Railway eyes pvt sector for lifeline as Tk358cr luggage vans lie idle

Infograph: TBS

In a bid to boost freight revenue, Bangladesh Railway purchased 125 luggage vans at a cost of Tk358 crore about a year and a half ago, but due to poor planning and inefficient integration into existing operations, the move has backfired – causing freight income to decline instead of rise.

Nearly 60% of the newly acquired vans now sit idle, while those in operation have failed to meet expectations. 

A luggage van is a type of railway car designed to transport freight, luggage, and goods, including perishable items.

Officials say the luggage vans have become a liability due to a lack of proper feasibility studies before the purchase. The railway authority is now exploring options to hand over their operation to the private sector.

Md Shamsul Haque, transport expert and professor at the Bangladesh University of Engineering and Technology, told The Business Standard that railway officials had made ambitious claims about the vans' potential to enhance capacity and revenue. 

"But no proper feasibility assessment was carried out. Many purchases in the railway sector are made to benefit suppliers, and there's no accountability for losses or failed investments. The interim government should investigate and take action against those responsible," he said.

 Procurement plan

Under the project titled "Technical Assistance for Rolling Operation Development of Bangladesh Railway", a contract worth Tk358 crore was signed with a Chinese supplier on 31 August 2020. The deal included 75 metre-gauge and 50 broad-gauge luggage vans. Each metre-gauge van costs Tk2.45 crore, and each broad-gauge van Tk3.05 crore. Each has a 10-tonne capacity.

The 125 new luggage vans, including 25 refrigerated units, were added to the fleet between September and November 2023. Of the 50 older vans, only 18 are currently operational, according to Bangladesh Railway's Transport Department.

Out of a total of 143 vans, only 63 are in use – 21 in the eastern region and 24 in the west. Additionally, 10 vehicle-carrying VK luggage vans and 8 guard brake vans are being used across both regions. 

Notably, 25 of the refrigerated vans have never been used.

Revenue drops despite expansion

Before the new vans were introduced, the Railway earned Tk9.91 crore from freight transport in the first eight months of 2023, moving 70,900 tonnes of goods using older vans. 

In contrast, after the addition of the new fleet, earnings dropped to Tk8.29 crore in the same period of 2024, with only 59,400 tonnes of goods transported.

According to officials, in an attempt to increase usage, the new luggage vans were attached not just to mail trains but also to intercity services. However, most intercity trains don't stop at every station, and those that do typically halt for only three to five minutes – insufficient for cargo operations. As a result, the initiative failed.

To further explore revenue options, Bangladesh Railway launched three pairs of agricultural product special trains on 24 October last year from Khulna, Panchagarh, and Rohanpur in Chapainawabganj. 

However, poor response from farmers led to the suspension of the service within a week. In some cases, trains consumed Tk2 lakh worth of diesel but earned less than Tk2,000 – some even ran empty.

 Pricing and logistics hurdles

Freight charges have also discouraged users. Transporting goods by train on the Dhaka-Chattogram route costs Tk2.36 per kilogram, whereas road transport costs range from Tk1.68 to Tk2 per kg. For instance, sending vegetables from Jashore to Dhaka by truck costs about Tk2 per kg, while the same by train costs around Tk4.50. 

Moreover, train shipments often involve multiple loading and unloading stages, increasing both time and the risk of damage.

 Lack of market insight

While the procurement project included feasibility studies, it failed to consider the demands of farmers and traders or conduct a proper market analysis. 

Adding to the inefficiency, approximately 93 mail and local trains – traditionally used for cargo – have been suspended over the past 15 years, many during the Covid-19 pandemic.

Md Shahidul Islam, joint director (operations) of Bangladesh Railway, told TBS, "There was a long-standing shortage of luggage vans, which pushed people toward alternative services. Moreover, using these vans often requires multiple transfers, while trucks provide door-to-door service." 

"Many mail and local trains that once used luggage vans are now suspended due to a shortage of rolling stock. That's why usage is low."

Leasing plan in works

In response, the railway is moving to lease the luggage vans to the private sector. On 5 January, senior officials decided to formulate a policy for renting or leasing the vans to individuals or private firms. It was noted that only about 5% of the vans are currently being used. 

A draft titled "Parcel and Goods Transport Policy 2024 for Private Individuals/Organisations through Bangladesh Railway" is currently awaiting approval.

Speaking to The Business Standard, Director General of Bangladesh Railway Md Afzal Hossain said, "These luggage vans were mainly operated on mail and local trains, many of which are now suspended due to a shortage of rolling stock." 

He added, "We are in talks with several private companies to boost usage and income. We are also in discussions with the postal department, whose existing rates are outdated. They've been asked to revise their rates as part of the process."