Can the recovery in rail freight volume last?

The volume growth should provide succour to the Indian Railways, which otherwise is worried about its weakening grip on the freight market


Graphic: Naveen Kumar Saini/Mint
Graphic: Naveen Kumar Saini/Mint

Freight traffic at Indian Railways increased by 7.7% in March, the fastest pace in at least five years.

The strong volumes helped the national carrier register a slight growth (0.4%) in freight volumes for the full fiscal year. The full year growth is still lower than the earlier fiscal (2015-16) when traffic grew 0.6%.

But encouragingly, volumes grew for three consecutive months now, a first in a year. Net tonne kilometre, which indicates total distance travelled by units of goods, increased 3.3%. The last time this metric registered growth was in June 2015. The volume growth should provide succour to the national carrier, which otherwise is worried about its weakening grip on the freight market.

The recovery can be a long drawn process, however. The average lead which reflects the average distance a unit of goods travelled on the rail network continues to decrease. In March, it fell 4% to 540km. Three years ago in March 2014, the average lead was 610km. Second, volumes are spurred by pig iron, steel, iron ore and other raw materials, the sustainability of which is still not clear given weak investment trends in the domestic economy. Container traffic also saw good growth. But their share in total freight traffic is relatively low (in terms of tonnage).

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