India launches flat freight rate to boost bulk cement transport via rail

India's Ministry of Railways has introduced a unified freight structure for bulk cement movement, aiming to cut logistics costs and accelerate the shift away from bagged cement, according to announcements made by Railway Minister Ashwini Vaishnaw on Nov. 18.

Under the revised system, bulk cement transported by rail will be charged a flat rate of Rupees 0.90/mt/km, replacing the previous slab-based tariff that varied across distance bands. Market participants said the change eliminates long-standing discrepancies where similar transport distances incurred different freight charges.

Vaishnaw said the simplified tariff is expected to lower construction material costs for middle- and lower-income households and reduce overall transportation expenses by about 30%. "Earlier, plants located only a few kilometers apart ended up paying different freight rates. Now, freight is charged on actual distance travelled at a uniform rate, removing earlier distortions," he said during the policy launch in New Delhi.

Bulk cement consumption has been rising in major Indian cities, with its share exceeding 50% in some metropolitan areas. Rail's share remains comparatively low: in FY 2025 (April-March), railways moved around 87 million mt of cement, of which 80 million mt was bagged cement and 7 million mt was bulk cement carried in specialized containers and wagons, the minister said. Cement accounts for roughly 17% of the rail sector's annual freight loading, he added.

Aparna Sharma, secretary general of India's Cement Manufacturers' Association, said the revised framework "arrives at the right time" and will support faster movement of cement and more efficient supply chains. "If you look at the cement industry, almost 18%-20% of the cement consumption is bulk, and of this, 10% bulk cement is moved by the Railways. Also, given the fact that we are looking at a market where 60-65% of the cement consumption is dominated by under 300 km distance. In this segment, we do not find bagged movement very viable. So, the policy appears timely, it will ensure the faster movement," said Sharma.

Several Southeast Asia-based traders said the streamlined freight structure is expected to have its biggest impact on India's domestic cement market, given that most of the country's production is consumed internally.

An Asia-based trader said, "The flat freight rate mainly helps Indian buyers. It may lead to softer domestic prices, but export values are unlikely to see any change."

A South Asia-based buyer echoed this sentiment, saying, "Indian producers are already ramping up capacity, and the revised railway charges will mostly influence domestic movements rather than export markets."

Platts, part of S&P Global Energy, assessed cement (ASTM type I) FOB Vietnam at $34.75/mt on Nov. 13, slightly lower than $35.25/mt in the previous week. Platts also assessed cement clinker FOB Vietnam at $29.75/mt on Nov. 13, up from $29.25/mt FOB the previous week.