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Logistics activity muted in Jan’22; freight rates improve slightly while diesel prices remain unchanged

* After a strong pick-up in Dec’ 21, logistics activity was muted in Jan’22. The e-way bill generations were down 4% MoM in Jan’22 and came in at 69m (+9% YoY) after a near all-time high bill generation of 72m in Dec’21.

* Freight rates improved marginally by 2-3% during the month even as fuel prices were unchanged. Demand environment remained strong with higher dispatches at major production centers, robust EXIM trade and increased food supplies at APMCs. Capacity utilization for trucks is strong at present at ~80-85% levels.

* Volumes handled at major ports registered a marginal decline of 3% YoY to reach 63mmt, flat MoM. Jan’22 saw YoY growth in Container traffic and other cargo that was offset by the decline in the Iron ore, Coal and Fertilizer segments. Growth was negatively impacted by the container shortage and elevated sea freight rates.

The e-way bill generations increase 9% YoY and decline 4% MoM; toll collections drop marginally by 2% MoM

In Jan’22, e-way bill generations were down 4% MoM to ~69m v/s 72m generations reported in Dec’21. E-way bill generations had been on a rise since last few months (excluding Nov’21) indicating the sustained improvement in truck operations due to the pick-up in economic activity. Jan’22 saw e-way bill generations growing 9% YoY with intra-state growing at 11% YoY and inter-state at 7% YoY. The marginal decline in the MoM activity is also reflected in the FASTag toll collection numbers which saw 2% fall MoM to clock INR36b in Jan’22 from the highs of INR37b recorded in Dec’21.

Rail EXIM container volumes grow 4% YoY in Jan’22

The Indian Railways reported a 4% growth in EXIM container volumes, lower than the overall growth in container volumes handled at ports. The Railways’ market share in EXIM containers stood at ~35% in Jan’22 (~36% in Jan’21). Domestic container volumes handled by the Indian Railways grew 21% YoY in Jan’22.

Traffic handled at major ports declines 3% YoY in Jan’22 (flat MoM)

After exhibiting flat growth in Nov and Dec’21, traffic handled at major ports declined 3% YoY in Jan’22. Container segment grew 7% YoY and other cargo rose 26% in Jan’22. This was more than offset by a sharp decline in Iron Ore / Coal/ Fertilizer segments by -32% /-19% /-14% YoY, respectively. Among the major ports, Ennore reported a jump of 34% YoY, New Mangalore (+19%), J.N.P.T (+7%) and Deendayal (+6%). On the other hand, Mormugao, Kolkata, V.O. Chidambaranar and Paradip reported decline of 44%, 19%, 15% and 10% YoY, respectively. Container cargo (TEU basis) grew 6% YoY in Jan’22.

Freight rates increase 2-3% MoM in Jan’22 despite no change in diesel price

The freight rates continued to remain firm during the month on strong demand driven by: a) higher dispatches at major production centers b) robust EXIM trade and c) increased food supplies at APMC. The diesel prices, conversely, have remained unchanged during the month. The truck utilization stood healthy at 80- 85% levels. Cumulatively, freight rates increased 45-50% over Jun-Jan as per IFTRT. Going forward, the freight rates are expected to remain elevated as we enter the seasonally strong period for logistics. Our top picks in this space continue to be VRL Logistics and Transport Corporation of India (TCI).

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