The logistics sector is projected to record a growth of 7-9 percent in the current fiscal but the industry players’ margins are likely to remain sensitive to risks stemming from a continued rise in oil and commodity prices amid the Russia-Ukraine conflict, according to a report.
The report by credit ratings agency ICRA also estimated that the sector’s growth stood at around 14-17 percent in 2021-22 over pre- COVID levels, adding that the momentum is expected to continue in this fiscal as well.
Revenue growth over the medium-term would continue to be driven by demand from varied segments such as e-commerce, FMCG, retail, chemicals, pharmaceuticals and industrial goods coupled with the industry’s paradigm shift towards organised logistics players post GST and E-way bill implementation, it said.
Furthermore, the report said that multimodal offerings are likely to gain increased acceptance and traction going forward, given that players offering multimodal services had more flexibility.
Given these factors and the relatively higher financial flexibility available to large organised players vis-à-vis their smaller counterparts, there is potential for increased formalisation in the sector going forward, the report noted.