The global provider of business decisioning data and analytics, Dan & Bradstreet recently published their study – Railway Freight Activity Optimism Index (RFAOI) – which is the 2nd edition of the pan-India survey. The study was conducted in collaboration with Jupiter Group, which is a premier manufacturer of railway wagons, passenger coaches, wagon components and castings, and measured the optimism in rail freight users with the ultimate goal to identify the upcoming trends in rail freight. The index is composed of 14 sub-parameters across four sub-indices – optimism around factors of supply, operational efficiency, investment, and demand.
The RFAOI for Q2 2022 stood at 63 i.e. three points higher than the previous quarter, despite the uncertainty posed by the numerous disruptions to the global economy. The survey also conferred that businesses in the western region of India are the most optimistic; And both large and medium scale businesses are more optimistic about export freight demand compared with small and micro players.
Railway freight activity is expected to gain further traction in Q2 2022. We can gauge from the survey that businesses are inclined towards increasing their share of goods transported through railways, but they also anticipate cost of transportation through railways to increase. As we track the pulse of the business activity across different size and location in India every quarter, we aim to highlight the various challenges businesses perceive to transport freight through logistics by gauging the optimism level for 14 parameters relevant for rail freight logistic sector”.Vivek Lohia, Director, Jupiter Wagons
Key findings of the four sub-indices of RFAOI
Optimism around factors of supply
- Optimism for factors of supply chain increased at the slowest pace (one percentage point gain) in Q2 2022 compared to the other three segments.
- Optimism level for availability of wagons fell by 4 points in Q2 2022 from the previous quarter.
Optimism around operational efficiency
- Optimism for operational efficiency in Q2 2022 improved by three points from Q1 2022.
- In the survey, Businesses are most optimistic about loading and unloading of goods and least optimistic about transit time.
Optimism around investment activity
- Optimism level for investment activity is the highest in Q2 2022; the optimism level increased most by six points in Q2 2022.
- Businesses are most optimistic about loading and unloading of goods, followed by investment for mechanisation.
Optimism around demand
- Optimism for freight demand improved quarter on quarter yet remains lowest among all the four sub-indices in Q2 2022.
- Businesses are more optimistic about export freight demand compared to domestic freight demand in Q2 2022, thereby, indicating strong export growth momentum to continue.
- In domestic freight demand, optimism level for import and captive trade increased, compared to optimism for domestic trade activity.
The improvement in consumer sentiment and resumption of business activities have helped improve the optimism level of businesses transporting goods via railways. We believe trade and logistic activity to gain momentum as India successfully executes more FTAs (Foreign Trade Agreements) with other countries. However, soaring logistic costs and overall inflationary pressure, given rising fuel prices and depreciating Rupee, might have impacted optimism level for import freight demand.”Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet
The RFAOI study highlighted two areas of concern as well. Optimism level for availability of wagons and transit time has fallen from the previous quarter. However, as a silver lining, optimism for utilization of wagons has increased and this is higher than containers compared to last quarter.
Overall, the RFAOI aims to track the pulse of the business activity across different size and location in India every quarter, and highlight the various challenges businesses perceive to transport freight through logistics.