India's Container Volume Forecasted to Grow 8% to 342 Million Tonnes Amid Infrastructure Boost

India's container volume is on a trajectory for an 8 per cent increase, reaching 342 million tonnes this fiscal year, despite looming concerns over a prolonged Red Sea crisis, according to a recent report by CareEdge Ratings. The anticipated connection of the dedicated freight corridor to Jawaharlal Nehru Port by FY26, coupled with capacity expansions at various ports, is poised to bolster container volume growth over the medium term. The report highlights the dominance of the '3Cs'—crude oil (Petroleum Oil Lubricants, POL), coal, and containers—in India's cargo throughput at ports, collectively accounting for 74-75 per cent of the total.

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Over the past three years up to FY24, POL saw a moderate compound annual growth rate (CAGR) of 4 per cent. In contrast, coal and container volumes experienced more robust growth rates of 13 per cent and 9 per cent, respectively. Despite an expected dip in coal imports by 3-4 per cent owing to increased domestic production, coal cargo throughput at ports is forecasted to grow at a CAGR of 2-3 per cent between FY24 and FY26. Furthermore, the share of coastal cargo is projected to escalate from 34 per cent in FY23 to 42 per cent by FY26, driven primarily by the coastal movement of coal along the eastern coast.

Maulesh Desai, Director at CareEdge Ratings, emphasized the government's focus on enhancing agglomeration infrastructure for sectors such as steel and cement as a significant factor supporting the anticipated rise in coastal movements at ports. The report also notes a substantial increase in coal throughput from 292 million metric tonnes (MMT) in FY22 to 367 MMT in FY23, supported by a 6 per cent increase in power generation from thermal plants.

The year-on-year growth in coal throughput during FY24 stood at approximately 9 per cent, mirroring the rise in thermal power generation. This growth underscores the increase in domestic coal production and sustained high volumes of coastal coal movement from FY23. Coastal throughput is expected to have surged from 60 MMT in FY21 to an estimated 145-150 MMT in FY24, marking a significant CAGR of around 35 per cent.

Despite challenges posed by the Red Sea crisis, including extended voyage spans by 15-20 days and elevated freight rates, capacity liners are prepared to expand container capacity through chartering additional vessels and accelerating fleet renewal. This readiness is crucial for mitigating increased transit times. Desai pointed out that food grains and other perishable items, along with freight-sensitive or low-value cargo—estimated at 10-15 per cent of container volumes—are most likely to be impacted by these developments.

India's reliance on the Suez Canal route for its trade with European countries, North Africa, and the Americas—which collectively represent about 35 per cent of the country's total foreign trade—underscores the significance of these developments for the maritime sector. The sector encompasses 12 major ports and over 200 non-major ports along India's 7,500 km coastline.

The resilience and strategic adaptations within India's maritime sector are crucial for navigating through current challenges while ensuring sustained growth in cargo throughput and container volumes. As India continues to expand its port capacities and enhance its maritime infrastructure, the sector remains a pivotal element in the country's trade and economic landscape.