Cargo growth turns positive on Y-o-Y basis for the first time in October-November 2020
Cargo at Indian ports has turned positive for the starting time time after seven consecutive months in October and November 2020, recording a 3% and 1% Y-o-Y growth, respectively. During March-September 2020, the Indian port sector has been adversely impacted due to the Covid-nineteen outbreak and the subsequent lockdown introduced by Republic of india and other major economies. Although the sector was classified under essential services and remained operational mail service the initial period of lockdown, the adverse impact on the domestic economic action besides equally slowdown in global merchandise has resulted in steep contraction in cargo volumes at the Indian ports. While positive growth in the by two months is positive, for the 8M FY2021, cargo has reported a 12% decline; nonetheless, the aforementioned is significant comeback compared to the 22% decline recorded in Q1 FY2021. The footstep of decline has moderated sequentially every month for key cargo segments, indicating continuing signs of a recovery.
Ankit Patel, vice president, and co-head, ICRA Ratings, mentioned, " Political leader, coal, and container segment have witnessed a wrinkle with ~thirteen%, ~23% and ~12% Y-o-Y decline during 8M FY2021. However, at that place are definite signs of recovery given that in October-November these 3 segments recorded significantly better performance than previous months. The pace of recovery in the port sector volition be contingent on the pace of recovery of the domestic industrial activity and the global economy. Farther, factors like changes in the global supply concatenation pattern during the recovery phase will also impact the cargo profile. Despite the expectation of a improve H2FY2021, due to the significant underperformance in H1FY2021, ICRA expects volume contraction of near 10% in full year FY2021."
Regarding the varying affect on unlike cargo categories, M. Ravichandran, executive vice president, and deputy chief rating officeholder, ICRA Ratings, mentioned, "We had before predictable the recovery in essential products like Pol and thermal coal to be relatively faster than containers. Containers are also facing a challenge in terms of shortage of containers on intra-Asian and sure other trade routes due to supply concatenation and merchandise imbalance issues. Even so, container cargo at Indian ports has seen a meliorate than predictable trade volume growth, and hence compared to the before expectation of a 12-15% decline, FY2021 is now probable to see a 10-12% decline. This is largely driven by the quicker than earlier expected pickup in industrial output and consequently higher exim volumes."
ICRA believes that port sector companies' credit profile would keep to remain under pressure on business relationship of the lower than anticipated cargo volumes during FY2021, especially those that have just commenced operations or ended debt-funded chapters expansions or accept a concentrated cargo profile. Nonetheless, well-diversified players (cargo-wise) and SPVs promoted by stronger sponsors should accept higher financial flexibility to weather this downturn, and their debt servicing is unlikely to be materially impacted.
Source: https://packagingsouthasia.com/type-of-article/industry-news/cargo-growth/
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