** Sagar Sandesh print version ceases to be published from December 31, 2017. New look E-paper would be available from Jan. 1, 2018 onwards. free of cost.**

Allcargo all geared up for harnessing untapped containerization biz opportunities

Plethora of conducive factors set to spur container freight handling market in India, says Allcargo Logistics Ltd (ALL) in a recent report. Container volume in India is expected to be 2x by 2020, driven by EXIM trade translating to an increase in containerization from the current 55% to >65% (versus developed countries’ average of 70%), adds the note. Revival in EXIM trade expected to translate into higher demand for containerization due to their efficiency highlights the note. The anticipated changes in the profile of traded goods (from intermediate to finishedü goods, including textiles, auto parts, pharmaceuticals and food products) will increase the opportunities for containerization, asserts the company. Particularly, infrastructural initiatives like Dedicated Freight Corridor and development of multi-modelü Logistics park are poised to prop up further support growth of cargo containerization. As if that were not enough, several upcoming container terminals planned at both major and non-major ports – are tipped to further increase flow of container traffic. Strong growth expected in CFS container volume with container traffic growing CFS / ICD business expected to grow in coming years, maintains the company.

Allcargo has leveraged its relationships with freight forwarders and major shipping lines by entering into CFS sector. The company’s CFSs at JNPT, Chennai and Mundra boast of total installed capacity of 620,000 TEUs p.a. and ICDs at Pithampur and Dadri are touted to have a total installed capacity of 88,000 TEUs p.a. It is pertinent to note that JNPT, Chennai and Mundra - key ports in India handling bulk of container traffic with the three ports together garnering around 75 % of total container traffic of India.

Being one of the largest CFS operators in India, Allcargo is the only company with significant presence at key container ports of the country, viz JNPT, Chennai and Mundra, a new CFS at Kolkata port is expected to be operational soon. These ports are in proximity to main industrial hubs, carry majority of the volumes and are preferred choice for customers because of their strategic location and they collectively handle around 75% of total container traffic of India. ALL opened a new CFS in Mundra on asset light model focusing on exports. More to say, only part of land at 2nd CFS at JNPT has been developed, offering opportunity to increase as demand picks up. Lastly, land bank of more than 200 acres across 3 strategic locations viz Hyderabad, Bangalore and Nagpur

The mix of owned fleet of trailers, RTGs, reach stackers and forklifts is billed to support transportation of containers between CFS and port; and movement within CFS, proving a unique differentiator. The timely transportation supports incremental revenue of the company. Allcargo operates its business model with unique synergies between MTO and CFS business where the company leases container space with major shipping companies for its clients in MTO segment and on other hand, it gets clients of CFS segment from the same shipping companies.

Contract Logistics

Company has strengthened its position into contract logistics through 62% stake acquisition in Avvashya CCI (ACCI).  ACCI focuses on managing contract logistics for key clients in Chemicals, Auto, Pharma and Retail sectors.  The business model of contract logistics will be asset light, hence return ratios would be accretive.  The segment of contract logistics is a potentially a very scalable model across the value chain Contract logistics is likely to witness strong momentum due to implementation of GST.

Infrastructure led growth especially in sectors like power, oil & gas, cement and steel – expected to increase demand for specialized transport solutions. Government focusing and incentivizing on shifting cargo carried by rail and road to coastal shipping and inland waterways Allcargo is upbeat about government plans to take wind energy generation to 60,000 MW in the next 5 years from around 20,000 MW currently. Government also plans to have 100,000 MW of solar power capacity by 2022  coupled with conventional power project plans to set up 5 new Ultra Mega Power Projects, each of 4,000MW.

Logistics sector is also set to reap the benefits of US$ 45 Billion capex that is expected to be spent by oil & gas sector in India in next few years. Similarly, India's cement demand is expected to reach 550-600 Million Tonnes Per Annum (MTPA) by 2025. To meet this demand, cement companies are expected to add 56 MT capacity over the next three years. In the same breath, India’s steel sector is expected to grow from 91 Mn tons in 2015 to 300 Mn tons by 2025.  Currently metro rails are fully operational in only 2 cities of the 53 Indian cities with a population of more than one Million. Almost all the state capitals are having plans to build metro railways.  Significant capex expected not only on Greenfield projects, but also on repairs & maintenance, and transmission & distribution. Demand for world-class quality supply chains to handle project cargo is expected to increase significantly.


Copyright © 2018 PORT TO PORT - Shipping Services Portal ( Sagar Sandesh ). All rights reserved.

Follow Us