Longer turnaround time in case of ports, demand shock impacting volumes and supply chain disruption impacting last-mile delivery some of the other challenges facing the industry.
"Factoring in the demand shock and supply chain disruptions, we are cutting FY21/22E volume growth for Adani Ports
to -2 per cent/11 per cent and Gujarat Pipavav Ports
to -3 per cent/11 per cent (earlier 10 per cent each)," said Edelweiss Rsearch in a report.
In the December quarter, Gujarat Pipavav took a hit sequentially in its operating profit as its revenue declined alongside, while Adani Ports saw a jump in both the parameters in the period under review. (see chart)
"In our view, bigger and multi-cargo ports are better off in a downtrend. Most ports belonging to Adani Ports are multi-cargo and bigger, which give it better control on traffic by offering discounts. Hence, we expect it to continue to outgrow the industry," said Edelweiss.
Cargo-wise, India’s rapidly growing container trade (25 per cent mix) is likely to take a bigger knock due to strong global inter-linkages in container movement.
Gujarat Pipavav’s volumes are likely to take a hit as 85 per cent of its volumes are container-led. Nevertheless, its debt-free balance sheet and 8 per cent dividend yield lend comfort, said the Edelweiss report.
outbreak has stalled the continuous growth of cargo volumes, which registered positive growth for the period December 2019 to February 2020, to a negative year-on-year growth of 2.01 per cent in March 2020, dragged lower by a significant drop in container and liquid cargo volumes, said a CARE Ratings report.
In FY20, cargo handling at India’s major ports grew by a meagre 0.82 per cent as against 2.90 per cent growth achieved in the previous financial year.
Going ahead, container traffic is likely to be affected by the slowdown in the automotive industry and other container cargoes (imports of white goods and granite exports) for FY21 due to weak demand, said CARE Ratings.
In the logistics
sector, rail freight services are on, but a partial permanent demand loss is expected in rail freight as bookings are likely to reduce in April, said the latest Dolat Capital report. Road freight operations on the other hand will see permanent demand loss due to the disruption, it said.
Players such as Mahindra Logistics, Allcargo, Future Supply Chain and Rivigo among others have witnessed no cargo movement except for essentials during the lockdown
and the segment is expected to take revenue hit.
In the express category, TCI Express, Bluedart, DHL and Fed Ex among others are also witnessing permanent demand loss with drivers having flown to hometowns or left stranded. Essential commodity transport is getting delayed by the many checks at state borders leading to delays in last mile delivery.
Most of the logistics companies
have not seen strong revenue growth for the last couple of quarters as demand environment has remained challenging due to the ongoing economic slowdown. As a result, earnings, too, have not seen any major improvements across the segment.