Container volumes to stay muted on subdued export-import ambience

Growth in container trade operator (CTO) volumes is expected to remain muted in this fiscal on account of subdued export-import trade environment.

A report by ratings agency Icra shows that the overall CTO volumes recorded some improvement during Q2 of FY20. However, the overall outlook is poised to stay bleak.

Container Corporation of India Ltd (Concor), the market leader in the segment has already witnessed moderation in market share as it focused on profitable cargo, the report noted.

Across major ports, container volume growth has slowed to 3.5 per cent in April-October of FY20 as against 11 per cent growth in FY19. Concor has lowered its volume growth guidance for this fiscal from 8-10 per cent earlier to 1-2 per cent now, indicating anticipation of lower volumes.

Going ahead, the commencement of the dedicated freight corridor (DFC) and improved circuit building by players with inland container depots (ICDs) are expected to boost CTO volumes.

“DFC implementation is progressing at slower than expected pace and while some sections have been completed, the overall project continues to witness delays and the eastern and western corridor is now expected to be completed by 2021”, the Icra report added.

DPD (direct port delivery) volumes remain stable at about 50 per cent of total containers moving by road at Jawaharlal Nehru Port Trust (JNPT) for the last few months. A significant proportion of this volume is still moving through the Container Freight Stations (CFS) although their average storage days has come down thus impacting average realisations and thus, margins of CFS players.

Owing to pressure on profitability and the need for better and wider network, the port logistics industry has seen consolidation trends in the last one year.

Dubai-based global ports operator DP World has forged a joint venture (JV) with National Investment and Infrastructure Fund (NIIF)- Hindustan Infralog Pvt Ltd, which has acquired Continental Warehousing Corporation (Nava Sheva) and 76 per cent stake in Kribhco Infrastructure Ltd.

Adani Logistics bought Innovative B2B Logistics Solutions Pvt Ltd, a Northern and Eastern India focused CTO. Allcargo Logistics Ltd has announced the acquisition of Gati Ltd in December 2019. Big ticket acquisitions aside, the warehousing segment has attracted several private equity investments.