Indian Railways claws back freight share from roads, waterways

6 November 2017

The challenges of demonetisation notwithstanding, Indian Railways has notched up a seven-year high in freight loading between April and October, carrying an extra 30 million tonnes (mt) during the first seven months of the current fiscal.

The increase has come courtesy the concessions being extended to industries from last year with a strategy to attract freight. The Railways has won back a chunk of this business from roads, and to some extent from waterways.

The measures undertaken included doing away with port congestion surcharges, dual iron ore charges and providing empty flow direction concessions.

It also permitted goods such as coal and iron ore to be moved through all rail routes instead of the rail-cum-sea route, which it had to resort to in the past due to lack of capacity. Additionally, the Railways has allowed long-term agreements, which its customers seem to prefer. These policies were brought in last year after detailed discussions with stakeholders across sectors, who had promised to return to rail if their concerns were addressed.

The growth was also sharpened due to a low base effect. “Major tariff rationalisation initiatives have yielded expected results in terms of retaining and regaining freight traffic by Railways. The highest loading for month on month has resulted in 30 mt of incremental loading against negative growth last year during this period,” Mohammed Jamshed, Member Traffic, Railway Board told BusinessLine.

“…we are at 653.21 mt, up to October 2017. We are also above the target(for this period),” added an official.

The additional loading was driven by coal, raw materials to steel plants, cement, steel, iron ore, foodgrains, petroleum products and a set of new commodity groups. Only fertilisers saw a drop, but with a surge in demand, the Railways expects to see growth there, too, in the coming months.

Foodgrains, which had taken a hit in previous years, has grown 1.2 per cent despite the North-East being cut off for nearly 15 days due to floods. Petroleum products also — after tepid growth in previous years — has seen a 1.8 per cent growth. Other goods – the new group of 70-odd commodities where railways had introduced a large number of concessions — has seen robust growth of over nine per cent.

The container segment, after suffering two successive years of slow growth, has clocked a growth of 13.3 per cent in the period. During FY17, when the Railways carried 1109 mt of cargo, the transporter had incrementally loaded goods of five million tonnes compared to the previous year.

The result of the concessions had begun reflecting in the last quarter of the previous financial year. “During January-March 2017, we saw good growth,” said a government official.

The railways is hoping to achieve its yearly target this year after many years of misses. But that would still need the transporter to carry another 25 mt of goods in the remaining five months.

Source: Business Line