Logistics sector may fall 6-8 per cent in FY21: ICRA

Rating agency ICRA in its latest report has said that Indian logistics sector is probably going to witness 6-8 per cent fall within the current year (FY21) on account of rapid outbreak of Coronavirus (COVID-19) disease. It noted that the rapid rise of COVID-19 pandemic as well as the government’s decision to contain the disease outbreak in India through 40-day lockdown is adversely impacting the logistics sector. Nevertheless, the logistics sector has seen a pointy fall in freight availability due to the restrictions imposed on the production of non-essential goods and absence of fleet for the movement of essential goods, all thanks to dearth of drivers, thereby leading to a spike in truck rentals.

According to the report, in Q3 FY2020, the revenue of ICRA’s sample of 12 large logistics players had declined by 2.6 per cent YoY, as compared to a growth of 18.6 per cent in Q3 FY2019 and 1.9 per cent in Q2 FY2020, in-line with the continued moderation in GDP growth, which hit 27-quarter low of 4.7 per cent, leading to a subdued freight availability. ICRA expects the trend to continue in Q4 FY2020 and Q1 FY2021 with a greater degree of subdued performance.

The report further stated that the muted consumer demand in sectors like automotive, FMCG, capital goods and retail, as well as the slowdown in the production of bulk industrial commodities, would adversely impact the expansion of the world. Further, it said that the immediate term growth prospects of the world also remain subdued, thanks to the outbreak of COVID-19 pandemic, which has exacerbated Indian macroeconomic growth scenario.