Logistics activity in India slowed down in November 2021 post the festive season and e-way bill generations declined by 17 per cent month on month to 61 million in November 2021, after reaching an all-time high in October 2021. As per a report by Motilal Oswal, the decline in month on month e-ways bills is a seasonal impact typically seen after the festive season in October. The report says that the freight rates also remained flat during November despite a significant cut in fuel prices. The report observes that the demand for logistics slowed down in the first half of November, but picked up in the latter half of the month, driven by the wedding season demand and a pickup in consumer spending.
The Motilal report observes that capacity utilisation for trucks currently stands at 80–85 per cent levels and the volumes handled at major ports remained flat year on year at 59mmt. November 2021 also saw growth in container traffic; coal; and petroleum, oil, and lubricants. Though the report says that the e-way bill generation was up 6 per cent YoY, it was down 17 per cent from all-time highs of October 2021. Interestingly, e-way bill generations were on the rise for the five months up to October 2021, indicating sustained improvement in truck operations on account of pickup in economic activity and inventory buildup for the festive season.
The report observed that there was 5 per cent YoY growth in EXIM (export-import) container volumes by railways in November 21 which was lower than the overall growth in container volumes handled at ports. The railways market share in EXIM containers stood at 34 per cent in November 21 (compared to 35 per cent in November 20). Domestic container volumes handled by the Railways grew 28 per cent YoY in Nov '21.
On the other hand, traffic at major ports remained flat in November 21, after 7 per cent YoY growth in October 21. A sharp pickup in industrial activity drove 7 per cent YoY growth in volumes handled at major ports in October 21; however, volumes came in flat in November 21. Among the major ports, Ennore reported a sharp jump, followed by Chidambaranar, Mumbai (plus 18 per cent), Jawaharlal Nehru Port (JNPT) located in Navi Mumbai's Raigad district and Chennai. On the other hand, Mormugao, Paradip, and Kolkata ports reported declines in volumes.
In another report by RedCore the Redseer’s research arm, the road logistics market is expected to grow with a Compound Annual Growth Rate (CAGR) of 7-8 per cent in the next five years. The report observes that with rising income levels, higher exports, a rapidly growing e-commerce sector, a growing retail sales market, and a projected GDP growth of seven to 8 per cent in the next five years, the demand for goods movement is also expected to increase at 8 per cent Compound Annual Growth Rate (CAGR).
The report points out that intercity represents 87 per cent of the road logistics spend of which 33 per cent is intermediate and finished goods transport. Intercity logistics is the movement of goods for more than 200 km (one side), with a round trip greater than 24 hours. 33 per cent of intercity logistics spend is on intermediate and finished goods transport. On demand markets account for ~63 per cent of the total long haul logistics market. On demand freight transport is movement of goods on an immediate basis with prompt payment. It helps in satisfying unfulfilled and urgent demands. Shipments are tendered one at a time on a load-by-load basis and price is high in comparison to price offered by the contract market.
The report also highlights that digital players are disrupting the logistics market with multiple innovative models including a slew of start-ups are disrupting this sector with innovative business models that solve most of the industry pain points from the supply side. According to the report, the time is ripe for the open open marketplace to succeed as factors such as heavy investments in road and transport infrastructure, rapid technology adoption among suppliers, India’s digital push, macro drivers for fleet owners, and India’s massive on demand or spot market is expected to to drive its growth in the near future.
