Madame Schachter's visions of flames and death is an example of foreshadowing and also irony. It is very interesting how the author uses her hallucinations in his story. It touches on a key theme of the story which is the relationship between sanity and insanity. Madame Schachter, who is presented as insane and acting irrationally, is the only character who actually "sees" clearly. She, unlike the rest of the passengers on the train, is able to see what is ahead for them. In the context of the Holocaust therefore, the boundaries between sanity and insanity are blurred and questionable.
Also, we see that Madame Schachter is beaten by some of her fellow Jews on the train, whilst they are encouraged to do so by other onlookers. This identifies another theme - the unjust treatment that the Jews receive at the hands of the Nazis causes them to act in a similar depraved and unjust fashion towards each other.
It is foreshadowing. She was screaming about the fire while nobody believed her because she is known to be crazy. She was even beaten and gagged to silence. Still, the fire did come and they ended up in the human ovens of the concentration camp.