Indian Railways Faces Sluggish Container Volume Growth Amid Trade Uncertainties

Indian Railways reports only 4.1% YoY growth in container volumes for FY25-to-date, with EXIM volumes barely rising, according to Nuvama. Despite India's 9% increase in containerisable EXIM cargo by value, trade tensions and geopolitical issues persist. Leading ports show robust growth, highlighting a shift away from rail transport.

Indian Railways (IR) is experiencing a tepid growth pattern in container volumes, casting doubts on the performance of container train operators (CTOs) for the current fiscal year's fourth quarter, Nuvama reveals. Latest data shows a 4.1% year-on-year increase in container volumes from April 2024 to February 2025, totaling 80.6 million tonnes. Export-import (EXIM) volumes remain stagnant with an estimated rise of only 0-2% YoY, highlighting continuing vulnerabilities in the sector.

While concrete trade metrics remain elusive, it's estimated that India's containerisable EXIM cargo witnessed a 9% YoY increase in value from April to November 2024. Yet, a notable 10% decline in November raises alarm over enduring weaknesses. Industry insiders blame global trade issues and geopolitical tensions for the underwhelming demand.

In February 2025, IR managed 7.11 million tonnes of container cargo, maintaining last year's levels year-on-year but slipping 12% month-on-month. Contrary to IR's slow pace, key ports saw a vigorous 9% YoY growth during the same timeframe, hinting at a heavier reliance on trans-shipment cargo and strategic changes in cargo origination near ports, potentially at the expense of rail usage.

This shift to ports seems to reduce dependence on IR, which, despite a 3.1% YoY growth for the nine months of FY25, lags behind the 10% rise in total port volumes. Analysts caution against interpreting this as a mass market departure, attributing it instead to increased trans-shipment and logistical re-alignments near ports.

The Dedicated Freight Corridor (DFC) linking Mundra and Pipavav ports hasn't yet yielded significant benefits, with only modest improvements observed for stakeholders like CTOs and IR.

Container train operators showed mixed results during the first three quarters of FY25. Concor reported a 2% rise, indicating a modest recovery, and Adani Logistics demonstrated a notable 10% increase in market share. Gateway Distriparks experienced a 5% drop, while Adani Ports' rail volumes fell by 6%, a first decline in 18 months.

(With inputs from agencies.)