Freight Corridor: What Is It and Why Is It Important for Trade?

As the name suggests, the freight corridor aims to bring high-speed freight transportation to the country. Most of these comprise a combination of highways, railways, and waterways. It specialises in various facilities that support cargo movement.

This seamless flow of transportation from factories to shops is what the modern world demands. Freight corridors give the necessary boost to economic growth and competitiveness by providing flawless logistics and lowering the cost of transportation. In short, they are, in a way, enabling trade. 

Inception of Dedicated Freight Corridor in India & The Present Scenario

The Ministry of Railways hailed the freight corridor as a catalyst for fast national growth and a revolutionary initiative for India in the twenty-first century. If we trace the chronology of the freight corridor project from its inception, the DFCCIL or Dedicated Freight Corridor Corporation of India Limited was established on 30th October 2006 by The Ministry of Railways to oversee the dedicated freight corridors’ planning, financial resource mobilization, construction, maintenance & operation.

With the fundamental objective of lowering logistics costs from the present 16% of GDP to a more sustainable level of 8% by 2030, the Dedicated Freight Corridor project continued to flourish. The freight corridor is not only regarded as the cornerstone of the National Logistics Policy but also projects a feel-good factor for rail transport.

Finally, October 2023 marked a great moment for the EDFC’s successful completion as part of the Indian Railways Dedicated Freight Corridor project. Having achieved its first triumphant test run of a freight train. The 1,337-kilometre EDFC has now been formally declared open for service.

The Western Dedicated Freight Corridor runs from, linking Haryana and Maharashtra, whereas the Eastern DFC links Punjab and West Bengal. The joint length of both freight corridors is around 2,843km. Other DFCs include a North-South (Delhi-Tamil Nadu) corridor, East-West (West Bengal-Maharashtra), East-South (West Bengal-Andhra Pradesh), and South-South (Tamil Nadu-Goa) corridor.

The key components of freight corridors

These components work together to create a seamless and efficient transportation network. Check out the section below to get a detailed overview.

1.   Transportation Infrastructure:

Freight corridors have properly maintained and upgraded highways with many lanes (depending on the traffic), rest areas, and weight limits. In conjunction with everything, high-capacity freight trains using modern railways and efficient signalling systems are in place. Moreover, the availability of rivers and canals for cargo navigation will give them easier access to these structures.

2.   Logistics facilities:

The Intermodal terminals must be created inside the freight corridor to facilitate seamless cargo transhipment between modes. They also have warehouses and distribution centres that process, deliver, and distribute products to fixed markets. Apart from this, special warehouses can set a few highly perishable products in cold storage facilities.

3.   Information Technology:

A freight corridor is equipped with real-time tracking and monitoring of goods to ensure timely delivery. Thus, they encourage excellent communication between various stakeholders present in the logistics process.

4.   The Supporting Infrastructure:

Customs and border controls that efficiently prevent delays and permit the speedy movement of goods. Moreover, services such as power, water, and communication must be abundant to have the freight corridor function efficiently enough. Finally, a few freight corridor rules should be implemented for the operations to act smoothly. It must be provided with compliance that assures safety and protection of the environment.

How DFCs are driving trade

A dedicated freight corridor is at the forefront of facilitating trade and the economy in India. They cover specialised infrastructure projects that allow the smooth movement of goods over long distances. Therefore, reducing transportation costs and improving the effective running of logistics.

In short, the freight corridor alone has done numerous things to boost trade, including:

● Lower Transportation Costs: Unlike road or rail networks, DFC offer a more efficient and cheaper mode of transport. Meanwhile, less delay, savings on fuel consumption, and enhanced load factors have led to a corresponding decrease in transportation costs.

●Greatly Improved Logistics Efficiency: With the assured provision of dedicated infrastructures and facilities to truly handle the efficient movement of cargo, freight corridors promise a reduction in transit times, lower handling costs, and more reliability of the supply chains.

●Higher Volumes of Trade: DFCs reduce the cost of transportation and thereby increase trade volumes. With the reduced cost of transportation, industries can become more competitive by extending markets for their products and importing goods at lower costs.

● Economic Development: The freight corridor develops the Indian economy by creating jobs, motivating investment, and promoting the growth of various industries in their locations. By attracting new organisations and industries, they spur economic growth.

●   Regional Integration: The freight corridor connects major industrial and commercial centres.  Additionally, appropriate Regional Integration with economic cooperation has led to the tremendous development of this nation.

Bottom line

Currently, around 70% of Indian logistics depend on roadways; the government aims to boost the freight corridor to reduce road dependency. By driving trade and improving costs they are playing a crucial role in supporting the country’s economic growth.