The Indian road logistics industry is predicted to experience growth in the year 2024 as, per a report by ICRA. The sector is expected to witness a revenue increase of 6-9 per cent year on year driven by demand from sectors like e-commerce, FMCG, retail, chemicals, pharmaceuticals and industrial goods. This growth can be attributed to the industry shift towards logistics players after the implementation of GST and e way bills.
However, there are risks such as increased inflation and interest rates along with supply demand dynamics that could impact the Indian economy. Operating margins are expected to be slightly lower in FY2024 compared to FY2023 (ranging between 10.5 per cent and 12.5 per cent) due to rising input costs elevated prices of oil.
Suprio Banerjee, Vice President & Sector Head of corporate Ratings, at ICRA Limited emphasized that “it is important to monitor how operators can adjust prices to offset rising input costs in a market.”
The report also highlighted the stability in volumes of e way usage and FASTag adoption which indicates domestic trade and transportation activities.
In the quarter of FY2024 logistics companies encountered difficulties, in transferring the rising costs to their customers even though there was a decrease, in crude oil prices.
The road logistics industry in India is expected to ride a wave of stable growth in FY2024, driven by strong demand but also facing challenges related to inflation and rising input costs, as well as environmental and social responsibilities, it further added.