Rail freight falls year-on-year for first time since Covid in June; sea ​​freight flat

Freight volumes at national transport company Indian Railways have fallen year-on-year for the first time since the coronavirus outbreak, according to data for June released by the Department of Railways. The railroad carried 123 million tons (mt) of goods last month, almost 2 percent less than in June 2022.

Previously, rail freight volumes recorded year-on-year growth over the last 36 months after falling drastically between March 2020 and July 2020 due to Covid-19 restrictions. Cargo revenue also fell 0.95 percent yoy to Rs 13,316 crore in June.

Meanwhile, cargo handled by state-owned ports also posted sluggish growth in June, close to the first decline in 16 months. According to preliminary data from the Indian Ports Association, cargo traffic in 12 major ports in the country was just over 66 million tons last month, up 0.7 percent year-on-year.

A previous statement by the association reportedly said that freight traffic actually fell in June for the first time since January 2022.

For the railroads, lower utilization was largely due to thermal coal, the mainstay of their freight traffic. Last month, 47 million tons (mt) of thermal coal were transported, 4.11 mt less than in June last year.

Officials said demand for coal has been significantly lower this fiscal year due to subdued power demand after unusual rains in April and May. Last year, challenges in planning coal logistics resulted in more than 1,000 passenger train journeys being canceled to move more coal and avert a coal crisis; This in turn led to accelerated cargo loading.

“As this was a measure taken under exceptional circumstances, it was unlikely that the same volumes would be repeated this year,” an official said. Coal accounts for over 50 percent of railroad freight loads.

Last month, the Dedicated Freight Corridor Corporation of India (DFCC) also completed a crucial section of the Eastern Freight Corridor; This aims to cut the time it takes to transport coal from east to north India by half.

Additionally, food grain shipments fell by over 42 percent in June, leaving railroads moving just over 3.5 million tons for the month. On the other hand, the transportation of iron ore, which was weak last year due to low industrial demand, has steadily increased. The railway transported 2.84 million t or 27 percent more iron ore than in June 2022.

The finished goods segment, which is crucial for railroads to capture road traffic, also suffered in June. The company transported over 1 million tons less goods than last year, although it made intensive efforts to conquer unconventional traffic.

Both rail and ocean freight saw double-digit growth through the first half of fiscal 2022/23, after which volumes struggled to maintain momentum.

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