of financing methods
The suitable finance methods for this business are corporate finance, in which the company’s credit worthiness is used to borrow, and project finance, in which the profitability of the project is used to borrow. Both are potential options. Realization of this business will require the procurement of funds for the following: ✓ Freight car purchase costs ✓ Terminal design and construction costs
If the method is to establish a local project company and use corporate finance to obtain funds, the chart of relationships between stakeholders is as shown in Figure 15. In that case, the sponsors could be a local company or other sponsor, in addition to the Japanese companies participating in the business. The project company will basically be drawing on the credit worthiness of the sponsors to obtain funding.
Figure 15 Relationship Chart for Corporate Finance
On the other hand, if the method is to use project finance to obtain funds, the chart of relationships is as shown company to agree insurance contracts, a company to operate the business, and an EPC operator to manufacture and deliver the freight cars. In project finance, the profitability of the project itself is an important element.
Insurance contract Finance contract
Insurance Financial company institution Project company Business operator Sponsor
Operation contract Investment contract EPC contract
EPC operator
Figure 16 Relationship Chart for Project Finance
51 In cases that involve freight transportation by rail, it is generally difficult to agree to long-term contracts for Producer) business. Therefore, we basically envisage participating with corporate finance, rather than project finance, which would make it necessary to obtain profitability with long-term stability. Therefore, from this point onwards, we will examine investment funding procurement methods on the assumption of participation with corporate finance.
⚫ Funding procurement by investment (share issue) In general, funding could be gathered from the Japanese parent company, local companies jointly operating the business, and other sources, but as what are called public-private funds, which are affiliated with the Japanese government, supply risk money, funding from such funds could also be considered.
Table 16 Investors in the Project and Related Considerations Main investors Points to consider Parent company or other In some cases, a majority investment is possible, but they may also affiliated company invest small amounts, based on their business policies and risk- taking perspective. Public-private funds such as There are cases in which minor funding is assumed, and cases in JOIN which share put options9 are a condition.
⚫ Borrowing from banks in India ① Funding procurement by borrowing from foreign banks (including Japanese banks) in India If the loan is taken from a bank which does business in Japan, it is possible to use the credit worthiness of the parent company to obtain funding.
The base lending rates of the three mega banks in December 2018 were as stated below. Actual lending interest rates are determined with reference to the borrowed value, the borrowing period, credit worthiness, whether there is an exchange swap, and other factors.
9 Rights to sell
52 Table 17 Marginal Cost of Funds based Lending Rates (MCLR) of the Mega Banks Mitsui Sumitomo Mizuho Mitsubishi UFJ (Effective (December 10, 2018) (December 6, 2018) (December 1, 2018) date) Overnight 7.30% 7.50% 7.30% call loan 1-month 7.50% 7.80% 7.50% loan 3-month 7.90% 7.90% 7.75% loan 6-month 8.15% 8.25% 7.85% loan 1-year 8.70% 8.55% 7.95% loan 2-year - - 7.95% loan Source: Prepared from each bank’s website
② Funding procurement by borrowing from local banks It is normally possible to borrow from local banks by using standby credit10, which is obtained from a Japanese financial institution by using the credit worthiness of the parent company. If a joint venture company is established with a local company, borrowing from a local bank using the credit worthiness of the local company becomes an option.
When borrowing from a local bank, the loan is usually denominated in Rupees, and if most revenue originates in India and is also in Rupees, it is possible to avoid some degree of exchange risk. For reference, the graph below shows movements in the policy interest rate (repo rate) operated by the Reserve Bank of India.
8.5
8
7.5
7
6.5
6
5.5 2014年 2015年 2016年 2017年 2018年 2014 2015 2016 2017 2018 Figure 17 Movements in Policy Interest Rates in India Source: Prepared from the website of the Reserve Bank of India
10 Letters of credit issued for the same purpose as obligation guarantees
53 ⚫ Funding procurement by borrowing from overseas (including borrowing from the parent company, and cross- border loans11) In India, commercial borrowing from sources outside India, such as a parent company or non-resident bank (cross- border loan), is permitted, and called External Commercial Borrowing (ECB). Approval is given by the Reserve Bank of India (RBI) and the lenders are limited to financial institutions, shareholders, and others outside India. There are also restrictions on the borrower’s business type, loan value, borrowing period, interest rate (a transfer pricing tax system must also be considered if the lender is an affiliated company), the borrowed currency, the purpose of use, and other aspects. (See Table 17)
Also, the costs (interest) incurred by cross-border loans, according to the formula below, have a spread12 for each individual company added to the base interest rate, and the cost of exchange rate13 hedging by currency swap14 must also be borne.
Interest rate = base interest rate + spread + currency swap hedge cost (+ withholding taxes)
11 Direct finance from overseas financial institutions. 12 Fixed interest spread 13 Costs incurred in order to avoid exchange rate risks 14 Transactions to exchange cash flows between different currencies.
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Table 18 ECB Types and Restrictions Type Applicable company Borrowing terms Track 1 • - Companies engaged in manufacturing, software In foreign currency, development, and marine or air transportation with minimum • - Companies in special economic zones (SEZ) average borrowing • - Companies in infrastructure businesses, etc. periods of 1, 3, or 5 years Track 2 • - All companies stated in Track 1 In foreign currency, • - Real estate investment trusts and infrastructure with minimum investment trusts average borrowing periods of 10 years Track 3 - All companies stated in Track 2 In Indian Rupees, - All non-banks under Reserve Bank of India (RBI) with minimum regulations average borrowing - Companies, etc. engaged in microfinance periods of 1, 3, or 5 - Companies engaged in R&D, training (other than years education), infrastructure support or logistics services; companies engaged in maintenance, repair and inspection, and freight transportation - Development companies in SEZs and national manufacturing investment zones Source: Prepared with reference to the JETRO website
Maximum values are set for borrowing by each business type, and ECB which exceeds the limits requires prior permission from the Reserve Bank of India. ECB from foreign shareholders is stipulated as not exceeding seven times the nominal capital invested by the foreign shareholders concerned.
15 A system employed when a domestic corporation is provided with funds by, for example, a foreign controlling shareholder, in order to prevent the domestic corporation from avoiding taxation by borrowing excessively from the foreign controlling shareholder, etc.
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Table 19 Application Conditions of the Thin Capitalization System Target Interest due on borrowing from a parent company or other affiliated company transactions that is not resident in India, with value exceeding INR10 million (In the case of borrowing from a financial institution or other third party, interest due is subject to the thin capitalization system if there is an explicit or tacit guarantee from an affiliated company). Limit of Up to 30% of EBITDA(*) inclusion in * Earnings Before Interest, Taxes, Depreciation and Amortization (profit expenses before interest payment, tax deduction, and depreciation) = ordinary profit (pretax profit + extraordinary income or loss) + interest due + depreciation costs (tangible fixed assets + intangible fixed assets) Year of carry- Up to 8 years over for excess interest
Investment finance from the Japan Bank for International Cooperation (JBIC) is widely used in India, in the forms of direct finance to local Japanese-affiliated companies and two-step loans16 via financial institutions.
Figure 18 JBIC Investment Finance
Based on the creation and start of the JBIC Global Facility to Promote Quality Infrastructure Investment for Environmental Preservation and Sustainable Growth on July 1, 2018, JBIC has added new “investment finance” to its means of support to its existing operations for “Global Action for Reconciling Economic Growth and Environmental Preservation (GREEN)” (See Table 19). This support is intended to provide more active support to projects which have effects for conserving the global environment. Preferential interest rates can be obtained by using that support.
16 A loan scheme in which credit lines are set with domestic and foreign financial institutions (intermediary financial institutions), and the intermediary financial institutions concerned draw the necessary funding in dollars, etc. from those credit lines to meet individual funding needs, re-lending the funds to end-user companies (local companies and Japanese-affiliated local companies).
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Table 20 Fields Covered by the Global Action for Reconciling Economic Growth and Environmental Preservation (GREEN) Theme Sector Energy supply (electric Renewable energy power generation, heat Energy-saving electric power generation and heat supply supply) Energy demand ① Ferrous metals ② Cement ③ Chemicals and petrochemicals ④ Non-ferrous metals ⑤ Paper pulp ⑥ Other industries (foods, fibers and spinning, glass and ceramics, etc.) New plant including elements of ①-⑥ above Green innovation Smart energy (power transmission and distribution) Green mobility (transport) Smart cities (civilian) Other global environmental conservation Source: Prepared from the website of the Japan Bank for International Cooperation
57 ⑥ Confirmation of business implementation effects a. Use of policy support, etc. potential for lateral extension to other countries, etc. and measures to promote extension
If deliberation is to continue towards the implementation of completed vehicle transportation in India, concerning the completed vehicle transportation tools studied in this investigation, including gathering of opinions from interested parties, and study of the business model and analysis of economy, there would be potential for using the support of NEDO, etc. The business model for completed vehicle transportation has potential for lateral extension to other countries where numbers of cars being manufactured are growing rapidly. On the other hand, the gauge17, axle loads18, construction gauge19, and various other conditions of Indian Railways and the DFC differ from other countries, and it would require study to match the rail specs in countries for lateral extension. Consideration of lateral extension would also require checking matters such as the positional relationships between automaker factories and rail freight stations, comparison of the fees for carrier cars20 in each country, the reliability of rail freight transportation, and policy trends.
17 The space between the inner sides of the heads of the two rails 18 The restriction on the load on each axle between a pair of wheels in rail rolling stock. 19 The spatial range in which building installation is not permitted above tracks 20 A truck used to carry vehicles.
58 b. Analysis of the superiority of Japanese companies (where necessary, moves by competing companies, and competitive advantages in comparison with them), prediction of benefits for Japan (economic effects)
We have conducted interviews with Indian carrier car operators21 and automakers about carrier car transportation and rail transportation. Opinions about carrier car operators - There have been cases in which some drivers in long-distance transportation return to their homes in their carrier car while in transit, unload completed vehicles from the carrier car, and let their friends drive the cars, resulting in damage to the completed vehicles. - There have even been worst-case incidents of drivers disappearing together with the completed vehicles. Opinions about rail freight transportation - Indian Railways manages train operations, but the next driver is not available at the driver change site. - Passenger trains are prioritized, so it is not clear when freight trains will run. - There are basically no timetables for freight trains, so it is not clear when the freight will arrive. - We have heard that there have been freight trains for which a timetable was prepared, but where the transport time in the timetable was 64 hours, there was an average delay of 26 hours.
Addressing these problems, it appears that the combination of expertise in the use of carrier cars to transport completed vehicles in Japan with expertise in rail freight transportation in Japan would be able to achieve stable, high-quality completed vehicle transportation on Indian railways too.
General Motors 0% Volkswagen 1% Others 1% Ford 3% Renault
3% Tata 7% Maruti Suzuki Mahindra & Mahindra 8%
Hyundai 16%
Nissan 2% Toyota Honda 4% 5%
Figure 19 Proportion of Domestic Sales of Cars in India Source: Processed from shares of passenger cars, sales, and exports by JETRO India (2017)
21 Companies transporting cars by carrier car
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As Figure 18 shows, the share of domestic car sales in India taken by sales of Japanese-affiliated companies is 61% (50% for Maruti Suzuki, 5% for Honda, 4% for Toyota, 2% for Nissan), so Japanese-affiliated companies would enjoy the benefits if completed vehicle transportation by a stable and high-quality method were possible. c. Response to Demands and Points Raised by Interested Parties in India
Table 20 tabulates responses, etc. to demands and points raised by interested parties in India.
Table 21 Requests and Points Raised by Interested Parties in India, and Measures in Response Points raised by interested parties Response, etc. to Points Raised Measures against stone throwing and theft are required Use a structure which obscures the completed vehicles for road transport from view There is no infrastructure for the transportation of 45 ft Choose transportation tools that do not use 45 ft containers in India (minor point) containers It would be better to avoid the use of chain blocks in Choose structures that do not use chain blocks mechanisms to move floors within containers. Rail fees are increased if height above rail level exceeds Design so that height above rail level is less than 4.3 m 4.3 m It would take a long time to manufacture freight cars to Look at freight cars from a long-term perspective, and a new design. consider freight car design content that will not need to be changed in the near term. Transportation costs on a door-to-door basis must Consider such as business model undercut current levels The specifications must allow smooth transportation of Consider such specification content tall vehicles such as SUVs Arrival times must be adhered to Provide support and negotiation to allow regular service operation by Indian Railways Damage to products must be reduced (reduce instances Consider such specification content of loading and unloading) If motorcycles are transported by AFTO freight cars, it Adopt structure that does not require pushing is necessary to push the motorcycles by hand for long motorcycles by hand for long distances distances, which is very arduous.
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d. Measures to Strengthen Cost Competitiveness if Japanese Companies Participate in the Business In preparing the current transportation tools for completed vehicle transportation, we must emphasize cost competitiveness even if Japanese technology is used. Therefore, we are considering whether we can manufacture in India, in line with the “Make in India” policy, except in situations which can only be handled by Japanese companies. For the tools proposed here, procurement will be within India, so we will be presenting and studying approximate fee calculations, based on the design summary of the tools, through consultations with counterparts such as container manufacturers.
Figure 20 Example of Equipment Made in India Source: From a corporate profile of Hindustan Vacuum Glass Pvt. ltd.
61 e. Validation of Energy Source CO2 Reduction Effects
Despite conducting a field survey, we were not able to find any data on the calculation method for CO2 reduction
effects in India, so we are using rough calculations based on CO2 emission volumes in the transport sector provided by the Ministry of Land, Infrastructure and Transport, as shown in Figure 20.
Private freight vehicles
Commercial freight vehicles CO2 emission quantity is approximately Marine 1/11 of the emission from trucks
Rail
g-CO2/ton-km
Figure 21 CO2 Emission Quantities per Unit of Traffic Volume in Japan (2016, freight) Source: Ministry of Land, Infrastructure and Transport (http://www.mlit.go.jp/sogoseisaku/environment/sosei_environment_tk_000007.html)
The CO2 emission quantity values the Ministry of Land, Infrastructure and Transport discloses are calculated by
dividing the amount of CO2 emitted by each mode of transport in freight transportation by the traffic volume (in ton-
kilometers, the weight of the transported freight multiplied by the distance), to produce the CO2 emission volume per
unit of traffic volume. The values are as shown in Figure 21. These values are the CO2 emission volume for carrying
1 t of cargo for 1 km by each mode of transport. Using these figures, we have calculated and compared the CO2 emission volumes for (i) carrier cars and (ii) rail transportation, with reference to transportation from Delhi to Mumbai. The preconditions for the calculation are as follows: - Comparison of envisaged cases of transportation of completed vehicles between Delhi Sarai and Mumbai Central over a period of one year. - Rail transport distance between Delhi and Mumbai: 1,388 km - Road distance between Delhi and Mumbai: 1,421 km (From Google Maps) - Road distance from factory to freight station, and from freight station to destination: 30 km (assumed) - Weight of completed vehicles: 950 kg/car - Traffic volume: 180 cars/day - Annual number of operation days: 240 days/year
62 (1) In the case of transportation from Delhi to Mumbai by carrier car
Factory Delivery destination
1,421 km
Figure 22 Illustration of Transportation from Factory to Destination by Carrier Car
CO2 emission quantity for the case in Figure 22 is
0.95 t/car x 180 cars/day x 240 days/year x 1,421 km x 240 g-CO2 /t-km ÷1,000,000 ≒13,996 t/year (converting units from g to t)
(2) The case of future rail transport between Delhi and Mumbai Delivery Factory Freight Freight destination station station
1,388 km 30 km 30 km
Figure 23 Illustration of Transportation by Rail
CO2 emission quantity for the case in Figure 22 is Rail transport portion
0.95 t/car x 180 cars/day x 240 days/year x 1,388 km x 21 g-CO2 /t-km ÷1,000,000 ≒1,196 t/year (converting units from g to t) Truck transport portion
0.95 t/car x 180 cars/day x 240 days/year x (30 km + 30 km) x 240 g-CO2 /t-km ÷1,000,000 ≒591 t/year (converting units from g to t) Total 1,196 t/year + 591 t/year = 1,787 t/year
Table 22 Comparison of CO2 Emissions Delhi to Mumbai Difference 1 Carrier car 13,996 t/year Comparing rail transportation with carrier car
2 Rail freight transportation, CO2 emission can be reduced by 1,787 t/year transportation –12,209 t/year, –87.2%
End
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