It?s a contrarian indicator of sorts. Just when there?s a visible slowdown in industry & manufacturing, the freight loading by the Railways has been rising.
Industrial production in March 2008 grew by a mere 3% against 14.8% a year ago. But in the same month, the Railways? freight load rose by 8.35% to 72.43 million tonne (mt), from 72.07 mt a year ago. The rise in freight loading was marginally less than the 8.8% increase in March 2007 over the previous year.
The Railways? freight load rose further in April 2008 by a healthy 10.93% to 67.69 mt compared to 61.05 mt in April 2007. Official figures released on Wednesday reveal that the Railways carried 28.82 mt of coal in April 2008 against 20 mt a year earlier. Similarly, the transport of iron ore rose to 14.65 mt as last month against 14.37 mt a year ago.
Explaining this increase in freight loading, VN Mathur member (traffic), Railway Board, told FE, ?This year there has been better growth in our freight transport because of better production by these sectors.? Foodgrain traffic has increased significantly because of better procurement by the government this year, he added.
Iron ore loading by the Railways in March 2008 shot up to 13.44 mt compared to 5.66 mt in the same month last year. The transport of cement increased to 7.69 mt as compared to 7.09 mt in March 2007. Railways? coal freight increased to 33.14 mt in March 2008 as against the 31.12 mt it carried in March 2007. Its food grain traffic also rose to 4.08 mt versus 3.97 mt a year ago. Similarly, the transport of petroleum, oil & lubricants (POL) increased to 3.41 mt during that month against 3.08 mt a year ago.
Much of the freight carried by the Railways consists of the commodities that are essential inputs for industrial activity. Most, barring petroleum, are produced largely within the country and transported mainly by rail. There was, however, a substantial decline in the transport of fertiliser, which dropped to 2.45 mt in April 2008 in comparison to 2.85 mt carried a year ago.
The freight surge in April 2008 can be partly attributed to the lower base effect, as April 2007 saw an unusually slow growth in freight loads carried by the Indian railways. In fact, growth in freight loading had slowed to a shocking 4.87% last April, with coal, cement and fertiliser volumes dipping sharply. At the time, the Railways had attributed the drop in freight transport due to lower production in these sectors. As reported by FE then, Rail Bhawan officials had cited problems in some collieries, repairs in fertiliser units and lower steel production to explain this dip.
The Railways carried 7.04 mt of cement in April compared to 7.38 mt in April last year. The transport of foodgrain rose to 3.12 mt in April 2008 versus 3.01 mt a year ago. Loading of POL also marginally increased to 3.17mt this April as against 3.16 mt last April. Similarly, the Railways carried 2.07 mt of fertiliser in April 2008 as compared to 1.9 mt in April last year.
Analysts point out that a reason for this continued increase in railway freight traffic could be higher inventory with manufacturers, which they tend to release over time. Maybe, the decline in industrial output will start reflect in the freight loads carried by Railways after a few months? lag.