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MOSL: LOGISTICS-Container rail traffic on the rise-Lead distance increases MoM in both EXIM and domestic segments

Logistics: Container rail traffic on the rise; Lead distance increases MoM in both EXIM and domestic segments

 

• EXIM originating container rail volumes increased 14% YoY, while domestic container rail volumes grew 20% YoY in August 2018.
• Lead distance for EXIM increased ~16km MoM, while that for domestic operations rose 28km MoM in the month, possibly due to additional volumes from JNPT's fourth terminal.
• With ~73% market share in container rail movement, Container Corporation of India (CCRI) is likely to grow in tandem with the underlying market, in our view. Volume growth, along with price hikes initiated by CCRI on key routes, should drive healthy margins for CCRI in the coming quarters.

 Originating container rail volumes grow 14% for EXIM, 20% for domestic

• After growing by a robust 23% YoY in July, EXIM originating container rail volumes increased 14% YoY in August 2018. Notably, EXIM growth has consistently been in double-digits for a year now (+13% YoY for 1QFY19). Domestic originating container rail volumes grew 16% YoY in July 2018 and 20% YoY in August 2018. After remaining subdued from the beginning of CY18, growth started picking up only in June 2018. As a result, growth in 1QFY19 stands muted at 4%.
• CCRI (~73% market share in container rail movement) has largely tracked growth in the underlying market, with EXIM volume growth of 8% YoY and domestic volume growth of 9% YoY in 1QFY19.