News Details

Indian port sector to witness 5-8 pc cargo volume contraction & project delays due to Covid-19 in FY 2021, says ICRA 
Container volumes to decline 12-15 pc


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, said an analysis by ICRA. 


Mr Ankit Patel, Vice-President and Co-Head, ICRA Ratings, mentioned, “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 FY 2021. 


“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.”


ICRA also notes that due to the invocation of Force Majeure clause at major ports, the project implementation of Sagarmala and other port projects may witness delays by at least six to twelve months. Further, since the projects are mainly driven by the private sector, given the steep economic contraction, many discretionary capex plans may be further postponed. The government is looking at a new vision plan for maritime sector and is in process of coming out with Maritime Vision 2030 document, which will factor in some of the issues faced by previous plans and also address the impact of Covid-19, the release said.


Regarding the impact on the credit profile of port sector entities overall, Mr K. Ravichandran, Senior VP and Group Head, ICRA Ratings, said: “The credit profile of port sector companies is expected to witness pressure in the near to medium term due to the impact of Covid-19 outbreak and the subsequent lockdown imposed. Further, entities that have recently commenced operations or concluded debt-funded capacity expansions or have concentrated cargo profile like containers could come under severe pressure. Nonetheless, well diversified players (cargo-wise) and SPVs promoted by stronger sponsors should have higher financial flexibility to weather this downturn, and their debt servicing is unlikely to be materially impacted.”

 

Source: Exim News Service: New Delhi, June 29

EXIM INDIA PROFILE

click here!!

Search News

Currency Import Export
U.S.Dollar 76.03 75.11
U.K.Pound 94.41 92.56
Euro 85.52 84.06

As On 01st July, 2020

more forex rates...

Currency Import Export
U.S.Dollar 77.05 75.35
Sterling Pound 97.30 94.00
Euro 87.25 84.20

w.e.f.19th June, 2020

more custom rates...