Bengaluru: The Indian road logistics industry is expected to grow at between 3-6% in the just began financial year (FY25), ratings and research agency ICRA said in a report on Monday.
The reasons cited for such a ‘sedate pace’ of growth included expected softening in spending by central and state governments, the limited ability of industry players to increase freight rates and moderation in consumer demand sentiments amid high inflation and interest rates.
However, “The outlook for the sector continues to be stable, fuelled by a sustained momentum in economic activities, enhanced traction of organised trade and continued support from varied segments like e-commerce, fast moving consumer goods, retail, pharmaceuticals, and industrial goods,” ICRA said.
Suprio Banerjee, sector head of corporate ratings at the agency, said that the road logistics sector’s revenue grew at 2.3% for the first nine months of FY24 (April-December 2023) and for the full year which ended on March 31, 2024, revenues are expected to grow by 2-5%, primarily due to a muted festive season, high inflation and uneven monsoon.
Banerjee said that road logistics players remain exposed to environmental and social risks. Tightening emission control norms necessitate alternative fuel vehicle investments or investments in the current fleet. The truckers are also exposed to litigation/penalties arising from issues related to harmful emissions and waste, which may lead to financial implications and impact reputation.
“The social risk includes driver shortage, health, safety, and quality of work-life balance for drivers,” Banerjee said.
(Published 08 April 2024, 15:11 IST)
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