Cargo volumes in Indian ports largely returned to pre-COVID levels: ICRA
Stability is driven by healthy growth in containers, iron ore and other miscellaneous segments.
The positive growth can also be attributed to the base effect since the same period in the past fiscal year was hit hardest by the pandemic-related lockdown.
This exercise is expected to exceed 2019-2020 (FY20) volumes at Indian ports, according to ICRA. The optimism is based on the performance of the industry in the first five months of this fiscal year, where all segments except Fertilizers experienced healthy year-over-year growth. Overall freight volumes are broadly stable over time compared to the similar period in FY20.
“Cargo volumes at Indian ports experienced a sharp contraction of nearly 14% in the first half of fiscal 2021, following the tight lockdown measures imposed which resulted in a severe economic contraction,” said Sai Krishna, Assistant Vice President and Head of Sector at ICRA.
“However, in the second half of fiscal 2021, with the exception of February 2021, volumes experienced year-on-year growth driven by the easing of containment measures and an upturn in economic activity with growth in nearly 3% year-on-year in the second half of fiscal 2021. In fiscal year 5M 2022, volumes almost reached pre-COVID levels despite the second wave of COVID-19, as activity The economy was improving. Global freight volumes are expected to increase by 7-10% year-on-year in FY2022 and 1-4% from FY2020, thanks to the economic recovery ”, a- he added in a press release.
The sector has seen consolidation in recent years, with the acquisition of ports and port assets by larger players. The trend is expected to continue as some of the weaker entities or stand-alone strategic assets will be acquired by stronger and larger players.
Going forward, with healthy volume growth expected for fiscal 2022, segment performance is expected to improve as they will benefit from operating leverage. Port profitability is expected to recover during fiscal year 2022 due to better capacity utilization and operating leverage.
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