Post Date : May 5, 2020
The spread of the coronavirus have resulted into a decline of container cargo volumes at Indian ports. According to CRISIL Research, the container volume at Indian ports are expected to decline by 16% in FY21 as the global health crisis sent consumer demand plummeting with a cascading impact on supply chain.
“The lockdown-induced container trade decline, equivalent to around 60 days and 30 days to high/very high traffic risk and moderate-to-high traffic risk geographies, respectively, suggests a contraction of 13-16 per cent in container traffic for Indian ports in fiscal 2021,” stated CRISIL Research in a note.
“However, given the uncertainty about the Covid-19 fallout, risk of second wave, tighter or prolonged lockdowns, people movement controls and social distancing across India and key trade partners can mean further downside,” it added.
The volumes at Jawaharlal Nehru Port Trust (JNPT) was the first to report a sharp dip in container trade across Indian ports, plunging by about 37 per cent in April, year on year basis.
Imports in the month of April at the port were about 20 per cent lower, while exports were around 55 per cent lower, year on year, as shortage of trucks and drivers hit long-lead hinterland movement for imports and exports.
Further, CRISIL Research says that weak production due to lack of manpower along with transportation and clearance challenges has further impacted exports.
India’s GDP is expected to witness a growth rate of 1.8 per cent in FY21 compared with 5 per cent last fiscal, with risks tilted to the downside scenario of zero GDP growth.
India has significant container volumes linked with severely hit Covid-19 countries, and is at risk of a sharp dip in container trade.
The US (estimated 10 per cent share in laden volumes) and Europe, including the UK (around 18 per cent), are regions with very high traffic risk; the Middle East (around 10 per cent) and Rest of Asia (about 23 per cent) have high traffic risk; while China (13 per cent) is in the moderate-to-high traffic risk category.
Many liners also skipped calls at JNPT and Mundra port, in April, due to congestion and paucity of exports.
Moving ahead, recovering trade of essentials (such as agricultural products, perishables and pharmaceuticals) will provide some respite. Volumes for discretionary items, (such as electronics, readymade garments, and automobile parts) will, however, remain lacklustre.
CRISIL Research estimates that the extent at which the pandemic is controlled globally and,the stance that major economies take towards imports will be critical to the pace of recovery in container trade post-2020.
“However, given that Covid-19 has badly hurt economies and consumer sentiment, and there is likely to be an attitudinal shift against globalisation, a slow and gradual recovery (against a V-shaped recovery witnessed after the 2008 global financial crisis) in container trade seems more plausible,” it added.
Source: Business Line