According to logistics service providers and industry analysts, a sharp increase in fuel costs, combined with increases in insurance charges and tolls, is set to reduce the competitiveness of highways for freight transportation, and could even divert freight traffic to railways during the current fiscal year. The construction of some lengths of dedicated freight corridors (DFCs) and the announcement by the railways of competitive freight prices could be difficult for the road transport sector. Currently, only around 35% of domestic freight is handled by rail, whereas 60% is delivered by road. The logistics sector anticipates that when more stretches of the DFC are completed and MMLPs are operationalized, the railways’ share of the market will grow.
Even in 2021-22, railway freight had grown at nearly thrice the pace of road freight transport. Indian Railways’ total freight loading rose 15 percent year-on-year (y-o-y) to 1,418.10 million tonnes (MT) in 2021-22, while the total freight transport by roads rose only around 5 percent to 2,500 MT, data from the Ministry of Road Transport and Highways and Ministry of Railways showed.
