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Alternative demands force rail freight service growth to 22 month low

The demand for alternative forms of transporting goods around the country has hit hard on one of the most crucial sectors in the backbone of the Indian economy, The rail freight service sector has seen a big low as per the data released by the ministry of railways which highlighted the fact that the overall volume in the rail freight industry has dipped to 0.8% on a year-on-year basis to 88.8 million tons of cargo moved around the country in the month of August which is seen as the slowest ever growth in the freight service sector in India in comparison to the past 22 months.

The Indian railways freight sector is a very crucial aspect of the economy which helps move tons of cargo across the country every day, ranging from parcels and letters to even whole cars and machinery are transported by the railways, the slowdown in growth can be looked at alternatives which have risen along with sometimes a delayed service by the railways have forced logistical companies to look into several different alternatives in place of the railways to help fulfill their cargo transportation needs.

Although there was a glimmer of hope in the month of June 2015, the data released by the railways ministry indicates that the sector has been facing the slowdown since the beginning of March 2015 and continued to go down ever since. The railways freight is crucial to the government itself as it is a major front in the transportation of highly important commodities across the country, namely coal, iron ore, etc which are transported to ports for exports or to thermal power plants to generate electricity, and even in this sector, the cargo services of the railway has seen a decline due to various sanctions and scandals which have prompted an investigation thereby leading to low level of operations.

On an overall basis from March 2015 since the decline of growth began, the aforementioned commodities front have seen a very big decline on the use of the railways freight service, the commodities mainly including iron-ore and cement which are the major players constituting 20% in the total cargo transportation remained at the same levels as last year, meanwhile the crucial coal transportation saw a dismal 1.3% increase in response to the coal block allocation scam which is currently under investigation.

The fertilizer sectors showed good promise as the sector showed a 27.8% growth; meanwhile the bad news came in the form of container freight from ports and food grains transportation which due to popular alternative methods have seen a 10.9% decline in the container freight and a staggering 18.3% decline in the food grains being transported. The ministry is looking into an upgrade in the services being offered to aid in providing an impetus to the railway freight sector.