Rail freight loading on track despite slow growth

Last Updated: Sun, Oct 21, 2012 06:59 hrs

Indian Railways (IR) has achieved 47 per cent of its full-year loading target and 44 per cent of the freight earning target in the first six months.

Traditionally, it is the last quarter that gives it the biggest push. The progress so far has been possible despite freight loading showing a slower growth of just five per cent this year compared to around nine per cent in the same period last year.

IR loaded 481 million tonnes and realised earnings of Rs 39,888 crore in the half year. Revenue rose 25 per cent compared to a 10 per cent increase in the corresponding period in 2011. Experts, however, say the sharp rise in freight revenue has only masked the economic slowdown that has caught up with IR. Industrial production for the first five months this year grew just 0.4 per cent, compared to 5.6 per cent last year. "The impact is visible in the low freight growth rate" said an expert.

The jump in earnings was possible due to an increase of freight rates of six per cent before the presentation of the railway budget, followed by a 25 per cent rise across the board, barring iron ore used domestically. Dinesh Trivedi's out-of-Budget move to raise freight rates remained when Mukul Roy moved in as railway minister in March and rolled back the passenger fare rise.

"A freight hike is the simplest way of bailing out the railways and it does not require any out-of-box thinking. The railways need to chalk out a long-term strategy to capture the market share it is losing to roads. This euphoria over revenue increase won't last for long, as the railways can't afford to take advantage of being a monopoly forever," said an expert, who did not wish to be named.

Even the net-tonne kilometres in the first half of 2012-13 rose only marginally, by 1.3 per cent. The average lead, showing the distance over which the freight is carried, has also fallen by three per cent over the April-September period of 2011-12, from 666 km to 644 km. IR benefits if more freight is loaded for longer distances. So, net-tonne km is the best indicator of performance, said an official.

The revenue impact because of the freight rate rise in the first quarter is expected to be comparatively more, since it includes a busy season charge, said an official. In the second quarter, this charge is not there and volume also dips, added the executive. However, almost 90 per cent of the increase in freight loading in April-September, of 22 mt over the corresponding time in 2011-12, is due to coal that recorded a nine per cent increase in loading.

The commodities which showed an increase in loading in April-September, compared to the same period last year, also include raw material for steel plants which showed a 4.7 per cent jump, pig iron and finished steel of 4.6 per cent, iron ore of four per cent, POL fuels 3.6 per cent and cement 0.5 per cent.

Commodities that saw the loading fall as compared to the first half year of 2011-12 are foodgrain and domestic container services. The severest fall was in fertiliser, of 7.1 per cent, and white goods that fell 4.5 per cent.

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