Sector Update: Logistics

Sector Update: Logistics

Total cargo at major ports in July 2009 reported a decline of 1% year-on-year (y-o-y) and 4.2% month-on-month (m-o-m) mainly due to 27% y-o-y decline in cargo at Kolkata port.

Year to date i.e. April to July 2009 cargo reported a flattish growth of 1.7% y-o-y to 180 million tonne (MT).

However, port container volume is in recovery mode and has reported a growth of 3.5% y-o-y and 8.5% mom after a sharp y-o-y fall in three consecutive months—March, April and May 2009—which augurs well for container freight station (CFS) players.

Improving container cargo volume augurs well for logistics majors like Gateway Distriparks Ltd (GDL) and Container Corporation of India (Concor).

We prefer GDL due to its higher-than-average valuation discount to the market leader Concor and due to expected improvement in profitability from rail operations.