As Recovery Strengthens, Logistics Indicators Scale New Highs
As the Indian economy inches back towards normal, indicators reflecting the movement of goods across the country are moving higher, in some cases to record levels.
The economy, according to the Nomura India Business Resumption Index, is a whisker away from pre-Covid levels. Economic activity is now only ~2 percentage points below pre-pandemic levels, Nomura said in a report on Monday.
The recovery has been led by goods over services, said Sameer Narang, chief economist at Bank of Baroda.
“In India and globally, consumption patterns have seen a shift to products over services, with contact-intensive services yet to revert to pre-Covid levels,” Narang said. “While the recovery in logistics was driven first by inventory filling and festive demand, the trend has sustained thereon.”
Railway tonnage in January 2021 rose to 119.79 million tonnes, the highest since April 2010, according to data put out by the Indian Railways.
Railway freight rose by 8.7% over a year ago in January 2021.
Even amid the peak of the pandemic, the contraction in railway freight traffic was restrained in comparison to several other sectors of the economy, said Abhishek Nigam, associate director at India Ratings & Research. Additionally, the railways waived charges for empty containers, leading to an increase in the share of railways vis-a-vis other means of transportation, he said.
Truck Rentals Rise
Rising truck rentals also partly reflect the increased demand, along with higher diesel prices.
The rise truck rentals ranged between 6-50% across different routes in January this year, according to data by the IFTRT.
Diesel prices continued to rise in January this year, along with a quantum increase in movement of fruits, vegetables and food items and a simultaneous increase in dispatches from industrial areas, according to a research note by IFTRT dated February 2, 2021.
E-Way Bill Collections
E-way bill collections rose to 6.28 crore in January 2021, recording a growth of 10.5% over a year ago. Collections were at a record high in December, when they rose to 6.4 crore and grew by 15.9% on an annual basis. In January, e-way bill collections fell month-over-month.
Other logistics indicators, too, have continued to improve.
According to a research note by India Ratings & Research dated Feb. 5, 2021, port volumes turned positive in December 2020 for the first time since February 2020. They rose 7% month-on-month and 4% year-on-year in December 2020, the note said.
“The growth in December has been led by strong year-on-year growth in iron ore (14%), other liquids (16%) and container volumes (15%) as well as other goods segment (13%). The growth was partially offset by a year-on-year volume decline in petroleum, oil and lubricants (3%), fertilisers (7%) and thermal coal (11%),” the report said.
The rise in overseas shipments has led to a shortage of port containers. There is a shortage of containers in several parts of the world, accompanied with an increase in pricing, said Nigam, adding that the case in India is no different.