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'Strong GDP growth in FY22 to drive logistics demand'
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SME Times News Bureau | 22 Mar, 2021
Strong GDP growth in FY22 will drive logistics demand, India Ratings and Research said.
According to the agency, strong-to-moderate recovery is already being witnessed across various logistics sub-sectors.
Besides,
commissioning of the Dedicated Freight Corridor could boost volumes and
efficiencies across ports as well as inland container depot/container
freight station players.
As per Ind-Ra report, major ports'
year-on-year volume growth has been positive for the past three months,
while private ports have also reported resilient volumes in 9MFY21.
"In
FY22, Ind-Ra estimates an 8 per cent YoY improvement in volumes for
India ports sector (major + private ports), post an estimated 4 per cent
yoy decline in FY21."
"The 8 per cent YoY rise will be led by
private ports, which in the past five years have displayed a median
multiplier (vs real GDP growth rate) of '1.4x', thus outperforming
growth from major ports. Historically, India's ports volumes have
closely followed GDP growth, with container growth coming in '2x' of
overall cargo volumes."
Besides, the report cited that domestic
air travel demand, which has continued to recover in 2HFY21, is expected
to strengthen in FY22, though the risk to this view arises from fresh
waves of Covid-19 recently.
"Both corporate and domestic travel
demand are already showing signs of revival, which has helped support
load factors and yields, while cargo volumes are expected to rise amid
stronger macroeconomic fundamentals and e-commerce push."
"Ind-Ra
forecasts domestic passenger numbers to rise 10 per cent in FY22 (over
FY20) implying a GDP multiplier of '0.9x', lower than the '2.4x' (median
estimate) for the FY15-FY20 period."
In terms of inland
container depots, the agency forecasted a healthy pickup in volumes even
though competition remains intense and realisations remain soft.
"The
reduced dwell time after the commissioning of 'Dedicated Freight
Corridor' and increased double stacking volume will support higher
operating efficiencies, which is likely to support EBITDA margins in
FY22-FY23."
"For warehouses, Goods and Services Tax-led consolidation and rationalisation of occupancy rates could continue in FY22."
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