What fosters shippers’ rail dispreference? Insights from Indian steel-makers with disparate output volumes

Abstract

Over time, rail's share of the freight market has steadily decreased and, currently, is significantly lower than that of the road. This study explores what fosters shippers' rail dispreference. The study is conducted in the domain of outbound logistics in the steel-making industry in India. Twenty-one industry experts are interviewed in-depth to capture their perceptions, and their responses are analysed. Of these, seven are industry experts, and the remaining fourteen are logistics managers working across two steel plants, among which the annual output of one is about ten times that of the other. We find that a capacity shortage in the rail sector and the monopoly position of the rail transport provider together foster multiple factors that drive shippers' rail dispreference. Further, shipper firm size moderates the influence of some of these factors, influencing shippers' rail dispreference to a lesser extent in the larger firms than in the smaller ones. The study highlights the realization that while increasing rail capacity is necessary, it is not enough by itself, but must be complemented by targeted policy changes. The study brings to the forefront the roles played by rail capacity shortage, rail monopoly position, and shipper firm size in shippers' rail dispreference.