India Ratings and Research (Ind-Ra) in its report on India’s logistics sector has highlighted the key volume and realisation trends across three logistics sub-sectors – sea logistics (global and domestic), surface logistics (rail and road) and air logistics (passenger and freight).
According to Ind-Ra the sea and road transport, post the unlock, has been moving towards moderate recovery while air transport is severely stressed.
It reveals that the Indian ports’ volumes have recovered to 80%-85% of the normal levels in June 2020, post a sharp 21%-23% YoY drop in volumes during April-May 2020. Though imports have been severely hit, exports have recovered to the pre-COVID levels.
Further it says, road transport may also have recovered, as indicated by the e-way bill collection and diesel consumption being at about 85% of the pre-COVID levels. However, air transport is reeling under pressure with passenger traffic practically at nil levels and freight traffic at 60% of the normal levels in May 2020.
Sea Transport: Sluggish Imports Continue to Affect Volumes
The overall major port volumes declined 15% YoY in June 2020, as against the 21%-23% decline in the preceding two months, supported by a 26% YoY jump in iron ore export from eastern ports.
Imports have remained sluggish, while a rebound in export to pre-COVID level led to India’s import-export mix changing to 58:38 (4% for transhipment) in June 2020 from the normal split of 65:30.
Dwell time for import containers at JNPT Port rose 3x in May 2020 (65 hours versus normal run-rate of 20-30 hours), although recovering to 38 hours in June 2020.
Surface Transport: Rail Gets Market Share; Road Shows Signs of Recovery:
Ind-Ra informed that the market share of rail rose sharply over the five months ended June 2020 to around 25% (normal run-rate of about 15%) due to the shortage of truck drivers and a significant reduction in railway haulage time as passenger trains were not running.
However, the recovery in e-way bill collection and diesel consumption to about 85% of their normal levels have indicated that rail may have already conceded its market share gains to the road sector in the last two months.
It further reveals that the freight differential between rail and road remained stable with rail freight rates stable at INR1.8/tonne/km, while road freight rates remained elevated at INR2.6/tonne/km.
Standalone truck operators are likely to remain under pressure, given that diesel prices have risen by about 27% in the last two months, while freight rates have remained stable.
Air Transport: The Most Affected Segment
The air transport remained the most affected as passenger traffic nearly remained nil in April-May 2020 and the actual volume of passenger traffic is still negligible compared to the normal traffic.
Speaking of the Freight traffic, it also remained muted at around 15% of the normal air freight volumes in May 2020, impacted by the overall weakness in economic activity, lack of manpower, and significant erosion in overall available belly-load freight capacity with many passenger aircraft grounded.