Stable freight rates in line with diesel; increasing use: Crisil
The close correlation between freight rates and diesel prices is due to the fact that fuel accounts for 50-60% of transport operators’ input costs.
“While there was a slight increase in freight rates on most routes, the overall rate increase was less than 1% over the quarter. Additionally, there was no change in rates freight on 10-15% of routes,” the report said.
On the shipment side, there is an improvement in mining products, such as coal, iron ore, limestone, etc., in the face of a lull in the previous two months. Relatively better shipments for retail as well as industrial oil derivatives also led to better achievements for tanker operators.
“Freight rates were stable sequentially in January 2022, largely due to relatively unchanged fuel prices over the past two months. This has led to the stabilization of the freight market,” Crisil said.
Freight rates were stable despite improving utilization levels during the quarter for bulk commodities, such as mining products, cement, etc. said, the rise in infections had a relatively marginal impact on consumer goods shipments compared to the sequential drop in the second wave,” the report added.
Indeed, this time, the dynamism of the bulk and industrial goods segments compensates for the inertia of the utilization rates of the consumer goods segment.
“All of this translated into the CRISFrex index remaining flat for a quarter in January 2022 at 120. Although improving utilization levels (particularly in the bulk segment) led to a increased overall industry margins to ~21% from ~20% the prior month.
But given the unpredictable nature of the pandemic, it is imperative to watch freight rates as well as utilization levels for the next 1-2 months as market dynamics could change quickly,” he said. note.
Crisil said the exercise is conducted on a closed sample of 159 route-cargo combinations, covering 32 routes, 11 types of goods from CRISIL Research analytical contacts and five truck platforms with different load bodies, depending on the goods transported.