April is typically a notoriously dull month for the Railways freight businesses.
But this year, there’s cause for cheer: the Railways has loaded the highest cargo ever moved in any April, thanks to demand from all the cargo groups, including coal.
Usually, demand in April from all the sectors including coal is subdued after a hectic March, when companies rush to meet their quarterly and yearly targets. Railway freight, a derived demand of goods production, also sees a corresponding drop to 88-90 million tonnes (mt) in April.
However, this year promises to be an exception. “We expect to close April 2018 with 98 mt, an incremental 8 mt over last year, which will be the highest-ever loading done in any April,” Mohammad Jamshed, Member-Traffic, Railway Board, told BusinessLine.
The nearly 9 per cent growth registered in April 2018 against the same period last year is the sharpest growth since 2011, according to data accessed by BusinessLine. Also, in 2018, the extent of drop in cargo loadings in April against March is about 12 per cent, the lowest in eight years.
The Railways has been working to get its customers to spread their transportation needs evenly through the year to ensure optimal utilisation of its trains, tracks and locomotives.
“We have been telling the stakeholders to spread their demand throughout the year instead of concentrating it in the last one or two quarters,” Jamshed added.
Apart from long-term agreements, the Railways last year expanded its discount in the empty flow direction to include entire originating and destination zones. This helped it garner an extra 21 mt traffic, earning ₹1,277 crore in FY18. This is much higher than the 6.72 mt that it moved earning ₹409 crore in FY17, when the discount policy was introduced in a limited form.
“Earlier, most of the rakes that carried coal to power plants returned empty to the collieries,” said Jamshad. “There was no originating cargo in the vicinity of power plants. We used to offer discounts of up to 30 per cent in freight rate if customers loaded cargo from the destination location to the originating point of coal loading.”
Last year, however, “we extended this discount to loading in the empty direction done from an entire zone that houses the destination location to an entire zone that houses the originating loading point. With each zone including multiple States, trains had to move a few hundred kilometres extra to gather cargo,” he explained.
Learning from e-comm
In asking its customers to spread their demand through the year, the Railways is adopting a strategy that e-commerce players have followed: they hold discount sales through the year to flatten sharp demand spikes.
A few years ago, when players like Amazon, Flipkart, eBay, Jabong and Snapdeal started pushing discount sales through huge newspaper ads, sales went up so sharply that delivery within the stipulated time became a major issue.
The frequent discount sales address this issue to a large extent. A valuable tip indeed for the other sectors to follow.