SRT's rail monopoly hinders logistics, burdens business

At present, our transportation costs are higher than that of our competitors in the region due to the fact that we are using more road transportation, which is the most oil-intensive mode of transportation. According to the Transport Ministry, 86 per cent of all merchandise is transported by road, while water and rail transportation account for only 12 per cent and 2 per cent respectively. Domestic transportation in competing countries depends on rail no less than on road. Transportation by rail consumes much less energy than road transport. As a consequence, our transportation costs are higher. The big hike in oil prices this time round will aggravate this disadvantage for Thai companies. That is the reason why there is a lot of pressure to improve transportation via waterway and rail.

 The government has responded well in this regard. Today, I will write about rail transportation only and leave waterway transportation for the future. To support the modal shift from road to rail, the Transport Ministry is prepared to take various actions.

First of all, more dual tracks will be constructed to help alleviate bottlenecks in high-density areas. Another set of dual tracks would also be added to run parallel with existing dual tracks on routes that are already crowded. The construction of a total of 832 kilometres of dual tracks is planned.

Secondly, container yards for transferring cargo containers from trucks onto trains and vice-versa would be constructed to minimise the time and cost of transferring between the two modes. If the transfer is inconvenient and time-consuming, businessmen may just choose to transport their cargo via trucks as they do now. They would not want to waste time and slow down their production or logistics process, which may pose other problems and additional indirect costs.

To attract businessmen to switch to rail transportation, it is necessary to make it fast enough. This means reducing the time of the overall process: from the transportation of goods by truck from the point of origin to the container yard, the time consumed in transferring containers from truck to train, the time spent on the rail line, and the time consumed unloading containers from train to the truck that will carry goods to their end destinations. The total time consumed along the entire route would not be less than the time consumed for transportation by truck alone. However, with efficient facilities for speedy transferring of containers and with a train schedule that is convenient for truck connections, the total time needed for the entire route can be reduced to the point that it would not be much longer than transport by truck alone. This would then justify the modal shift from road to rail, as transportation costs would be reduced.

 The above mentioned plan of the Transport Ministry is a good initiative. However, having adequate dual tracks and a container yard with adequate facilities for unloading and reloading does not ensure that the total transportation time by rail will be as short as it should be unless the management of the transport system is improved. At the present time, the manager of the rail system for such transportation is the State Railway of Thailand (SRT). The performance of the SRT as a manager is quite notorious. Transportation by rail is, at present, quite slow and unappealing to users of the rail system. If the management of the rail system is not improved, rail transportation may still be as slow as it currently is and will not be able to encourage businessmen to switch to rail transportation.

I would like to propose letting private enterprises become rail service  operators. The SRT could lease proper pieces of land to private enterprises for the construction of yards for unloading and reloading containers in mode switching. Private operators would normally invest in the most up-to-date equipment to provide speedy unloading and reloading services to attract business. At the same time, private enterprises should also be allowed to run a cargo train service on existing dual tracks in competition with the existing ones run by SRT.

The railway tracks were not built out of SRT's own funds, but were 100-per cent funded by the fiscal budget. If roads paid for by the government budget can be used by the private sector for trucks, the railways, also paid for by taxpayers, should likewise be available to private enterprise to run train services. However, the private operator would have to invest in the rolling stock and cars by themselves as the SRT has been investing in the stock and cars out of its own income. I believe that if private operators are allowed to run train services, the train schedule would be more customer-friendly and the loading time in mode switching would be minimised which would encourage a modal shift from road to rail transportation. This would in the end put pressure on the SRT to improve the efficiency of its cargo operation.

I am writing this article simply to point out to the Transport Ministry that constructing adequate dual tracks alone is not enough to encourage a modal shift to rail transportation. It is necessary to make rail transportation as fast as possible, and ensure that it does not take much longer than road transportation. The solution could be in allowing private enterprises to run cargo train services on the existing tracks, which were built out of the government budget. Private enterprise should also be allowed a long-term lease on the proper pieces of SRT land to construct an efficient container yard, with modern equipment to minimise time for mode switching. Allowing private operators to run the services will create competition in cargo services, which would improve the quality of service and thus make a shift to rail more attractive. This proposal would not replace the current operations of the SRT, but would simply add additional service providers to cope with an increased demand for rail transportation. The SRT should not object to this movement. Its monopoly is a hindrance for any improvement in service. I would request the government to seriously explore this matter to ensure an effective modal shift into rail transportation and really improve the logistics of the business sector.

Until next Monday.