Indian ports to witness 5-8% contraction in volume and project delays in FY2021: ICRA

The Indian port sector has been adversely impacted due to the Covid-19 outbreak and the subsequent lockdown introduced by India and other major economies. Although, the sector has been classified under essential services and has remained operational during the lockdown, the adverse impact on domestic economic activity as well as slowdown in global trade has resulted in steep contraction in cargo volumes at the major ports. Similar to the 22% decline in April 2020, May 2020 also saw a 22% decline in throughput. While, the decline was across major cargo categories, POL, thermal coal and container segment witnessed significant contraction.
Ankit Patel, Vice President and Co-Head, ICRA Ratings, says, “The recovery in the port sector will be contingent on the pace of recovery of the domestic industrial activity and the global economy. Further, factors like changes in global supply chain pattern during the recovery phase will also have an impact on the cargo profile. Of late, anti-China sentiment has also been building up momentum, which could also be a headwind for the trade growth. The full year outlook for the sector remains negative, with volume contraction expected in FY2021. The recovery among the cargo segments should be relatively better for essential products like POL and thermal coal, which should be in line with lockdown relaxations and the pick-up in domestic economic activity, while for segments like coking coal and containers the recovery may be long drawn. ICRA expects that while general cargo throughput may witness ~5-8% contraction for full year 2020-21, the container segment may witness a decline of 12-15% during the same period.”