August freight activity brings cheer to Railways

The month of August has brought cheer to the Indian Railways due to an increase in freight activity, in a reversal of trend witnessed in the first four COVID-hit months of the current fiscal and indicating an upswing in economic activity.

Total freight loading was higher by 6.41 per cent at 26.72 million tonnes in the first 10 days of the current month compared with the same period last year.

The increase has been aided by several recent initiatives, including fare rationalisation, introduced to boost freight carriage.

Typically, more than 60 paise of every rupee earned by the Railways comes from freight carriage, while each passenger is carried at a loss. Therefore, an increase in freight loading (and, hence, earnings) is critical for the financial health of the Railways.

The Railways was struggling with a drastic fall in earnings so far this fiscal due to the COVID-19 lockdown that was in place for most part of the previous quarter and which had brought the economy to a standstill. This had meant a huge fall in the amount of freight carried and a collapse in passenger earnings as all train services were cancelled.

As a result, in the first four months of the fiscal, Railways had reported a nearly 17 per cent year-on-year fall in loading and a 27 per cent drop in earnings from freight. The buoyancy in August has helped reduce the gap to 16 per cent till August 10.

More from freight

In an interaction with the media recently, Railway Board Chairman V K Yadav had listed out several initiatives the transporter had taken to boost freight carriage. He had also announced an ambitious target of achieving 50 per cent higher earnings from freight this fiscal compared with the last fiscal.

While loading surpassed last year’s tonnage for the first time this fiscal in the first 10 days of August, earnings are still down 1.2 per cent year on year.

The earnings so far this fiscal are down a good 25 per cent compared with last year.

So, the freight loading and earnings run rate must be accelerated substantially for the Railways to achieve the target in the remaining part of the year.

Freight initiatives

The Railways introduced several initiatives to boost freight activity.

To begin with, it started offering category-wise discounts to drive up freight loading. So, there is a 40 per cent lower charge for fly ash bagged in an open wagon, an initiative meant to attract freight from power companies and the cement sector.

A long lead (movement over long distances) concession of up to 20 per cent is expected to drive up traffic from coal, iron ore and steel industries, while an up to 50 per cent ‘short lead (small distances) concession’ is meant for all the other sectors.

What has also helped is an increase in the speed of goods trains. There has been enough track space available for freight carriage as passenger services have been suspended for nearly two months and they have remained minuscule even after the resumption of limited operations.

Related News: Cancellation of trains extended until Sept 30; special services to continue

This has meant that the speed of freight trains has almost doubled to 46 kmph. Besides, the detention period of trains at loading and unloading terminals has reduced and the turnaround of wagons has been quicker.

Yadav said that separate corridors for freight and passenger trains will ensure faster goods trains.

The Railways also launched time-tabled parcel trains during the pandemic, catering to those customers who do not need to send items across the country in bulk. These parcel trains were meant to transport essential commodities and goods in smaller quantities to tide over supply chain disruption caused by the COVID lockdown.

A senior Railways official said a consignment worth just Rs 80 was also booked in one such train.

The guiding principle of such parcel trains is to offer passage to each and every item, however small the quantity, during the pandemic. This endeavour will now continue, and the Railways will have a greater role vis-a-vis roadways in total goods transported across the country.

Lower dependence on Coal

The focus on non-coal freight items is also helping the transporter. For long, coal has been nearly half of all freight carried by the Railways and this excessive dependence on just one commodity was showing signs of being untenable even before the pandemic, since coal carriage has been declining due to various reasons inherent to the power sector.

But, now, as other commodities find its rates and freight focus more attractive, the Railways’ dependence on coal has decreased.

Consequently, the overall loading increased in the first 10 days of August despite coal freight lagging compared to the same period in 2019.

Passenger earnings

Passenger traffic was down by 80 per cent in the first 10 days of August compared with the same period last year. As a result there has been a huge fall in passenger earnings compared with last fiscal.

Yadav has already said that the overall passenger earnings could be lower by Rs 35,000-40,000 crore this fiscal.

The 230 trains currently being operated comprise just a fraction of the Railways total network and even these services have nearly 25 per cent unoccupied seats.

No wonder then that the Railways is focusing more on improving its freight performance.