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MOSL: LOGISTICS-Container volume growth moderates in Oct-Nov’18-Lead distance declines in both EXIM and domestic segments

LOGISTICS: Container volume growth moderates in Oct-Nov’18; Lead distance declines in both EXIM and domestic segments

 

• EXIM originating container rail volumes increased 6% YoY, while domestic container rail volumes grew 9% YoY in Oct/Nov’18.
• Lead distance declined by ~21km YoY for EXIM and by 44km YoY for domestic operations in Nov’18 due to more volumes from the Mundra and Pipavav ports.
• With ~75% market share in container rail movement, Container Corporation of India (CCRI) is likely to grow in tandem with the underlying market, in our view. The 45-day free dwelling time should support the company’s volumes. This, along with its price hikes, should drive healthy margins for CCRI over the coming quarters.

Container rail volumes grow 6% for EXIM, 9% for domestic in Oct/Nov

• After growing by a robust 9% YoY in Oct'18, EXIM originating container rail volumes increased by a moderate 4% YoY in Nov'18. Domestic originating container rail volumes grew by 16.5% YoY in Oct'18 and 1% YoY in Nov'18. The slowdown in growth can be ascribed to a high base and festive season-driven seasonal weakness.
• CCRI has largely tracked growth in the underlying market, with EXIM volume growth of 9% YoY and domestic volume growth of 18% YoY in 2QFY19.

Lead distance declines in both EXIM, domestic operations

• In Nov'18, lead distance declined by ~21km YoY for EXIM (-6% YoY in 2QFY19) and by 44km YoY (-4% YoY in 2QFY19) for domestic operations due to more volumes from Mundra and Pipavav ports.
• Consequently, CCRI, too, witnessed a decline of ~3% YoY in EXIM in 2QFY19. The impact, though, was partly offset by price hikes initiated by the company. A higher proportion of double-stacking volumes in 1QFY19 also helped improve margins.