The Indian road freight transportation sector is expected to see revenue contraction of 18-20% in FY21 due to the adverse impact of lockdowns, ICRA Ratings has said.
ICRA has maintained its negative outlook for this sector due to expectations of continued pressures on the credit profile of road transportation companies. The rating agency said over the medium term, the sector would witness some consolidation trends, given the rising pressure on viability of small fleet operators.
“The aggregate revenues of ICRA’s sample of logistics companies contracted sharply by 35% during the quarter,” said Shamsher Dewan, Vice-President, ICRA Ratings. “The impact was more visible on players operating on an asset-heavy model, due to high fixed costs for owned assets, while asset-light players fared relatively better,” he added.
This decline was also corroborated by the generation of e-way bills, which contracted by 49% during the quarter.