Home / Industry / Manufacturing /  Cement transportation by railways falls 11.8%

Bangalore/New Delhi: Indian Railways is carrying less cement than it used to because of a rise in freight charges, not as much of the building material being transported across long distances and a slowing economy that has seen construction being hit.

Cement carried by the railways fell 11.8% to 7.52 million tonnes (mt) in August from 8.53 mt in the year earlier, amid an increase in freight fares of as much as 24%.

The Cement Manufacturers Association (CMA) said the decline was prompted in part by the increase in freight rates, although the general decline in the cement market was also a reason. Also, the material doesn’t have to be sent across long distances.

“Today, a larger share of cement dispatches take place within 400km of the plant," N.K. Pande, a senior deputy secretary at CMA, said by email.

For shorter distances, road transport is more economical and allows for door-to-door delivery without multiple handling stages as in the case of rail transport.

Cement manufacturers find it more economical to use rail only if the distance is more than 700km, said R. Sivadasan, former Indian Railways chief financial officer.

That isn’t always the case, Pande said.

“Even for certain long-lead dispatches, where return freight traffic is assured, road transport is being preferred for cement, as its overall cost of transportation is cheaper," he said.

The share of the railways in cement transportation has contracted, said Rajesh Kumar Ravi, a Mumbai-based cement analyst with Karvy Stock Broking Ltd.

“The fact that the cement industry has grown at the rate of 7-8% in the April-August period this year while volumes transported by the railways have remained almost flat means that cement manufacturers are preferring transportation by road," he said.

Because of regional price variations, cement manufacturers have an incentive to transport cement to adjoining regions and not over longer distances.

In addition, manufacturers have to anyway use trucks for door-to-door connectivity, Ravi said.

In the first five months of the financial year, the railways loaded 42.58 mt of the commodity, down marginally from the 42.76 mt carried last year. Cement freight accounted for nearly 9% of the 6,328.28 crore in freight revenue in August, compared with 9.47% of 5,204.26 crore last year.

The amount of steel carried by rail last month was little changed, pointing to a slowdown in construction.

Coal has picked up some of the slack. Although total revenue-earning traffic grew more than 16% in the April-August period from last year, this has largely been because of a 15% increase in coal volumes transported. Coal accounted for nearly half of the total revenue earning traffic in the period.

August volume for most other commodities transported by railways—pig iron and finished steel, mineral oil, food grains, and fertilizers—has remained almost flat or has marginally declined from the year before.

Most of the railway cement traffic originates in the areas around Jabalpur in Madhya Pradesh and Bilaspur in Chhattisgarh and Kodangal in Andhra Pradesh.

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