Global container trade volumes have experienced a modest decline of 2% y-o-y in Apr-May 2023. However, there is positive growth in India’s major ports’ volumes and container volumes, which have increased by 2% y-o-y in Apr-June 2023. Railway volumes and container volumes have also witnessed a 1% y-o-y increase, although indicating a slight deceleration in rail coefficient. Looking ahead to 2023, we anticipate a continuation of the GST-driven organised players’ share gain, as well as an increase in traffic on the Dedicated Freight Corridor (DFC). Considering these factors, we have identified Concor, Delhivery, and TCI Express as our top picks.
Rail coefficient should improve as Western DFC ramps up: In June 2023, the volume of major ports in India witnessed a marginal increase of just 0.5% y-o-y, while container volumes experienced a decline of 7% y-o-y. This decline was offset by a disproportionate rise in iron ore and fertiliser volumes, which helped balance the slowdown in other segments. Notably, ports in Tamil Nadu have been leading the regional volume decline, both in June 2023 and the Apr-June period. In terms of rail transportation, overall rail volumes experienced a 2% y-o-y decline, with container volumes down by 10% y-o-y in June. However, we anticipate a positive impact on rail volumes as the Gujarat Ports-Dadri stretch of the Dedicated Freight Corridor (DFC) began operations in Apr-May 2023. This development should contribute to a rise in rail volumes in the near future.
Additional DFCs on the cards: The Western Dedicated Freight Corridor (WDFC) has been commissioned, connecting Gujarat Ports to Dadri in the hinterland. The commissioning of the stretch from a station 100 km away from JNPT to Dadri is expected to be completed by December 2023. The final 100 km stretch is scheduled to be operational by the end of CY24.
Efforts are being made to expand non-conventional freight transportation. Ultimately, the improved time and cost efficiency of the DFCs should help corporations reduce inventory days and enhance reliability. Detailed project reports are currently being submitted to the Ministry for additional Dedicated Freight Corridors.
