Indian Railways, which has been striving to boost its freight revenue and tonnage through various freight rationalisation steps, continues to struggle, with its freight revenue declining by more than 10% in the second quarter of FY17 to R48,342 crore.
The drop in revenue was mostly due to leads (net tonne per kilometre) declining by more than 8% as compared to the corresponding period last year.
The transporter also witnessed its freight tonnage decline by 1.6% in Q2 FY17 to 532 mt as opposed to 541 mt carried in the corresponding period last year. With a major decline found in commodities like coal (-4%), cement (-6.1) and fertiliser (-5%).
The tariff for coal which accounts for 45% of the railways’ freight receipts was raised by 7-14% for distances between 200km and 700 km two months ago. It also reduced the freight for long-lead traffic by 4-13%. Additionally, it imposed a R55/tonne extra charge on both loading and unloading. In spite of these steps, revenue from transportation of coal has declined by more than 14% as compared to the corresp-onding period the previous year.
The transporter also scrapped the dual freight policy for iron ore and removed the 10% port congestion surcharge earlier this year which has resulted in the iron ore traffic picking up by more than 12% in the first two quarters of the current fiscal while the container segment has picked up marginally by 1%.
Railway officials believe that the slew of tariff rationalisation measures taken in the current fiscal will start having the desired effects from the third quarter of this fiscal year, while actual freight loading will stabilise from September 2017.
“The main concern right now is the decrease in leads; if freight revenues are hit, it is because leads went down. The overall lead (net tonne/per km) target for FY17 is 600 km down from the target of 620 km in FY16. Till now, we have managed to maintain an overall lead of 555-558 km in the first five months of the current fiscal. This is the main challenge and this is why most of the concessions and incentives are given for longer leads. If the leads go down by 10%, the freight revenue will be impacted by 10%,” member traffic, Railway Board, Mohd Jamshed, told FE.
The transporter has pegged its freight loading to grow by more than 4% to 1,157 million tonnes for the current fiscal year, while it has pegged its freight revenue to grow by 5%.