Transportation activity loses steam

by Madhumita Gokhale

India’s transportation and logistics sector has gradually recovered from the second wave of Covid-19 following the lifting of restrictions on mobility and subsequent improvement in economic activity. October 2021 largely coincided with India’s festive season, which saw a release of pent-up demand following the regional lockdowns. This led to an especially sharp increase in transportation activity of goods in October 2021, over the corresponding pre-Covid level. But the pace of growth slowed down considerably in November 2021.

Revenue earning freight traffic handled by the Indian railways shot up by 25.1 per cent in October 2021 compared to the corresponding 2019 level. This pace was not maintained in November 2021. The November 2021 railway freight traffic rose by 15.6 per cent to 116.8 million tonnes compared to November 2019.

Coal, cement and petroleum, oil & lubricants (POL) contributed to this deceleration in overall railway freight traffic.

Imported coal handled by the railways declined substantially in November 2021 compared to the corresponding pre-Covid level. In September 2021, railway traffic of imported coal fell to a 13-month low of 6.4 million tonnes, owing to a surge in global coal prices. The imported coal traffic in September 2021 was 20.2 per cent lower than in September 2019. The decline continued at nine per cent in October 2021 and 11.4 per cent in November 2021 over the corresponding pre-Covid period. Imported coal volumes handled by the railways in November 2021 stood at 7.3 million tonnes.

Railway traffic of domestically produced coal, on the other hand, grew by 19.1 per cent in November 2021 over the same month in 2019. But, the growth was far weaker than the 35.5 per cent growth seen in October 2021. It was also weaker than the average growth of 26.3 per cent seen during August-September 2021.

Cement and POL traffic also faced deceleration in growth to 6-7 per cent in November 2021. Their growth in October 2021 over the corresponding month in 2019 was much higher, at 36.1 per cent and 10.2 per cent, respectively.

Iron-ore and fertiliser traffic handled by the railways declined for the third consecutive month in November 2021 over the corresponding pre-Covid level. The November 2021 decline was of seven per cent for fertilisers and 0.6 per cent for iron-ore. The railways handled 13 million tonnes of iron-ore and 4.5 million tonnes of fertilisers in November 2021.

In contrast, EXIM (export-import) containers handled by railways was among the few categories that observed higher growth in November 2021. EXIM container volumes rose by 15.4 per cent to 4.5 million tonnes in November 2021 compared to the same month in 2019. This category had seen a smaller increase of 5.9 per cent in October 2021.

The availability of fast-frequency indicators related to road transport activity in India is extremely limited. Diesel is the primary fuel used by commercial road transport vehicles, because of which diesel consumption can be used as a proxy to measure growth in goods transportation activity by road. GST e-way bill generation can also be used as a measure of movement of goods. Both these indicators suggest that transportation activity of goods by roadways slowed down considerably in November 2021.

Consumption of high-speed diesel rose above the corresponding pre-Covid level for the first time in October 2021 after the second Covid-19 wave. The increase was of the order of 1.7 per cent. However, the recovery was short-lived. Diesel consumption declined again in November 2021 by 14 per cent as compared to November 2019. As per a news report by NDTV Profit, diesel sales remained 1.7 per cent below their 2019 level in the first 15 days of December 2021 too.

E-way bill generation has increased to well above the corresponding 2019 level since June 2021. In October 2021, it shot up by 39 per cent over the same month in 2019, reaching the highest ever level of 73.5 million. But November 2021 saw a smaller increase of 14.5 per cent in a similar comparison. The number of e-way bills generated in November 2021 stood at 61.1 million.

National Electronic Toll Collection (NETC) is another indicator that gives an idea about the performance of road transport activity on toll roads. NETC was made mandatory for all motor vehicles from February 15, 2021, due to which the latest data is not comparable with its corresponding pre-Covid level. On a sequential basis, however, there was a decline observed in toll collections in November 2021. The value of NETC payments fell to Rs.31.8 billion in November 2021, after rising to an all-time high of Rs.33.5 billion in October 2021.

India’s major ports also faced a moderation in growth of cargo traffic in November 2021. Port traffic grew by 2.7 per cent in November 2021 over the same month in 2019. This was much lower than the 5.3 per cent growth seen in October 2021. The main source of the slowdown in port traffic growth in November 2021 was a decline in traffic of iron-ore, fertilisers and POL compared to November 2019. Thermal & steam coal recorded a smaller 12.9 per cent increase in port traffic in November 2021 as compared to the 26 per cent increase recorded in October 2021. In contrast, containerised cargo was among the few commodities that reported a sharper increase in port traffic in November 2021.

The October 2021 spike in growth of freight transport activity was driven by a surge in industrial production and transport of goods to the end destinations in order to meet the festive demand. But this sharp up-tick was short-lived. The tempering of growth in freight transport activity in November 2021, along with the weakening of production and sales seen by industries like coal, steel, passenger cars, two wheelers and fertilisers raise a concern over the sustainability of the quick and strong recovery the Indian economy has seen from the second wave of Covid-19.

Cargo Traffic via Various Modes of Transport (% change over corresponding 2019 level)
  Aug 21 Sep 21 Oct 21 Nov 21
Railway freight traffic, of which 21.5 19.7 25.1 15.6
  Coal 16.3 21.5 27.1 14.0
   Excluding Import 20.3 32.2 35.5 19.1
   Imported coal -1.7 -20.2 -9.0 -11.4
  Iron ore 12.3 -3.0 -0.4 -0.6
  Cement 38.1 24.4 36.1 7.1
  Fertilisers 1.7 -12.7 -12.4 -7.0
  POL -0.8 5.6 10.2 5.9
  Containers 13.3 18.2 22.6 23.3
   Domestic containers 60.7 50.5 100.0 57.1
   EXIM containers 3.7 10.9 5.9 15.4
Traffic at major ports, of which -0.1 -1.4 5.3 2.7
  POL -10.0 -13.0 -8.0 -4.9
  Iron ore -12.2 -28.9 -16.9 -39.6
  Fertiliser -7.8 5.5 -23.6 -38.3
  Thermal & steam coal 30.6 13.4 26.0 12.9
  Containerised cargo 9.2 17.9 18.1 20.6

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.0 -0.7
Consumer Sentiments Index
Base September-December 2015
59.9 +1.2
Consumer Expectations Index
Base September-December 2015
61.2 +1.0
Current Economic Conditions Index
Base September-December 2015
57.9 +1.6
Quarterly CapEx Aggregates
(Rs.trillion) Mar 21 Jun 21 Sep 21 Dec 21
New projects 2.36 2.74 2.25 2.51
Completed projects 1.17 0.74 1.18 1.53
Stalled projects 0.28 0.33 0.03 0.03
Revived projects 0.23 0.12 0.28 0.39
Implementation stalled projects 0.34 0.38 0.25 0.65
Updated on: 19 Jan 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Mar 21 Jun 21 Sep 21 Dec 21
All listed Companies
 Income 15.1 39.2 27.9 17.0
 Expenses 7.4 38.6 27.3 18.0
 Net profit 337.8 142.5 52.7 12.8
 PAT margin (%) 8.8 9.0 9.6 19.4
 Count of Cos. 4,401 4,495 4,546 145
Non-financial Companies
 Income 17.8 56.1 36.1 18.9
 Expenses 10.7 57.1 36.6 22.3
 Net profit 222.4 199.3 59.5 4.9
 PAT margin (%) 9.0 8.5 8.8 17.7
 Net fixed assets 2.3 4.9
 Current assets 4.3 11.0
 Current liabilities 1.2 0.9
 Borrowings -4.5 12.2
 Reserves & surplus 11.7 12.4
 Count of Cos. 3,247 3,301 3,304 104
Numbers are net of P&E
Updated on: 19 Jan 2022 8:28PM
Annual Financials of All Companies
(% change) FY19 FY20 FY21
All Companies
 Income 13.4 0.6 -1.5
 Expenses 13.8 0.4 -4.1
 Net profit 12.7 -6.9 62.0
 PAT margin (%) 2.0 2.1 5.7
 Assets 9.9 8.8 10.7
 Net worth 8.2 4.5 13.3
 RONW (%) 3.6 3.5 8.2
 Count of Cos. 32,530 31,471 11,634
Non-financial Companies
 Income 14.2 -1.2 -3.0
 Expenses 14.3 -0.9 -5.3
 Net profit 22.1 -21.1 49.3
 PAT margin (%) 2.8 2.3 5.3
 Net fixed assets 6.0 11.2 1.5
 Net worth 7.8 2.2 11.0
 RONW (%) 6.3 4.9 9.1
 Debt / Equity (times) 1.0 1.1 0.8
 Interest cover (times) 2.2 1.9 2.8
 Net working capital cycle (days) 74 81 80
 Count of Cos. 25,943 25,015 8,657
Numbers are net of P&E
Updated on: 18 Jan 2022 2:48PM