Transport & Logistics: Container trade thrives amid global downturn

In April-May 2023, the global container trade volume recorded a slight decrease of 2% compared to the previous year. However, there is positive growth in major ports of India volumes and container volume, which increased by 2% yoy in April-June 2023. Rail Volumes Container volumes also showed a 1% year-on-year increase, although this indicates a slight slowdown in the rail coefficient. Looking ahead to 2023, we expect the GST-driven share gains of organized players to continue, as well as an increase in traffic on the Dedicated Freight Corridor (DFC). Taking these factors into account, we have identified Concor, Delhivery and TCI Express as our top picks.

Rail coefficient should improve as western DFC increases: In June 2023, major ports volume in India recorded a marginal increase of only 0.5% yoy, while container volume recorded a 7% yoy decrease. This decline was offset by a disproportionate increase in iron ore and fertilizer volumes, which helped offset declines in other segments. Notably, ports in Tamil Nadu led the regional volume decline in both June 2023 and the April-June period. As for rail transport, total rail volume recorded a 2% yoy decrease, while container volume in June fell by 10% yoy. However, we expect a positive impact on rail traffic volumes as the Gujarat Ports-Dadri section of the Dedicated Freight Corridor (DFC) starts operating in April-May 2023. This development is likely to contribute to an increase in rail traffic volume in the near future.

Other DFCs planned: The Western Dedicated Freight Corridor (WDFC) has become operational, linking the ports of Gujarat with Dadri inland. Commissioning of the line from a station 100 km away from the JNPT to Dadri is expected to be completed by December 2023. The final 100 km line is scheduled to be operational by the end of FY24.

Of the Eastern Dedicated Freight Corridor (EDFC), 900 km of the total 1,856 km are currently fully operational, with the remaining stretch due to be completed by December 2023.

There are efforts to expand non-conventional freight transport. Ultimately, the improved time and cost efficiencies of DTCs should help companies reduce shelf life and increase reliability. Detailed project reports for additional dedicated freight corridors are currently being submitted to the Ministry.

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