Ind-Ra has revised its FY27 outlook for India’s logistics sector to neutral from improving, citing persistent geopolitical uncertainty despite strong domestic fundamentals.
It expects resilient volume growth, supported by favourable policies and investment, but warned that elevated sea freight rates will keep the operating environment volatile, with diversified operators likely to outperform.
Indian logistics players had demonstrated exceptional resilience in their operating performance despite the volatile geopolitical environment during FY22-FY26, Pratik Mundhada, director, corporate ratings at India Ratings and Research (Ind-Ra) said.
Although geopolitical shocks were difficult to quantify, the sector was expected to witness reasonable volume growth and stable realisations over FY27-FY29, he noted adding that better funding availability and supportive regulatory policies were also expected to strengthen the credit profiles of logistics companies.
However, he cautioned that elevated sea freight rates were likely to persist, keeping input cost inflation a concern for downstream players.
While Ind-Ra’s overall outlook for the logistics sector was neutral, the credit profiles of individual companies could diverge, with operators having diversified volume mixes, infrastructure advantages and efficient operations likely to outperform, Mundhada added.
Ind-Ra expects volume growth across most logistics’ segments, excluding ports, to remain healthy. Rail container volumes are projected to grow 8-10 per cent annually during FY27-FY29, driven by the Jawaharlal Nehru Port Trust-Western DFC connectivity, potentially outpacing overall rail freight growth.
It also forecasts healthy demand in the express delivery and warehousing segments. However, legacy third-party express logistics providers may face slower growth as major e-commerce companies continue shifting volumes to their in-house logistics networks. Warehousing demand is expected to remain supported by industrial occupiers, third-party logistics providers and express companies. In contrast, seaport cargo volumes are likely to record only low single-digit growth in FY27 due to weak bulk commodity trade, although container traffic is expected to provide some support.
On pricing, Ind-Ra noted that realisations across most logistics’ segments, except warehousing and sea freight, have remained largely stagnant because of intense competition and an unfavourable cargo mix.
Rail freight and express operators continue to face pricing pressure, while warehousing rentals are expected to rise 4-6 per cent in FY27, driven by higher institutional demand and lease renewals. Sea freight rates are also expected to remain elevated despite weak demand, supported by ongoing geopolitical tensions and disciplined capacity additions by shipping lines, Ind-Ra mentioned in its report titled, ‘FY27 Logistics Outlook: Stable Operating Performance amid Volatile Environment.’
Fibre2Fashion News Desk (CG)
