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MOSL: INDIA LOGISTICS: Activity picks up in Jun’22; Freight rates steady, with an improvement in demand for Logistics

 Logistics activity picked up in Jun’22, with daily average e-way bill generation rising 5% MoM and daily average FASTag toll collections rising 2% in Jun’22. Fleet utilization levels stood at 80-85% in Jun’22.

-          Truck rentals on trunk routes remained flat MoM in Jun’22, after a sharp 5-6% MoM drop in May’22 on account of the Centre’s move to cut excise duty on diesel by INR6 per liter.

-          Volumes handled at major ports rose 14% YoY to 66mmt. Coal/petroleum, oil, lubricants (P.O.L)/other cargo reported a 51%/10%/37% YoY growth in Jun’22, whereas a sharp 59%/27% decline was seen in iron ore/fertilizer segments.

 

Daily average e-way bill generation/toll collection up 5%/2% MoM in Jun’22

Daily average e-way bill generation grew 5% MoM and clocked ~2.5m/day in Jun’22, indicating an improvement in truck operations due to a pick-up in economic activity. Daily average e-way bill generation was on a decline since Apr’22 due to lower consumer spending, given the high inflationary environment. Daily e-way bill generation rose 36% YoY from the COVID-19 impacted month of Jun’21, with intra/ inter-state bill generation growing 39%/32% YoY in Jun’22. The daily average FASTag toll collection improved 2% MoM to INR1.4b in Jun’22.

Rail EXIM container volumes decline by 3% YoY in Jun’22

While overall container volumes handled at ports grew 8% YoY, EXIM container volumes handled by Indian Railways fell 3% in Jun’22. The Railways’ market share in EXIM containers stood ~34% in Jun’22 (v/s ~38% in Jun’21). Domestic container volumes handled by the Railways rose 42% YoY in Jun’22.

Traffic handled at major ports grew 14% YoY in Jun’22

After increasing 9% YoY in May’22, traffic handled at major ports rose 14% YoY in Jun’22. Coal/P.O.L/other cargo grew 51%/10%/37% YoY in Jun’22, whereas a sharp 59%/27% decline was seen in iron ore/fertilizer segments. All major ports reported a YoY increase in traffic handled in Jun’22, with major growth (up 34%/22%/ 19%) reported by V.O. Chidambaranar/Ennore/Deendayal. Container cargo grew 8% YoY in Jun’22 on a TEU basis.

Freight rates steady MoM in Jun’22, despite a pick-up in Logistics activity

Truck rentals on trunk routes dropped 5-6% MoM in May’22, with: a) a reduction in excise duty by INR6 per liter on diesel, and b) slight softening in the demand environment. However, freight rates have been steady on trunk routes in Jun’22, despite a strong recovery in economic activity. The next couple of months will be crucial in terms of the movement in freight rates, given the volatility in global crude oil prices. VRLL continues to remain our top pick in the Indian Logistics space.