This fiscal is likely to surpass fiscal 2019-20 (FY20) volumes at Indian ports, according to ICRA, which recently said the optimism is based on the performance of the sector in the first five months (5M) of this fiscal wherein all segments, except fertilisers, have witnessed healthy year-on-year (YoY) growth. The overall cargo volumes are largely stable in the duration compared to the similar period in FY20.

The stability is driven by healthy growth in containers, iron ore and other miscellaneous segments.

The positive growth can also be attributed to the base effect since the same period during the last fiscal was most severely impacted by the pandemic-related lockdown.

“Cargo volumes at Indian ports had witnessed a sharp contraction of nearly 14 per cent during H1 FY2021, following the strict lockdown measures imposed which had resulted in severe economic contraction,” according to Sai Krishna, assistant vice president and sector head at ICRA.

“However, in H2 FY2021, except for Feb 2021, the volumes witnessed YoY growth driven by easing of containment measures and a pick-up in economic activity with YoY growth of nearly 3 per cent in H2 FY2021. In 5M FY2022, volumes reached almost pre-COVID levels despite the second wave of COVID-19, as economic activity improved. Overall cargo volumes are expected to grow by 7-10 per cent YoY in FY2022 and by 1-4 per cent compared to FY2020, driven by the economic recovery,” he added in a press release.

The sector has witnessed consolidation in the last few years, with acquisition of ports and port assets by larger players. The trend is expected to continue as some of the weaker entities or strategic standalone assets get acquired by stronger and larger players.

Going forward, with healthy volume growth expected for FY2022, the performance of the segment is expected to improve as they will benefit from the operating leverage. The profitability of ports should recover in FY2022 due to improved capacity utilisation and benefit of operating leverage.

Fibre2Fashion News Desk (DS)

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