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Railways freight traffic increases in June; policies beyond its control affecting the national carrier

04 Aug

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In the wake of losing freight traffic to roads, the Indian Railways has recently come with various measures, such as withdrawing port congestion charges, to gain lost ground. The efforts have started to yield results according to June 2016 data which shows that the railways on average transported 945 rakes of various commodities compared with 910 in June 2015.

Interestingly, a closer look at the data reviewed by InfraCircle shows that policies formulated by other ministries have affected the national carrier’s overall numbers.
A case in point being coal. The domestic movement of the fuel has gone up from 283 rakes per day a year ago to 311 in June 2016, an increase of 28 rakes per day. However, movement of imported coal in the same period has come down to 71 rakes per day compared with 84 in the year-ago period. This resulted in a net increase of 15 rakes per day for coal in June 2016 over June 2015.

The ministry of railways introduced a slew of reforms to improve freight business in the current financial year. The railways minister Suresh Prabhu in his budget speech for the current financial year had announced time-tabled freight trains, appointment of key customer managers to cater to commodities and withdrawing port congestion charges.
A railway document, reviewed by InfraCircle, attributes the drop to less import of coal at ports in zones such as Southern Railways, South Central Railways, East Coast Railways and Western Railways.

Commodity-final
This is a fallout of the government’s decision to cut down on import of coal. Aided by a jump in coal production by Coal India Ltd (CIL), India in the financial year saved Rs28,000 crore due to lower imports and is aiming to save Rs40,000 crore in the current financial year as well.

In financial 2015-16, CIL achieved a production of 536 million tonnes (MT), an increase of 8.5% over the previous fiscal. Coal imports during the period came down 27% to 15.54 MT.
According to Mohammad Jamshed, member traffic, Indian Railways, there has been a substantial adverse impact on coal freight loading October onward. “It was down to about 3-4 MT compared with the previous year… in May we made a recovery and some green shoots were visible,” he said.

The movement of imported fertiliser also declined by 2 rakes per day on average whereas movement of domestic fertiliser improved by 4 rakes.
India witnessed a record production of 24.5 MT of urea, the most commonly used fertiliser, for the financial year ended 31 March 2016. Due to an increase in the domestic production, urea import in the country during the last fiscal also came down by around 3.4% to 8.47MT compared with 8.75MT in 2014-15.

According to experts, external policies have had a direct impact on the freight business of the railways.
“Basically it’s not the policy of railways but external policies seem to have made an impact. Given changes in the domestic as well as global environment, imported coal is being replaced by domestic coal,” said Vishwas Udgirkar, partner and lead-infrastructure consulting, Deloitte Touche Tohmatsu India LLP.

He added that increase in the overall number of rakes per day, however, is a good sign.
“Though it (the railways) is behind the target, both month-wise as well as for the first quarter, which is a little bit worrisome, if the growth continues it will be able to do better,” said Udgirkar.

The railway ministry has budgeted for freight traffic to grow to 1,15MT in the current financial year. For June, the railways had targeted 970 rakes of commodities movement everyday of which it achieved 945 as on 29 June.

For iron ore movement, though the domestic movement of rakes increased by two per day, the number of rakes containing the mineral that got exported increased by six per day.
In an attempt to boost iron ore exports, the Indian Railways had in May decided to withdraw the dual freight policy for transportation of the mineral and pellets. As per the new policy, freight rates for transportation of iron ore for domestic consumption and exports are now charged equally.
However, the other big trigger was a spurt in iron ore production given mining in Goa, one of the top producers in the country, is steadily picking up. According to provisional data compiled by India’s ministry of mines for April 2016, production of iron ore during the period went up significantly by around 54.48% to 16.99 MT compared with 10.99 MT during April 2015, as reported by InfraCircle on 17 June.

Railways freight traffic increases in June; policies beyond its control affecting the national carrier

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Posted by on August 4, 2016 in Uncategorized

 

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