Container cargo volumes to rise 8 pc in FY25

Update: 2024-05-17 13:14 GMT
Despite the risk of prolonged Red Sea crisis, container volumes are expected to grow by 8 per cent this fiscal.(PTI Photo)

Chennai: After a flat growth in FY23, container volumes registered 10 per cent growth in FY24. Despite the risk of prolonged Red Sea crisis, container volumes are expected to grow by 8 per cent this fiscal.

According to Care Ratings, India saw a rising trend in containerization from FY13 to FY21, during which container volumes in India grew at a robust CAGR of 9.5 per cent, outpacing the global CAGR of 3.13 per cent, indicating a strengthening trend of containerization in India.

 However, global shortage of containers due to EXIM cargo imbalances caused by Covid-19 disruptions, the Russia-Ukraine war, and threats of hyper-inflation led to surge in the Shanghai Containerized Freight Index (SCFI) from October 2021 to February 2022, leading to a corresponding rise in container freight rates. Container volumes in India still demonstrated a healthy CAGR of 6 per cent from FY20 to FY22.

 In FY23, container volumes experienced flat growth at 3 per cent to 287 MMT but witnessed a robust recovery of 10 per cent in FY24 to 317 MMT, driven by a strong rebound in EXIM trade despite the ongoing Red Sea crisis starting in November 2023. The disruption arising out of increased attacks on ships sailing through the Red Sea region has prompted shipping liners to consider alternative, longer routes past the Cape of Good Hope, extending voyage schedule by 15-20 days thus raising transit costs and insurance premiums.

 The increased voyage span also has led to higher freight rates. However, the capacity liners' readiness to expand container capacity—owing to healthy profitability by chartering additional vessels, cascading capacity from other regions, and accelerating fleet renewal—supports mitigation of the increased transit times.

 The impact on cargo will primarily affect food grains and other perishable items, along with freight-sensitive or low-value cargo, which is estimated at 10-15 per cent of container volumes. Therefore, CareEdge Ratings expects container volume growth to grow by 8 per cent at 342 MMT in FY25, amid the risk of a prolonged Red Sea crisis. 

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