Rail freight sees first YoY decline since Covid in June; sea cargo flat

Freight volumes for the national transporter, Indian Railways, contracted year-on-year for the first time since the coronavirus outbreak, shows the data for June released by the Ministry of Railways. The Railways ferried 123 million tonnes (mt) of goods last month, almost 2 per cent less than in June 2022.

Before this, railway freight volumes had been witnessing YoY growth for the past 36 months, after they drastically declined between March 2020 and July 2020 amid Covid-19 restrictions. Earnings from freight operations in June also decreased 0.95 per cent YoY to Rs 13,316 crore.

Meanwhile, cargo handled by state-owned ports also showed poor growth in June and came close to the first decline in 16 months. According to provisional data by the Indian Ports Association, cargo traffic at 12 major ports of the country was a little over 66 mt last month, registering YoY growth of 0.7 per cent. 

An earlier statement by the association reportedly said that cargo traffic in June had in fact declined for the first time since January 2022.

For the Railways, the reduced loading was primarily on account of thermal coal, the mainstay of its freight operations. It ferried 47 million tonnes (mt) of thermal coal in last month, 4.11 mt less than in June last year.

Officials said that demand for coal has been much lower this financial year because of subdued power demand following unseasonal rainfall in April and May. Also last year, challenges in planning coal logistics led to the cancellation of over 1,000 passenger train trips in a bid to transport more coal and avert a coal crisis; this, in turn, resulted in accelerated freight loading.

“Since that was a measure undertaken under extraordinary circumstances, the same volumes were unlikely to be repeated this year,” an official said. Coal accounts for over 50 per cent of the Railways’ freight loading.

Last month, the Dedicated Freight Corridor Corporation of India (DFCC) also completed a crucial stretch on the eastern freight corridor; this is slated to bring down the time for transporting coal from east to north India by half.

Moreover, transportation of foodgrain fell by over 42 per cent in June, leaving the Railways ferrying a little over 3.5 mt during the month. On the other hand, iron ore transportation, which was weak last year due to low industrial demand, has picked up steadily. The Railways transported 2.84 mt or 27 per cent more iron ore than it did in June 2022.

The finished goods segment, which is crucial for the Railways to capture modal share from roadways, also suffered in June. It transported over 1 mt fewer goods than last year, despite its aggressive push to capture non-conventional traffic.

Both rail and sea freight had been witnessing double-digit growth until the first half of the financial year 2022-23, following which the volumes have struggled to maintain the momentum.