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We monitor monthly indicators to assess freight and cargo movement across the road, port and rail networks. For Oct-23, rail cargo volumes, GST e-way bill generation and major port volumes registered strong growth of 9%, 30% and 14% YoY, respectively, indicating buoyed activity at the start of the festive season. Rail container cargo volumes in Oct-23 increased 14% YoY, suggesting positive volume trends for rail logistics operators, such as Container Corporation of India (Not Rated) and Gateway Distriparks (Not Rated). Rail coefficient in EXIM container trade, on the other hand, declined to 34.8%, partially reversing the gains made by railways in Q2. Continued growth in GST e-way bill generation bodes well for road logistics service providers such as VRL Logistics (Not Rated), as a shift from the unorganized sector seems imminent, given increasing compliance requirements under the GST regime.

Strong surge in e-way bills a precursor to festive demand

Momentum in e-way bill generation surged with numbers crossing the 100mn a month mark for the first time, indicating strong demand at the onset of the festive season. Eway bill generation was up 31% YoY for inter-state and 30% YoY for intra-state. Average freight rates on trunk routes (Delhi to Mumbai, Chennai and Kolkata) stayed flat sequentially, as diesel prices have remained unchanged since Jun-22. ATF prices have increased 5% MoM/2% YoY in Oct-23. Large organized fleet operators like VRL had indicated strong demand trends in Q3, with verticals like textile registering MoM growth in the range of 35-40%. With a reduction in the threshold of GST e-invoicing leading to increased cost of compliance and flat freight rates, we believe a shift towards organized large fleet operators is imminent in road logistics in the near future.

Continued momentum in rail cargo aided by coal and container traffic

Rail cargo grew 8.5% YoY in Oct-23 (129mn ton), while container volume grew 14% YoY/down 2% MoM. Total tonnage (ton km) improved 4.7% YoY, while lead distance declined 3.5% YoY. Total EXIM tonnage grew 21% YoY, aided by volume (over 16% YoY) and contribution from lead distance (4% YoY). Among bulk commodities, coal (17% YoY), raw material for steel plants (12% YoY), fertilizers (9% YoY) and iron ore (6% YoY) saw a healthy uptick, while food grains continued to decline (-38% YoY, YTD Oct-23 down 32% YoY) on the back of export ban of rice in Jul-23. Rail coefficient in EXIM container trade declined by ~69bps YoY and 310bps MoM to 34.8% for Oct-23, partially reversing the gains made by railways in Q2 (Jun-23: 32.3%; Sep-23: 37.9%).

Major ports witness robust volume growth in Oct-23

Volume growth at major ports increased by 14% YoY in Oct-23 (~71mn ton), with container volume expanding to 15.8mn ton, up 19% YoY. Iron-ore, fertilisers, coal and P.O.L. volumes grew 93%, 28%, 6.7% and 13.5% YoY, respectively, while other liquid volumes declined -12.1% YoY. All major ports saw a volume increase with Mormugao, Cochin, Visakhapatnam, Tuticorin, Chennai, Kolkata, Paradip and New Mangalore, registering 102%, 60%, 35%, 33%, 21%, 15%, 13%, 10% YoY, respectively, with Kandla being the only port to witness a 4% YoY decline. Volumes at Mumbai port stayed flat YoY.

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