Examining the Effect of COVID-19 on rail freight volume and revenue using the ARIMA forecasting model and assessing the resilience of Indian railways during the pandemic

Abstract

India implemented a nationwide lockdown on 22 March 2020 to prevent Coronavirus (COVID-19) from spreading throughout the nation. Only the most critical services were running during this period. As a result of the pandemic, several organizations, including the travel industry, put a moratorium in place. This included the Indian Railways. In spite of the lockdown, the freight services were operational and carrying out essential duties, but the volume of freight and revenue generated was adversely affected. Railways contribute around 1% to the overall GDP of India and a significant part of India's economy is freight transport by rail. This necessitates an analysis of rail freight volume and corresponding revenue loss due to COVID-19. The present study is an attempt to estimate these losses. Based on the monthly historical data the present study employed the ARIMA forecasting model to develop a scenario and measure freight volume without COVID-19. Under the first scenario, month-wise actual historical freight volumes were considered for the period from April 2012 to November 2021. On the other hand, in the second scenario, the monthly historical data from April 2012 to March 2020 and from October 2020 to November 2021 were used as-is, while from April 2020 to September 2020, ARIMA modelling was used to forecast freight volume without the effect of COVID-19, since the first lockdown occurred in the latter days of March 2020. Further, in order to predict revenue loss, we developed a linear regression model based on the temporal data (April 2012–November 2021) for freight volume and revenue generated by Indian Railways. Based on the ARIMA modelling, the total loss of freight volume and revenue was estimated at 149.08 million tonnes and INR 16712.68 crores, respectively. Furthermore, the present study also discusses the resilience shown by the Indian railways during the outbreak of COVID-19.