NBFC

Work
NBFC Exposure:
Amidin
RedSlow
Exposure:
Banks’ Lending MFs
Crisis,
to Outstanding
Sea Progress: National
Indian
Banks’
NBFCs Reduces
Remains
Container
Continues
Remains to
High;
Further
steady at
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Highways
to
Increase, 11%
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Grow
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whileat Banks’
Execution
8%
MFs’
Rises of
atto
inBanks’
Advances
FY25;
Trend
the Advances
Decline
Down
ShorterbyEnd
Rising
Coastalin
7-10% Volumes
FY25 to Drive Coal Cargo
February
April 17,
May
April
May 29, 03,
2023
16, 2023
2023
2024
16, l l l BFSI
2024 l Ratings
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April 07, 2023 Research

Synopsis
In this report, CareEdge Ratings delves into the current state of Indian ports, outlook for coal and container volumes
amid stagnant imports and the impact of the Red Sea crisis. Additionally, the report outlines the Government of
India's emphasis on enhancing coastal trade through the Amrit Kal Vision of 2047.

• Despite an anticipated decline in coal imports by 2-3% due to increased domestic coal production, CareEdge
Ratings expects coal cargo throughput at ports to grow at a CAGR of 3-4% from FY24 to FY26. This growth
will primarily be driven by the coastal movement of coal along the eastern coast, complemented by added
capacities and synergistic benefits.
• The Red Sea crisis has led to an increase in voyage span by 15-20 days, in addition to higher freight rates.
However, the capacity liners' readiness to expand container capacity—owing to healthy profitability by
chartering additional vessels, cascading capacity from other regions, and accelerating fleet renewal—bodes
well for mitigating the increased transit times. The impact on cargo will primarily affect food grains and other
perishable items, along with freight-sensitive or low-value cargo, which is estimated at 10-15% of container
volumes. Therefore, CareEdge Ratings expects container volume growth to grow by 8% at 342 MMT in FY25,
amid the risk of a prolonged Red Sea crisis. Going forward, significant adverse movement in charter rates
impacting cargo volumes and vessels addition by shipping lines shall be key monitorable.

Healthy cargo throughput growth at Indian Ports for FY21-FY24

India’s maritime sector is represented by the 12 major ports and more than 200 non-major ports along the 7,500
km of coastal line. Overall, cargo throughput at Indian ports is at its all-time peak at 1539 MMT (Million Metric
Tonne) for the financial year ended March 31, 2024, i.e. FY24 representing ~7% growth over FY23. Cargo
throughput for FY21-FY24 was also healthy marked by a compounded annual growth rate (CAGR) of 7%. Resilient
economic activity, increasing demand & consumption of major commodities, declining shipping freights and traffic
recovery post covid were the prominent growth drivers.

Cargo growth led by Coal and Containers volumes

Cargo at Indian ports is dominated by 3Cs. i.e. Crude Oil (termed as Petroleum Oil Lubricants (POL)), Coal and
Containers as presented below.

These three commodities represent 74%-75% of total cargo throughput handled by ports. Over the past 3 years
ended FY24, POL witnessed a moderate CAGR of 4% while coal and container volumes witnessed healthy CAGR of
13% and 9% respectively as presented below in Exhibit A.

1
 Amid Red Sea Crisis, Indian Container Cargo to Grow at 8% in FY25; Rising
Coastal Volumes to Drive Coal Cargo

Exhibit A
1800
1539 MMT
1600
1400 1245 MMT 16%
1200 9%
18%
1000 21%
9%
800
20%
600 26%
22%
400
200 31% 28%
0
FY21 FY24
POL Coal Containers Iron Ore Others

Source: MoPSW and CareEdge Ratings

Increasing coastal volumes to drive coal cargo throughput offsetting flat imports
Coal throughput witnessed healthy growth from 292 MMT in FY22 to 367 MMT in FY23 representing growth of
~26%. The growth in throughput was supported by increased power generation from thermal plants by 6% to
1059.9 billion units. Against this, the imported coal volume registered a y-o-y growth of 18% to 249 MMT in FY23.
However, the volume growth was also driven by increased coastal volumes of coal. Coastal volumes have rose from
80 MMT in FY22 to 118 MMT in FY23 registering strong growth of 47%. During FY24, y-o-y growth in coal
throughput was ~9% which mirrored the increase in thermal power generation by 9%. This support the increase
in domestic coal production and continued coastal coal volumes on a high base of FY23. The growth in exim and
coastal coal volume is represented below in Exhibit B:

Exhibit B

Coal: EXIM vs Coastal

1 450
409 433 400
399
1 367 350
22% 28%
1 32% 33% 36% 42% 300
277 292 In MMT
250
1
200
0 78% 150
72% 68% 67% 64% 58% 100
0
50
0 0
FY21 FY22 FY23 FY24 FY25 (P) FY26 (P)

Imported Coal Coastal movement Total

Source: MoPSW and CareEdge Ratings

Coastal throughput is expected to increase from 60 MMT in FY21 to 131 MMT in FY24 reflecting a healthy CAGR of
around 30%. The same was largely driven by an increase in cargo movement on the eastern coast with the ramp-
up of overall volumes at Paradip, Gangavaram, Krishnapatnam, Dhamra and Gopalpur ports. Contribution of coal
cargo of the overall coastal volumes has increased from 22% in FY21 to 33% in FY24 as inferred in Exhibit B.
Coal production from Coal India Limited (CIL) constituted around 80% of India’s total coal production in the last
three years ended FY24. CIL’s coal production has increased from 602 MMT during FY20 to 774 MMT during FY24
2
 Amid Red Sea Crisis, Indian Container Cargo to Grow at 8% in FY25; Rising
Coastal Volumes to Drive Coal Cargo

and it is expected to increase to 1 billion MT by FY26. Out of total coal imports of around 268 MMT for FY24,
reliance on the import of coking coal of 63 MMT and thermal coal imports of around 40-50 MMT for coastal power
plants are expected to continue in the medium term. Balance coal imports shall be partly substituted by domestic
production and thus expected to decline by 2-3% by FY26. However, the Government of India’s plans to add large
thermal capacities of 80 GW augurs well for the demand prospects for coal.

CareEdge Ratings expects coal cargo throughput to grow at a CAGR of 3-4% over FY24 to FY26, as the share of
coastal cargo is expected to rise from 33% in FY24 to 42% by FY26.

Strategic initiative of the Government of India to expand coastal cargo share for India:
Coastal shipping is inherently multimodal, relying on other forms of transport for first and last-mile connectivity.
Although water transport costs per kilometer are lower as compared to road or rail, the overall cost of multimodal
logistics is high due to several factors: i) longer lead distances from existing ports, (ii) inadequate storage
infrastructure, and (iv) excessive reliance on a single mode of connectivity, which lead to increased congestion and
high first and last-mile costs.

To address these challenges, the Government of India as part of its efforts to enhance multimodal connectivity
under the Maritime Amrit Kal 2047 vision, is planning to develop agglomeration infrastructure specifically for sectors
like steel and cement. This cluster infrastructure includes rail-based steel warehouse facilities for cargo storage,
cargo sorting based on product types, and other value-added services.

Large steel clusters located on the eastern coast of India—where steel cargo is typically transported to the west
via road and rail—are situated up to 350 km from Paradip and Haldia ports. The aforesaid nature of development
in these two locations is expected to boost coastal movement from east to west, handling 8-10 MMT of steel while
simultaneously reducing logistics costs.

Container volumes to grow by 8% in FY25 to 342 MMT after healthy 10% growth in FY24

India's Container Cargo Trend

500 16%
15%
14%
400 13% 12%
300 10% 10%
In MMT

8% 8%
200 7%
394 6%
317 342
246 248 279 287 4%
100 3%
2%
0 1% 0%
FY20 FY21 FY22 FY23 FY24 FY25 (P) FY26 (P)

Volumes (In MMT) Growth

Source: MoPSW and CareEdge Ratings

Global maritime trade growth is closely linked to GDP growth. From 2010 to 2021, the global median maritime
trade to GDP ratio was 1.13 times. India saw a rising trend in containerization from FY13 to FY21, during which
container volumes in India grew at a robust CAGR of 9.5%, outpacing the global CAGR of 3.13%. This indicates a
strengthening trend of containerization in India.
Global shortage of containers due to EXIM cargo imbalances caused by Covid-19 disruptions, the Russia-Ukraine
war, and threats of hyper-inflation led to surge in the Shanghai Containerized Freight Index (SCFI) from October

3
 Amid Red Sea Crisis, Indian Container Cargo to Grow at 8% in FY25; Rising
Coastal Volumes to Drive Coal Cargo

2021 to February 2022, leading to a corresponding rise in container freight rates. Nonetheless, container volumes
in India still demonstrated a healthy CAGR of 6% from FY20 to FY22, signifying a strong economic indicator. In
FY23, container volumes experienced flat growth at 3% to 287 MMT but witnessed a robust recovery of 10% in
FY24 to 317 MMT, driven by a strong rebound in EXIM trade despite the ongoing Red Sea crisis starting in November
2023.

The disruption arising out of increased attacks on ships sailing through the Red Sea region has prompted shipping
liners to consider alternative, longer routes past the Cape of Good Hope, extending voyage schedule by 15-20 days
thus raising transit costs and insurance premiums. Although the SCFI also increased by 59% by the end of
December 2023 to USD 1760/Twenty Foot Equivalent Unit (TEU) compared to December 2022, and around
2300/TEU during May 2024, it remains well below the all-time high of approximately 5100 USD/TEU in February
2022. The capacity liners’ readiness to expand container capacity by chartering additional vessels, cascading
capacity from other regions, and accelerating fleet renewal are positive steps toward mitigating increased transit
times.

India relies on the Suez Canal route for its trade with European countries, North Africa, and the Americas, which
collectively account for about 35% of India's total foreign trade, primarily in the container segment. However, the
impact on cargo will primarily affect food grains and other perishable items, along with freight-sensitive or low-
value cargo, which together constitute 10%-15% of the total volumes.

CareEdge Ratings anticipates that container volumes will grow at a rate of 8% in FY25 to 342 MMT over FY24,
amid prolonged Red Sea crisis. Moving forward, growth in EXIM volume and clarity on geopolitical conditions will
be key monitorable.

CareEdge Ratings’ View

“Despite an anticipated decline in coal imports by 2-3% due to increased domestic coal production, CareEdge
Ratings expects coal cargo throughput at ports to grow at a CAGR of 3-4% from FY24 to FY26. This growth will
primarily be driven by the coastal movement of coal along the eastern coast, complemented by added capacities
and synergistic benefits. Consequently, the share of coastal coal is expected to increase from 33% in FY24 to 42%
by FY26. The Government of India's focus on building agglomeration infrastructure for specific sectors like steel
and cement and enhancing multimodal connectivity under the Maritime Amrit Kal 2047 vision, also supports the
expected increase in coastal movements at ports,” said Maulesh Desai, Director at CareEdge Ratings.

Commenting on the prospects of container volume, he noted, “The Red Sea crisis has led to an increase in voyage
span by 15-20 days, in addition to higher freight rates. However, the capacity liners' readiness to expand container
capacity—owing to healthy profitability by chartering additional vessels, cascading capacity from other regions, and
accelerating fleet renewal—bodes well for mitigating the increased transit times. The impact on cargo will primarily
affect food grains and other perishable items, along with freight-sensitive or low-value cargo, which is estimated
at 10-15% of container volumes. Therefore, CareEdge Ratings expects container volume to grow by 8% at 342
MMT in FY25, amid the risk of a prolonged Red Sea crisis. Going forward, significant adverse movement in charter
rates impacting cargo volumes and vessels addition by shipping lines shall be key monitorable. The slated
connection of the Dedicated Freight Corridor to Jawaharlal Nehru Port Trust (JNPT) in FY26, alongside capacity
additions by ports, is expected to drive growth in container volumes over the medium term.”

4
Amid Red Sea Crisis, Indian Container Cargo to Grow at 8% in FY25; Rising
Coastal Volumes to Drive Coal Cargo

Contact
Rajashree Murkute Senior Director Rajashree.murkute@careedge.in +91-22 -6837 4474
Maulesh Desai Director Maulesh.desai@careedge.in +91-79 -4026 5605
Nishid Khemka Lead Analyst Nishid.khemka@careedge.in +91-79- 4026 5610
Mradul Mishra Media Relations Mradul.mishra@careedge.in +91-22 -6754 3596

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