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December 10, 2023

India: Port cargo traffic growth in November slows to 3% amid trade slowdown

According to data from the Indian Ports Association (IPA), state-owned ports handled 1.9 million tonnes (mt) of cargo in November, which is only slightly more than they did in the same month last year due to ongoing freight costs and international trade instability.

The aggregate traffic at India’s 12 major ports was 61.3 mt in November, despite the fact that many people expected the holiday season to boost the logistics industry.

The main cause of this, according to experts, has been the slowdown in international trade. They predict that this slow pace will persist in the near future, with only slight rises or drops dependent on changes in high-frequency economic indicators in western countries.

With only a 1.5% increase in container traffic during the first seven months compared to the previous fiscal year, trade-in completed goods has been particularly poor.

“Container segment volumes this year have been muted. Subdued export-import trade and high freight costs in the first quarter of the fiscal year both had an influence and caused container volumes to shift toward the breakbulk segment, according to Sai Krishna, vice-president and sector head at ICRA.

In March of this year, major Indian ports (controlled by the central government) handled a record amount of traffic, totaling 70 mt, capping a turbulent year characterized by numerous Covid-19 waves. The aggregate cargo at 12 major ports has not even reached 65 mt since the first quarter of the current fiscal year, and for the past three months, it has remained constant at 61 mt.

Concerns about international trade still affect the container market. According to Mohit Kumar, a research analyst at DAM Capital, “we predict FY23 growth to be in the region of 3-4% (against the prior 5-6%) given the increasing uncertainty in global trade.”

Meanwhile, overall cargo growth, which was in double digits at the beginning of this fiscal year, stands below 9 percent. However, the growth has been due to disproportionate increases in commodities such as coal, which was due to a nationwide coal crisis, forcing the Centre to import more coal, and also push more coal out through the coastal route as railway networks remained choked.

“Coal is mostly to blame for the fiscal year’s 8.8% overall rise. In the near future, we anticipate some normalization in this sector, which may be partially offset by expansion in other sectors like iron ore and agricultural cargo. Overall, traffic increase for the fiscal year is anticipated to be between 6 and 8%, according to Krishna.

Although a decline in coal traffic is widely anticipated, experts think that the Center’s campaign for coastal shipping of thermal coal may prevent a noticeable decline.

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