How did railways turn around the freight train?

Over 74% of Indian Railways revenue comes from its 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 its freight service is performing.

Report card of Railways’ freight service

And it is doing really well. In the last two years, railways freight loading has been impressive. Despite the pandemic, the freight loading in FY21 exceeded that of FY20. Indian railways ferried 1,418 million tonnes of freight in FY22, a jump of 15% over the previous fiscal’s 1,233 mt.

Railways had recorded 25 straight months of best-ever monthly freight loading till September this year. The cumulative freight loading by Indian railways during the April-September period of current fiscal 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 cumulative earnings from freight stood at Rs 1.43 trillion during fiscal 2022. The annual increment of over 180 mt was also the highest recorded in a single year. The previous best incremental loading in absolute terms was 66.1 mt achieved more than a decade ago in the year 2005-06.

Uptick in coal transportation -- the mainstay of Railways’ freight service

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

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

The pickup in automobile transportation

One of the highlights of this year’s freight business is the increase in automobile loading as 2,712 rakes have been loaded till September this year, higher by over 70% when compared with the same period of last year. Automobiles’ share in railways’ freight basket is very less when compared with the overall volumes. However, Railways has taken several initiatives to boost its share.

It had liberalised its automobile freight train operator (AFTO) policy in 2018, with the aim of attracting more interest from automobile companies. Under the revised policy, registration fee for AFTO 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 rise in automobile traffic in the past few years. Approximate estimates would put automobile freight at close to 4.6 lakh units so far this fiscal year.

The government is devising more strategies to fuel auto traffic. To accommodate SUV cars, a new design of auto-carrier wagons is under finalisation. To facilitate loading /unloading of automobiles, design-modification to the existing NMG wagons is also under execution. Auto makers are now planning to increase the distribution of vehicles through rail transport by up to 30% by 2027. This share was 16% in FY22. With railways being a cleaner source of transport, higher freight through it contributes to overall reduction of carbon footprint.

The speed

The freight trains 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 per hr to 41.2 kms per hr.

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

Diversifying the freight basket

Railways is also looking to diversify its freight basket to reduce dependence on coal. It is planning to ferry more automobiles, consumer goods and white-good products like air-conditioners, refrigerators etc.

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

Despite the steady growth this fiscal, the volumes are still short of 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 mt in the coming months to meet the target. The government is also planning to acquire 30,000 wagons in the current year.

V N Mathur, former member - traffic, Railway Board says some commodities like coal have done really well. Railways have improved on a number of operating parameters like speed and wagons. 

Despite the gains in recent past, railways share in overall freight traffic is still low at 26- 27 per cent, while the majority of the freight is through road transport.

The government has designed a national railways plan under which it seeks to increase the share of railways to 40-45%. According to some estimates, Railways would need to account for over 3,600 mt in 2031 to meet its modal freight share targets. It is also expecting an incremental revenue of at least Rs 30,000 crore per annum from freight services once 300 Gati Shakti cargo terminals are operational in the next five years.

Even if the economic activity sustains at higher levels and there is increase in demand for commodities, there are still challenges like last mile connectivity, transit times, issues with terminals.