After a year and a half of COVID-19 pandemic hitting the world, rays of revival across many sectors can be seen. And India’s logistics companies seem to be riding on a wave of growth after the waning of the second wave.
Transport Corporation of India (TCI), one of India’s leading supply chain and integrated logistics players, expects its net profit to grow 30%-40% and its revenue to grow 20% in FY22. One of the world’s largest logistics players, DHL Express, recently opened an airside facility in Bengaluru airport. The gateway is said to handle 650,000 to 700,000 shipments a month. The cargo facility in Bengaluru is one of the biggest investments the company has made in India, said the India Managing Director. French logistics player FM Logistics has recorded a 58% growth in its India turnover in the first half of this fiscal year.
Companies are bullish and are investing in new infrastructure in spite of global supply chain constraints and fuel price hikes. According to Vineet Agrawal, managing director of TCI, increased freight rates in coastal shipping have helped increase revenue.
Despite supply chain businesses having been affected due to a global shortage of semiconductors and their impact on the automotive and white goods industry, automakers are optimistic about the situation, and production has started to improve from the last quarter. Automotive companies, which were hit the hardest, have assured an increase in production, with hope that the overall market can absorb the higher fuel prices. Furthermore, in India, as elsewhere, a spurt in demand in some segments such as e-commerce has kept companies confident.
The global pandemic led to a prolonged partial closure of ports worldwide, creating a glut of containers in some ports and an abject shortage in others and of course freight rates and container prices have shot through the roof. Companies like the TCI have said it will only spend half of their planned capital expenditure of INR200 crores due to the increase in costs of ships and containers. About 60% of its CAPEX was to buy new container ships and containers. According to a report by ING, the supply of new containers will only ease the pressure by 2023.
Needless to say, many companies saw a big dip in revenue a year earlier. However, things are looking up. Most prominent companies are making noticeable investments foreseeing this trend. The new airside facility in Bengaluru airport for DHL will save 12-24 hours in terms of transit time for DHL’s customers.
Consolidated revenue grew 38%, and net profit trebled in the July-September quarter. Agrawal, says, “The estimate we are giving the street is, of a 30%-40% increase in the bottom line and a 15%- 20% increase in topline.”