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Activity steady in Mar’22… …freight rates rise as diesel prices move up

Logistics activity in Mar’22 sustained the momentum witnessed in Feb’22. Daily average e-way bill generations were up 10% YoY and 2% MoM in Mar’22. The fleet utilization levels stood at 80-85%.

After several months of no hike, retail diesel prices rose ~6% during Mar’22. The higher diesel prices led to increased freight rates of 2-3%. Diesel prices are likely to be hiked again in near future and delays in passing on the increase could impact near-term earnings of the logistics operators.

Volumes handled at major ports stood flat YoY at 70mmt. Volumes grew YoY in Coal and Fertilizer, which were offset by the decline in Iron Ore and Container Cargo volumes in Mar’22. Growth was impaired by the container shortage and elevated sea freight rates.

Daily average e-way bill generations up 10% YoY and 2% MoM; daily average toll collections rise 2% MoM in Mar’22

In Mar’22, daily average e-way bill generations rose 2% MoM and clocked an alltime high figure of ~2.5m/day. E-way bill generations have 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 activities. Daily e-way bill generations rose 10% YoY with intra-state bill generations increasing 12% YoY and inter-state growing 7% YoY in Mar’22. The improvement in the MoM activity is also reflected in the daily average FASTag toll collection numbers, which rose 2% MoM and reported INR1.3b/day in Mar’22.

Rail EXIM container volumes remain flat YoY in Mar’22

While the overall container volumes handled at ports declined 7% YoY, EXIM container volumes handled by Indian Railways remained flat YoY in Mar’22. The Railways’ market share in EXIM containers stood at ~36% in Mar’22 (v/s ~32% in Mar’21). Domestic container volumes handled by Railways rose 32% YoY in Mar’22.

Traffic handled at major ports remains flat YoY in Mar’22

After declining 4% YoY in Feb’22, traffic handled at major ports remained flat YoY in Mar’22. Fertilizer/Coal/Other Cargo showed growth of 49%/25%/8% YoY in Mar’22, which was offset by a sharp decline in the Iron Ore / Container segments by 32% /10% YoY, respectively. Among the major ports, New Mangalore reported a jump of 15% YoY, followed by Ennore (+10%) and V.O. Chidambaranar (+9%). Conversely, Mormugao and Cochin reported declines of 26% and 12% YoY, respectively. Container cargo dipped 7% YoY in Mar’22, on a TEU basis.

Freight rates increase 2-3% MoM as retail diesel prices rise by nearly 6% during the month

After several months of no hike (despite the sharp rise in global crude prices), retail diesel prices grew ~6% in Mar’22. With strong volumes, fleet operators were able to undertake a freight price increase of 2-3%, which was largely sufficient to cover the rise in costs. However, the next couple of months would be crucial to watch as diesel prices are likely to be hiked further. VRL Logistics and Transport Corporation of India (TCI) continue to remain our top picks in the Indian Logistics space.

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