Railway freight traffic hits record high in January 2021

by Manasi Swamy

Freight traffic on Indian Railways has gone through the roof in the New Year. It reached an all-time high of 119.8 million tonnes in January 2021 from 118.3 million tonnes in the previous month. The traffic in January 2021 was also 8.7 per cent above its year-ago level. Revival of revenue earning freight traffic on railways started in September 2020 when the volume of cargo carried crossed the 100 million mark for the first time after the lockdown. Since then, traffic on railways has gone up 17 per cent until January 2021. An overall improvement in freight traffic suggests continuation in economic recovery beyond the festive season.

Railways carried 52.1 million tonnes of coal in January 2021, higher than 51 million tonnes carried in December 2020. With this, coal traffic surpassed its pre-Covid level in January 2021. The volume of coal carried by Indian Railways has been consistently increasing since May 2020, after it nosedived to 34.6 million tonnes in April 2020 from 51.9 million tonnes in March 2020 due to the lockdown. Despite a steady improvement, coal traffic in January 2021 was 1.6 per cent lower than its year-ago level. The contraction, however, alleviated from 4.3 per cent in December 2020.

Compared month-on-month (m-o-m), coal transported to steel plants and thermal power houses grew in January 2021. For thermal power plants, railways carried around 20.5 million tonnes of coal in January 2021, which was 7.5 per cent higher than that in December 2020. The last two weeks of January saw a surge in electricity demand. As per the Ministry of Power, India’s peak power demand reached an all-time high of 189.64 gigawatt (GW) on January 30, 2021, crossing its previous peak of 188.45 GW on January 28, 2021. Before this, peak demand was witnessed on January 22 and January 20. In a statement, Coal India Limited (CIL) claimed that it was ready to meet any rise in demand from the power sector with nearly 63 million tonnes of coal lying at its pitheads. A surge in power demand in January hints towards well-functioning commercial and industrial sectors.

Traffic of coal for washeries and other public users fell in January 2021 over their respective levels in December 2020.

Freight traffic on railways signals an improvement in the performance of steel industry during January 2021. Barring iron ore, traffic of all major raw materials used in steel production grew in January over their levels in the previous month. Railway traffic of coal for steel plants increased by six per cent to 5.1 million tonnes. This is the highest volume of coal transported for steel plants since March 2019. Other raw materials for steel production saw a three per cent jump in their traffic during January. As per data released by Joint Plant Committee (JPC), final consumption of finished steel reached a record high of 10 million tonnes in January 2021. Railway freight data confirms the same. Traffic of pig iron and finished steel soared to an all-time high of 5.9 million tonnes during the same month.

Volume of iron ore carried for steel plants slipped from its peak of 8.8 million tonnes in December 2020 to 8.6 million tonnes in January 2021. This volume of iron ore is still the second highest ever carried for steel plants. Moreover, iron ore traffic for steel has been growing in double-digits over its year ago levels for five months in a row. Thus, the sequential drop is not a cause for concern.

Railway traffic of iron ore for exports surged by 40.9 per cent to 2.1 million tonnes in January 2021 over its level in December 2020. Besides, iron ore also saw 56.7 per cent y-o-y jump in its traffic for exports. As per reports, China’s imports of iron ore from India soared by 88 per cent in January 2021 as Chinese mills looked for diversified sources amid skyrocketing iron ore prices. B K Bhatia, Joint Secretary General of the Federation of Indian Mineral Industries (FIMI), expects the Chinese purchases to continue until March 2021.

Cement & clinker traffic soared to 12.7 million tonnes in January 2021. With this, January 2021 witnessed the highest volume of cement & clinker freight ever carried by Indian Railways. Traffic of cement & clinker has been expanding sequentially since September 2020, except for a pause it took in November 2020. Increase in cement traffic accompanied by robust demand of steel signals accelerating construction activities in the country. Traffic of containers also surged to its all-time high level of 6.3 million tonnes in January 2021, hinting towards further improvement in trade during the month.

Foodgrain traffic tumbled from 6.2 million tonnes in December 2020 to 4.7 million tonnes in Janaury 2021. Fertiliser traffic fell from 5.2 million tonnes in December 2020 to 4.7 million tonnes in January 2021.Traffic of fertilizer has fallen three months in a row, after it had touched its peak at 5.9 million tonnes in October 2020.

Traffic of crude oil & petroleum products (POL) on railways in January 2021 also dropped from its all-time high level of 4.3 million tonnes in December 2020 to 4 million tonnes in January 2020. This plunge in railway traffic of POL can be attributed to a fall in its foreign shipments, both outbound and inbound, in January 2021, as reported by the Ministry of Commerce & Industry.

Revenue earning freight traffic on Indian Railways has completely recovered from the pandemic- induced lockdown. Growth is seen across-the-board. Not only did overall freight traffic reach its peak, but traffic of major commodities like iron ore, cement & clinker, container services, pig iron & finished steel and coal transported for steel plants witnessed their all-time high levels in January 2021. Increase in demand for these commodities indicates progress across different sectors of the economy

1. https://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&tabcode=001081005000000000&repnum=21348&frequency=M&colno=1
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