Rail freight growth slows as ‘non-coal’ baskets turn sluggish

Over the past few years, the growth rate of freight segment has fallen both in volume and volume terms. For instance, the freight revenue growth in FY25 stood at just 3.7%, which was much lower than 7% growth in FY24, 15% in FY23 and 20.4% in FY22. The freight loading growth too has fallen drastically from 15% in FY22 to 3% in FY25. An analysis shows that the share of “non-coal” segments remains stagnant over the past two years with even a slight dip in volume in FY25 (799 million tonnes) as compared to FY24 (801 million tonnes).

Experts said that the poor focus on expanding the freight basket along with choking networks, fewer rail lines dedicated for container traffic, and stiff competition from the road sector are affecting the growth of freight segments.

In FY25, over 51% of total freight volume constituted coal. Even though the coal transportation via the rail network is rising steadily – 7.2% compounded annual growth rate (CAGR) between FY23 and FY25 – experts warn that over dependence on one commodity increases the risk profile of the entire freight segment, which has been cross-subsidising the losses on the passenger side.

“Indian railways is clueless about the replacement plans for coal. Renewables are gaining ground. Although the pace of growth in absolute terms is quite low at the moment, it is bound to go up. It will eat into the coal consumption. Historically, in developed countries like the US, the UK, and Germany, coal used to be a major part of the freight basket. But today, the coal transportation through rail network in the UK is nil with Germany and US transporting a small amount of coal,” said Lalit Chandra Trivedi, former general manager, East Central Railway.

While the coal and iron ore are showing highest growth on the volume side, the domestic container service has witnessed 17.5% growth in the past two years. “This boost has primarily come from the western dedicated freight corridor (DFC) which is primarily for container traffic. The growth of container segment will accelerate further when the last leg of the western DFC will be commissioned by the end of 2025,” said a railways consultant. As per Indian railways, gunny sacks, hot rolled coils, ceramic tiles, wall care putty and rice are five major commodities within the container division. “Container service is the future of railways. But there are hardly 2-3 lines which can receive container trains. The railways has to create more lines which can connect right up to the place where ship berthing takes place,” said Trivedi.

Experts said that the slowing down of freight growth is especially concerning since railways has set a target to achieve 3,000 million tonnes (MT) of volume by 2030. Not just that, the national rail plan envisages to increase modal share of the railways in freight to 45%, up from about 27% currently.

“Around 2000, the length of rail and road networks were around 65,000 km each. Due to the push being given to the highways construction by various governments, their length.