10-15% dip in inland logistics companies’ volume
India Ratings is estimating inland logistics companies’ volume to plunge by 10-15% in the financial year 2020-21 as the consumption demand could take a longer time to revive. The agency further noted that the first quarter of the year is likely to see a 40-60% fall as the lockdown has been extended till May 3.
“The volume decline will be asymmetric across the value chain, with standalone truck operators showing the highest stress, followed by inland logistics players, ports and warehouses,” the agency stated. Lack of clarity over realisations, cost reduction initiatives taken by players, and government support is likely to take a toll on profitability. The agency also added that paucity of labour and drivers along with health safety environment (HSE) checks at ports for foreign vessels may lead to congestion at ports/depots, which may impact their efficiencies. It also cautioned that invocation of force majeure clause may increase contingent liability risk.