How did railroads turn the freight train around? | So Good News

Over 74% of Indian Railways’ revenue comes from freight operations. It is the backbone of the railways and also supports passenger operations. So the health of the railways depends a lot on how their freight services perform.

Report card on the railway’s freight service

And it’s going very well. In the last two years, the freight load on the railway has been impressive. Despite the pandemic, the freight load in FY21 exceeded that of FY20. Indian Railways carried 1,418 million tonnes of freight in FY22, a jump of 15% over the previous fiscal’s 1,233 tonnes.

Railways had recorded 25 consecutive months of best monthly freight loadings ever until September this year. The accumulated freight load of Indian Railways during the period April-September at current finance charges stood at 736.68 million tonnes (MT) as against 668.86 MT achieved in the same period of FY22, representing a growth of 10.14%.

And the accumulated freight revenue stood at Rs 1.43 trillion during the fiscal year 2022. The annual increase of over 180 tonnes was also the highest recorded in a single year. The previous best incremental load in absolute terms was 66.1 tonnes achieved more than a decade ago in the year 2005-06.

Increase in coal transport — the mainstay of the railway’s freight service

Coal makes up the majority of the commodity basket, with iron ore a distant second. In FY22, railways transported over 650 million tonnes of coal, compared to 542 million tonnes in FY21 with a growth of 20%. The rise in coal transport was mainly driven by increased power demand. After shortages were reported around last year and early this year, the railway had increased transport. Coal freight has increased by over 32% between September 2021 and March 2022.

Anil Kumar Lahoti, General Manager of Central Railway has said that the increase in freight this year is due to several business development initiatives, including the infrastructure upgrade on the Central Railway.

The collection in car transport

One of the highlights of this year’s shipping business is the increase in car loading as 2,712 rakes have been loaded up to September this year, up by over 70% compared to the same period last year. Cars’ share of the railway’s freight basket is very small compared to the total volumes. However, Railways has taken several initiatives to increase its share.

It had liberalized its Auto Freight Train Operators (AFTO) policy in 2018, aiming to attract more interest from auto companies. Under the revised policy, the AFTO registration fee was reduced by 40% to Rs 3 crore, along with relaxations under the minimum procurement policy.

In line with this, there has been a steady increase in car traffic in recent years. Rough estimates would put car shipments at close to 4.6 lakh units so far in the financial year.

The government is preparing several strategies to drive car traffic. To make room for SUVs, a new design of car carriers is being completed. To facilitate the loading/unloading of cars, design modifications to the existing NMG wagons are also being carried out. Automakers are now planning to increase the distribution of vehicles through rail transport by up to 30% by 2027. This share was 16% in FY22. Since railways are a cleaner source of transport, higher freight through it contributes to an overall reduction in carbon footprint.

The speed

Freight train speeds have also increased over the years, thanks to a plan called “Mission Raftaar.” From FY17 to FY21, the average speed of freight trains has increased from 23.7 km/h to 41.2 km/h.

Indian Railway is building more than 3,000 km of Dedicated Freight Corridor (DFC), which will enable freight trains to run at a speed of 100 kmph.

Diversify the product basket

Railways is also looking to diversify its freight basket to reduce its dependence on coal. It plans to ferry more cars, consumer goods and white goods such as air conditioners, refrigerators etc.

The diversification plan is steady as the balance sheet and other commodities segment reported a growth of 14% in FY22 over the previous fiscal, with an incremental load of 15 million tonnes. However, the shift may take some time. The loading of various goods increased by 14% in September this year.

Despite the steady growth in the budget, volumes are still below the ambitious target of loading 1,700 million tonnes, which is higher than the budget estimates. According to a Business Standard report, there is a need to achieve close to 150 tonnes in the coming months to reach the target. The government also plans to acquire 30,000 wagons this year.

VN Mathur, former member – traffic, Railway Board says some commodities like coal have done very well. Railways have improved a number of operational parameters such as speed and carriages.

Despite recent progress, the railway’s share of overall freight traffic is still low at 26-27 per cent, while the majority of goods are transported by road.

The government has drawn up a national railway plan in which it seeks to increase the proportion of railways to 40-45%. According to some estimates, railways will need to account for over 3,600 tonnes by 2031 to meet their modal share targets. They also expect an increase in revenue of at least Rs 30,000 crore per annum from cargo services once 300 Gati Shakti cargo terminals are operational in the next five years.

Although economic activity is maintained at higher levels and there is increased demand for goods, there are still challenges such as last mile connectivity, transit times, problems with terminals.