According to a report by ICRA, the Indian road logistics industry is expected to increase growth in the year 2024 with a predicted increase of 6-9% y-o-y due to demand from industries like e-commerce, FMCG, retail, chemicals, pharmaceuticals and industrial goods. The entire growth is attributed to the industry’s move towards logistics players after the induction of GST and e-way bills.
But, the reports found out that there are risks involved like increased inflation and interest rates along with supply-demand dynamics that could affect the Indian economy. Other than that, there are operating lower margins expected in 2024, when compared to FY 2023 due to a hike in the prices of oil.
Suprio Banerjee, Vice President- Sector Head of Corporate Ratings from ICRA stated that it is essential to assess how operators can fix prices to offset rising input costs in a market.
The report also highlighted the stability in volumes of e-way usage and FAST tag implementation that shows domestic trade and transportation activities. It might happen that in the first quarter of 2024, the logistics companies might incur problems in transferring the rising costs to their customers even though there will be a decrease in crude oil prices. The road logistics industry in India is anticipated to ride a wave of stable growth in FY2024, focused on strong demand but also face challenges related to inflation and high input costs, as well as environmental and social responsibilities.