THE domestic logistics sector is set to grow at 8-10 per cent over the medium term with the outlook remaining largely stable, ratings agency ICRA said on Wednesday. The key drivers for demand pick-up would be the festive season as well as the anticipated revival in infrastructure spending post monsoon and improvement in receivable cycle of contractors, it said in a statement. “ICRA Research has forecast the domestic logistics sector to grow at 8-10% over the medium term with the outlook remaining largely stable,” it said.

 

The ensuing demand momentum will lead to higher freight volumes in the second half of FY2020 despite weak macroeconomic scenario, it added. ICRA Ratings Vice President Shamsher Dewan said, “We expect the sector to continue to outpace the GDP growth over the medium-term, which apart from demand side factors would also be supported by supply-side positives like emergence of integrated logistics players, investments in infrastructure development - warehouses & inter-modal transport hubs and; capacity augmentation being undertaken by large logistics players.”

 

“Industry capex towards capacity augmentation (fleet, warehousing, cold storage, terminals etc) and investments in technology to improve service offerings is estimated at Rs. 9-11 billion annually (which translates into 2-3 per cent of operating income),” the statement added. Credit metrics of ICRA’s sample of logistics companies are expected to remain comfortable, it said.