Domestic logistics sector to decline by 6-8% in FY2021: ICRA

In Q3 FY2020, revenue of ICRA’s sample of 12 large logistics players had declined by 2.6 per cent Y-o-Y as compared to a growth of 18.6 per cent in Q3 FY2019 and 1.9 per cent in Q2 FY2020, in line with the continued moderation in GDP growth, which hit a 27-quarter low of 4.7 per cent, resulting in subdued freight availability. ICRA expects that this trend is likely to continue in Q4 FY2020 and Q1 FY2021 with a greater degree of subdued performance. Muted consumer demand in sectors such as automotive, FMCG, capital goods and retail coupled with the slowdown in the production of bulk industrial commodities would adversely impact the growth of the sector. The pandemic induced nationwide lockdown has further accelerated the ongoing slowdown in the Indian macroeconomic conditions resulting in subdued freight availability. Consequently, in FY2021also, the ratings agency expects a contraction of 6-8 per cent Y-o-Y in revenue of its sample of logistics companies.