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ICRA ratings agency predicts Indian logistics sector to grow at 8-10%

July 17, 2018

The Indian logistics sector is expected to grow at 8-10% over the medium term, domestic ratings agency ICRA said.

Media reports quoted the ratings agency as saying, “ICRA maintains a stable outlook for the Indian logistics industry, expecting it to grow at 8-10% over the medium term.

The demand growth would continue to be buoyed by pick up in industrial activity and consumption-led sectors while increasing preference for outsourcing logistics activities would provide further impetus to organised players.”

Additionally, factors like improvement in logistics, infrastructure, and emergence of logistics startups would offer further impetus to growth, it said. Factors like rise in integrated logistics, ecommerce logistics, investments in warehousing, and penetration of technology in the sector, will help over the longer term.

With industrial output and consumption-driven sectors recovering in the second half of the financial year 2018 from the initial lull post-GST implementation, the freight demand in India has also reported healthy pickup during the said period, the agency report said.

“The performance of key listed logistics companies indicates that there was pick-up in growth momentum as the year progressed. From an aggregate revenue growth of only 4.6% in Q2 FY2018, the sample’s growth gained pace to 10.8% in Q4 FY2018, as freight volumes picked up,” ICRA Vice-President and sector head, Corporate Ratings, Shamsher Dewan said.

“Transporters also took advantage of the improvement in freight demand to pass on the increase in diesel prices to their customers during the latter half of the year, as against freight rate cuts undertaken earlier in the year, in light of weak demand,” he added.

According to him, “ICRA estimates that there have been savings as high as 18-20% in the truck turn-around time post the implementation of GST, supported by the elimination of inter-state check posts.”

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