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Activity improves in Feb’22; freight rates rise marginally while diesel prices remain unchanged

After a muted activity in Jan’22, logistics activity improved in Feb’22. Daily average eway bill generations clocked an all-time high figure of 2.4m/day in Feb’22 (+7% YoY; +10% MoM)

Freight rates improved marginally by 2% during the month even as fuel prices remain unchanged. Demand remained strong with higher dispatches at major production centers, robust EXIM trade and increased food supplies at APMCs. With the spike in global crude oil prices due to the ongoing geopolitical crisis, a looming diesel price hike could impact the earnings of the logistics operators adversely.

Volumes handled at major ports declined 4% YoY to reach 59mmt. Feb’22 saw YoY Volume growth in Petroleum, Oils and Lubricants (P.O.L) and other cargo, which was offset by the decline in the Iron ore, Coal and Fertilizer segments. Growth was impaired by the container shortage and elevated sea freight rates

Daily average e-way bill generations up 7% YoY and 10% MoM; daily average toll collections rise 12% MoM in Feb’22

In Feb’22, daily average e-way bill generations rose 10% MoM and clocked an alltime high figure of ~2.4m/day (v/s 2.2m/day reported in Jan’22). E-way bill generations had been on a rise since the last few months (excluding Nov’21), indicating the sustained improvement in truck operations due to the pick-up in economic activity. Feb’22 saw daily e-way bill generations growing 7% YoY with intra-state growing at 9% YoY and inter-state at 5% YoY. The improvement in the MoM activity is also reflected in the daily average FASTag toll collection numbers, which rose 12% MoM and reported INR1.3b/day in Feb’22.

Rail EXIM container volumes grow 2% YoY in Feb’22

While the overall container volumes handled at ports declined 2% YoY, the Indian Railways has reported a 2% YoY growth in EXIM container volumes in Feb’22. The Railways’ market share in EXIM containers stood at ~35% in Feb’22 (v/s ~33% in Feb’21). Domestic container volumes handled by the Indian Railways grew 23% YoY

Traffic handled at major ports drops 4% YoY in Feb’22

After declining 3% in Jan’22, traffic handled at major ports further declined 4% YoY in Feb’22. P.O.L/ other cargo showed growth of 3%/20% YoY in Feb’22, respectively. This was more than offset by a sharp decline in the Iron Ore / Coal/ Fertilizer segments by 33% /15% /15% YoY, respectively. Among the major ports, Ennore reported a jump of 33% YoY and Paradip (+9%). Conversely, Mormugao, Deendayal and Kolkata reported declines of 27%, 26% and 7% YoY, respectively. Container cargo (TEU basis) dropped 2% YoY in Feb’22.

Freight rates increase ~2% MoM in Feb’22 despite no change in diesel price; sharp rise in crude oil price to see domestic fuel price moving up

The freight rates continued to remain firm during the month backed by strong demand on: a) higher dispatches at factory gates, b) robust EXIM trade, and c) increased food supplies at APMC. The diesel prices, on the other hand, have remained unchanged during the month. However, the spike in global crude oil prices over the last few months makes the domestic fuel price hike imminent in the near term, which could add pressure on the road logistics operators. Our top picks in this space continue to be VRL Logistics and Transport Corporation of India (TCI).

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