The road logistics sector will do well in the year 2024

The road logistics sector will do well in the year 2024, supported by stable domestic consumption and investment demand. According to rating agency ICRA, the industry’s revenue growth is estimated to be in the range of 6-9% in FY2024, building on an elevated base of FY2023. This growth is primarily driven by demand from varied segments, including e-commerce, FMCG, retail, chemicals, pharmaceuticals, and industrial goods, coupled with the industry’s paradigm shift towards organized logistics players, post-GST and e-way bill implementation. ICRA expects the outlook for the sector to remain stable.

Downside risks to the estimates remain from any material tapering of demand due to elevated inflation and interest rates and global supply-demand shifts impacting the Indian economic scenario. According to ICRA, the industry debt coverage metrics are expected to ease marginally in FY2024, compared to the FY2023 levels with a likely contraction in operating margins because of inflationary input cost pressures, primarily elevated crude oil prices and debt-funded capital expenditure for vehicle replacement, required prior to the introduction of the Scrappage Policy along with a high interest rate regime.

Suprio Banerjee, Vice President & Sector Head – Corporate Ratings, ICRA Limited, says, “With gradual demand recovery on the back of supportive macro-economic factors, ICRA’s sample set1 witnessed revenue growth of 16% in FY2023 on a YoY basis, amid a low base of FY2022. The operating profit margin, however, contracted to 12.4% in FY2023 compared to 14.0% in FY2022 on account of fluctuations in fuel procurement cost. As witnessed in Q1 FY2024, ICRA expects the aggregate operating profit margins for the sector to marginally moderate to a range of 10.5-12.5% in FY2024, from 12.4% in FY2023 owing to elevated input costs. The operators’ ability to effect further price hikes to offset input price increases, amid stiff competition, remains a key credit monitorable.”

E-way monthly volumes remained largely stable at above 80 million since March 2023, reporting all-time high volumes in August 2023, signifying resilient domestic trade and transportation activities. The monthly FASTag volumes have also moved in tandem with the e-way bills, ranging from 285 to 320 million in Q4 FY2023 and Q1 FY2024, with an all-time peak of 335 million in May 2023, reflecting buoyancy in the movement of vehicles.

Despite the decline in crude oil prices in Q1 FY2024, the operating margins of the logistics players were impacted due to the lag in price hikes. The subsequent sharp rise in prices in Q2 FY2024, raised concerns over the ability of the logistics players to pass on the cost to their customers.

Road logistics players also remain exposed to environmental and social risks. Tightening emission control norms necessitate alternative fuel vehicle investments or investments in the current fleet. They are also exposed to litigation/penalties arising from issues related to harmful emissions and waste, which may lead to financial implications and impact reputation. The social risk includes driver shortage, health, safety, and quality of work-life balance for drivers.
Grade A Warehousing in Tier 2 & 3 Cities Fuelling India's Logistics Sector
The Indian warehousing market is seeing increasing demand with 3PL and e-commerce players being the major occupiers in tier-2 and 3 cities. Factors like the boom in e-commerce, outsourcing to logistics

Read more ...

CJ Darcl revolutionizing logistics & warehousing with cutting-edge solutions
As India's economy grows, there's a continuous demand for warehousing, especially in Grade A and B categories, fuelled by sectors like electronics, retail, FMCG, and manufacturing and these industries

Read more ...

TVS ILP elevates warehousing standards
With the influx of companies venturing into Tier-2 and 3 markets, there's an imperative for the industry to reassess models and strategies so that they can effectively harness the emerging opportunities

Read more ...

NDR Warehousing's network spans 21+ Industrial Parks across India
The growing demand for tech-enabled operations and the widespread adoption of cutting-edge technology have rendered Grade A warehouses highly agile, enabling them to effectively adapt to the ever-evolving

Read more ...

Welspun One tailored Grade-A warehouses elevating industry expectations
The surge in warehousing demand in recent times is largely attributed to the pivotal role played by Tier-2 and Tier-3 cities, fueled by extensive digital penetration, transforming them into significant

Read more ...

LP Logiscience's integrated warehousing systems redefine efficiency
A multitude of factors like allowing 100% FDI in warehousing and increased adoption of technology have contributed to the growth of the modern warehouse segment in tier 2 and tier 3 markets, including the post-pandemic

Read more ...

Rhenus transforming logistics with end-to-end solutions & real-time visibility
The success of emerging Grade A warehouses in select Tier 2 and 3 cities hinges on the yet-to-be-determined market potential of these regions for the specific products requiring warehousing

Read more ...

Value Spaces driving logistics forward
The rise of e-commerce has led to a surge in demand for efficient and well-equipped Grade A warehouses to manage the storage and distribution of goods. Naresh Sharma, Managing Director, Value Spaces Logistics

Read more ...

Safexpress elevating logistics excellence with comprehensive solutions
The fast-emerging warehousing clusters have witnessed substantial growth due to the increase in road, rail, and air connectivity, making it feasible to establish warehouses in these locations.

Read more ...

TCI catering to diverse industry verticals
There is rising demand from both the consumer and the business side of supply chains logistics, hence, opportunities for expanding warehouses are lucrative but they come at the cost of upfront investment

Read more ...

eTrans: Driving Safety, Efficiency & Productivity in Logistics
Our customer-centric approach helps us understand the needs and challenges of our customers, allowing us to tailor our solutions to meet their requirement for improved security and productivity

Read more ...

Prozo Offering Multi-Channel & End-to-End Solutions
Our end-to-end supply chain solutions enable fast-fulfilment for B2B, B2C and D2C supply chains and our service lines PFN, PLN, PWLP and PRN ensure that brands have access to the most comprehensive

Read more ...

Smart Tech Enabling Green and Efficient Cold Supply Chain
The adoption of smart technology in temperature-controlled storage and transportation is not only revolutionizing how we manage perishable goods but also offers the promise of a greener and more efficient

Read more ...

Solutions for Cleaner and Greener Supply Chains
Firms that are implementing sustainable logistics methods are in a better position to meet customer demand for environmentally responsible products and services, increase customer loyalty, save costs

Read more ...

Modernizing the Maritime Industry Through Automation
Automation and Artificial Intelligence in the maritime industry is helping companies streamline shipping processes and enhance operational efficiency

Read more ...

Goldhofer impresses at NordBau 2023
Goldhofer and co-exhibitor Volvo Trucks certainly crowds with their first combined presence at NordBau 2023 in Neumünster, Germany. A four-axle »TRAILSTAR« trailer and a three-axle »STEPSTAR« with two pairs

Read more ...

Bruhat Logistics India moves Voyage Chartered Vessel from Vietnam to India
Bruhat Logistics India has recently moved a breakbulk shipment of cranes from Vietnam to India. The cargo consisted of two Crawler Cranes which were dismantled and moved on a breakbulk vessel

Read more ...

Challenges & Opportunities in India’s Container Market
The container industry serves as the backbone of international trade, ensuring smooth and efficient flow of goods across borders. Inland Container Depots (ICDs) and Container Freight Stations (CFS) are vital hubs in the logistics chain, enhancing efficiency

Read more ...

Container xChange - Streamlining Logistics
With the increasing desire for access to a wider range of products across the globe, industries are required to obtain materials and goods from diverse regions. This consumer behaviour has created a need for efficient and cost-effective shipping solutions

Read more ...