The Indian logistics sector that has been lying low for several months owing to global economic meltdown is slowly reviving with a surge in container traffic movement to the US and Europe Indian logistics operators, who have incurred huge losses due to shrink in cargo volumes and trade because of the global financial meltdown, can now heave a sigh of relief. The Indian logistics sector comprising of ports, road and rail transport, warehousing facilities etc is showing signs of revival, with the rise in country’s exports by 18.2% touching US$13.2 billion in November 2009 (as per the latest data available).
A growth in container and iron ore traffic movement witnessed a surge by 12.8% on a year-on-year basis to 48.2 million tonnes (mt) in cargo volumes handled by India’s major ports in November 2009. “A rise in container traffic movement to the US and European markets, owing to revival in demand, has helped the major ports in India to register positive growth. We hope the demand to increase further in these markets, with the setting in of stimulus packages provided by the respective state governments,” says Rahul Jha, proprietor of R R Logistics, a mid-sized logistics firm in Kolkata.
Jawaharlal Nehru Port Trust (JNPT), which handles almost 59% of India’s container traffic, registered a growth of 8.9% in November 2009 and expects to handle more than 4 million TEUs (twenty-foot equivalent units) of container traffic by the end of 2009-10.
 Factors reviving the logistics sector
Experts endorse the growth in the country’s economy as one of the major reasons behind the revival of the logistics sector. Although container train operators are incurring losses, analysts hope that rail operations will become profitable in 2010-11. They believe that a pick-up in industrial production will bolster the demand for inter-modal rail services, thereby benefiting container train operators.
In the road segment spot market, truck rentals have surged in the past 3 months, thereby signalling prospects of positive growth in the road sector that was lying low for most part of 2009.
Banking on the revival, a number of transportation companies are venturing into warehousing and distribution services, while a number of logistics firms such as Aqua Logistics Limited and TVS Logistics Services Limited, among others are planning to venture the capital market in 2010. Sensing a surge in demand for warehousing services, Gati Limited, one of the country’s premier surface transportation firms, is planning to construct more warehouses in the country.
In this context Bikash Das, senior marketing executive of Albastross Shipping Private Limited (Kolkata), a subsidiary of Transfer Group of Companies, a big-sized shipping firm in Mumbai says, “Considering the superior quality of packaging services offered by warehouses, the demand for warehousing services in India is increasing. Therefore, investment in warehousing services is a profitable business for transportation firms.”
With the increasing role of third-party logistics (3PL) service in the Indian logistics sector, Allcargo Global Logistics Limited has announced that it will soon roll out 3PL services in the country.
Although the domestic logistics sector is on the path to recovery, industry stalwarts are keeping their fingers crossed as they believe that complete recovery from recessionary pressures has still a long way to transverse. Arup Choudhury |
