Indian logistics companies eye export rebound as profits drop

Indian logistics companies eye export rebound as profits drop

After a tough quarter, Indian logistics and transportation companies believe a fledgling export recovery could improve their performance.

Earnings at India’s leading transportation and logistics services providers took a hit in the second fiscal quarter through September amid lackluster demand, but there are signs of recovery.

Near double-digit growth in the country’s export trade during October after one-and-a-half years of monthly declines could signal a turnaround for the industry.

At trucking giant Transport Corporation of India, second-quarter net profit fell 18 percent year-over-year to Rs. 19.72 crore (roughly $3 million) from Rs. 23.95 crore, even as quarterly income from operations increased 13.5 percent to Rs. 450.4 crore from Rs. 396.7 crore. TCI’s core freight division booked operating revenue of Rs. 221.4 crore during the quarter, up 7 percent from Rs. 206.5 crore, according a company filing with the Bombay Stock Exchange.

The company’s net income in the first fiscal half tumbled 22 percent year-over-year to Rs. 34.8 crore from Rs. 44.4 crore, although half-year revenue was up 11 percent to Rs. 878 crore from Rs. 791 crore.

State-owned rail operator Container Corporation of India, which has been struggling to drive up its export and import volumes despite new initiatives like time-definite services, suffered a 32 percent fall in net profit and an 8.2 percent dip in revenue in the second quarter year-over-year. Net earnings decreased to Rs. 157.84 crore from Rs. 231.69 crore, and revenue was down to Rs. 1,378.61 crore from Rs. 1,501.79 crore, a company statement shows.

Concor’s operating income from international freight hauling operations declined 8.6 percent to Rs. 1,129.77 crore from Rs. 1,236.47 crore a year earlier, and income from the domestic segment totaled Rs. 248.84 crore, down 6.2 percent from Rs. 265.32 crore.

The intermodal logistics provider reported first-half net profit of Rs. 336.32 crore, down 23.4 percent from Rs. 438.95 crore in the same six months of 2015, on revenue that dropped 7 percent year-over-year to Rs. 2,717.83 crore, according to the release.

TCI and Concor are not the only logistics players that posted tepid growth in the second quarter because of soft freight volumes and pricing challenges.

Quarterly net income at container warehousing services provider Gateway Distriparks plunged 40 percent year-over-year to Rs. 10 crore from Rs. 16.7 crore, as revenue slipped 2 percent to Rs. 83.4 crore from Rs. 85.3 crore.

Despite the pressure on volumes and revenues, Gateway expects its container freight station and rail services segments to show an upward trend as economic conditions stabilize.

The newest trade statistics of the Ministry of Commerce and Industry showed that India's merchandise exports jumped 9.6 percent year-over-year to $23.5 billion in October, following a 4.62 percent increase in the prior month. Total exports for the first seven fiscal months through the end of October totalled $154.9 billion, compared with $155.2 billion a year earlier.

“This [export growth] is a very encouraging sign, as most of the global economies are still reeling under pressure to perform, and global demand still does not seem to pick up,” said Ganesh Kumar Gupta, vice president, Federation of Indian Exports Organisations, in a statement. “If this kind of positive growth continues in the coming months also, we are definitely on course to achieve $280 billion or even more in exports during the current fiscal year.”

Although exports have shown signs of growth and the value of imports during October rose 8.1 percent year-over-year to $33.7 billion, inbound shipments from the start of the fiscal year are down 10.85 percent to $208 billion from $233.4 billion.

The export revival could embolden the government to accelerate its Sagar Mala program and other reform measures, including a plan to transform all major public ports run by boards of trustees into independent companies with more operational and financial autonomy.