Captains Speak

Published: Dec 29, 2021
Updated: Dec 29, 2021

Gateway Distriparks: Logistics business is on the rebound

With the logistics industry entering a bullish phase, prospects for Gateway Distriparks, the segment leader, have improved substantially, reveals Kishan Dass Gupta, Chairman and Managing Director. “We anticipate continuous month-on-month momentum in growth of volumes for the foreseeable future as most lead industry indicators point to a strong demand revival. Core servicing sectors of the company such as auto, white goods, steel, agro products and other industries are witnessing a healthy traction in their businesses. Going forward, a monthly run-rate of 25,000 twenty foot equivalent units (TEUs) for rail containers is not a difficult one. The company expects to reach the 25 K monthly run-rate for rail containers by the middle of FY22-23. Overall, for cargo freight stations (CFSs) and rail containers, the company expects early double-digit growth by FY22-23 and FY23-24,” Mr Gupta says. He adds, “With demand, the price pressure is also easing and the ability to double stack in both import and export directions has improved.” Reviewing the performance of the company during Q1FY21, Mr Gupta says the throughput of rail containers was 67,042 TEUs, a growth of 9% yoy and 19% qoq. The throughput for 9MFY21 was down by 10% to 170,800 TEUs. The throughput of CFS in Q3FY21 and 9MFY21 was at 84,060 TEUs (down 11% yoy) and 227,161 TEUs (down 26% yoy) respectively.

During Q3FY21, the company witnessed a sharp recovery in its overall volumes for both the CFS and rail container business after volumes got impacted by the Covid disruption in H1FY21. The revival in EXIM trade has been much faster than anticipated. The improvement in volumes has been seen sequentially every month since the beginning of October 2020. In the month of December 2020, the company recorded the highest ever monthly throughput of 25,676 TEUs in rail containers. And in the same month, the CFS business also witnessed close to peak business with 30,085 TEUs. The December 2020 rail container volume of 25,000 TEUs had some benefit of a backlog demand.

NEW TERMINALS

As regards future plans, Mr Gupta reveals that the company looks to set up 2-3 terminals in the next 2-3 years. The satellite terminals will be about 35 acres and the company plans a capex of Rs 60-70 crore per terminal.

According to him, EBITDA/TEUs of about Rs 9,000 is largely due to volume improvement, an increase in turnaround time as well as a 5% rebate on railway haulage charges on laden containers by the Railways, which is expected to expire by April 30, 2021. Volume increase will increase the ability to operate double stake containers. Commissioning of the Western Dedicated Freight Corridor (WDFC) has resulted in significant cut-down of turnaround time. Strategically located infrastructure alongside the WDFC and a robust balance sheet will help the company capitalize on future growth opportunities.

Referring to updation on the WDFC, Mr Gupta says, “The Rewari-Madar section of the WDFC that runs for 79 km in Haryana and 227 km in Rajasthan, aggregating a total distance of 306 km, was inaugurated in the first week of January 2021. The company is one of the first intermodal operators to run trains on the newly inaugurated section of the WDFC. The 335-km long MadarPalanpur section of the WDFC is likely to be commissioned by the end of Q1FY22 but the company expects that to happen by September 2021. The Palanpur-JNPT section will take 15 months from the commissioning of the Madar-Palanpur section.”

“The Palanpur-Pipavav line doubling with electric traction will get completed by end of Oct 2021. Once the MadarPalanpur section of the WDFC is commissioned, it will connect the key Gujarat ports of Mundra and Pipavav, resulting in increased marketshare gains for container train operators as against road transporters. This will benefit the company due to its multimodal capabilities to cater to its customers who are increasingly demanding integrated logistics solutions. With the company’s intermodal hub at Garhi Harsaru, Gurugram in NCR, now connected to the corridor, the transit time of the trains of the company will reduce significantly as well as allow higher double stacking of containers. Moreover, it will help the company provide an even more reliable service to customers through North India ICDs at Garhi Harsaru, Faridabad and Ludhiana. The company expects for CFS business an EBITDA/TEUs of Rs 2,900-3,000, which is sustainable as the company increases its share of value-added services.”

SNOWMAN LOGISTICS

According to AM Sundar, CEO, Snowman Logistics, capacity utilisation in Q3FY21 was about 85%. The expansion of capacity at Coimbatore, Krishnapatnam and Mumbai is underway. NCR terminals are seeing fresh enquiries and demand with leading operators in the NCR region increasing prices. The company has a more than adequate rail fleet to cater to immediate-term demand. The company is a market leader in Mumbai, Vizag and Kochi in the CFS business and one of the top players in Chennai. Standardisation in terms of services and price is yet to happen in the cold chain logistics industry.