Nearly 6-7% road traffic shifts to railways in Sept 1-Oct 13 period

The battle of roadways versus railways for a pie of the freight market seems to be taking a fresh turn with the Covid-19 pandemic. 

After a long time, railways has been able to get a share of the road freight volume but, according to experts, it could only be a blip.

In September, rail freight traffic increased by 15 per cent and till October 13, it was 18 per cent more than last year. 

This rise is mainly due to a shift of at least 6-7 per cent traffic from roads to railway in these two months.

The major items in the shift are salt, cement, automobiles and finished steel. There is considerable growth in the movement of industrial salt from Kutch to other parts of the country, while the automobiles sector saw 12 per cent growth. 

“There is a growth in the industry, growth in volume and a firm rise in railway traffic. However, initial data indicates that there has been a 6-7 per cent shift in traffic from road to railways,” said an official aware of the development.

Officials said several concessions lined up by railways have led to the increase in traffic. This includes steps like long-lead concession – 15 to 20 per cent for coal, iron ore, iron and steel. Other factors include short-lead concession and withdrawal of busy season surcharge. 

Truckers, however, say that even if rail freight concessions have made it attractive to move goods by train, the inclusion of other charges still makes railways an expensive proposition. 

“There are various handling charges, over and above the freight rates, as well as loading and unloading charges. These rates make railways expensive. The share of railways in freight has been 31 per cent for the last five years,” said S K Mittal, chairman, All India Motor Transport Congress (AIMTC). 

The railways’ share in the transportation of surface freight has declined from 86.2 per cent in 1950-51 to 30-35 per cent now, owing to a shortfall in carrying capacity and a lack of price competitiveness. In 1990-91, it was around 62 per cent.

Transporters also feel that the freight rates only impact bulk cargo and have no bearing on smaller consignments or cargo items.

“Consumer durables, white goods and finished products are still preferred via roads,” said S P Singh, senior fellow and coordinator at the Indian Foundation of Transport Research and Training (IFTRT).

Interestingly, railways is getting the share from not just road but the sea route as well. Major players are sourcing iron ore through the all-rail route from the rail-cum-sea route earlier. 

“We are seeing positive growth in all commodities. In September, it was 15 per cent. We expect it to further grow in October as it is beginning of the festive season,” said V K Yadav, chairman and chief executive officer (CEO) of the Railway Board.

The lockdown – that lasted from March till June and continued in some states even after that – proved beneficial for the railways since inter-state movement of goods was more difficult by road.

“Some of the teething issues faced were availability of drivers and non-uniformity of lockdown rules across the country which made transporters choose rail. With the economy on a rebound, we should expect a claw back and more movement will happen through roads,” said Jagannarayan Padmanabhan, director and practice lead, transport, CRISIL Infrastructure Advisory.

The drop in freight rates may not completely tilt the logistics business in favour of railways as companies look at total logistics cost.  Railways will fare better for distances beyond 550 km, he added. For the remaining months of FY21, however, the railways will have to bank on power demand that is expected to pick up in October-November because of the festive season, leading to an increased coal traffic. 

Experts also said there was an uptick in freight movement by road in the last two quarters. For the same period, the railways was also able to bounce back faster, primarily because of pent-up demand and restocking due to the festivals.