Ravi Jakhar, Chief Strategy Officer at Allcargo Logistics, expects freight rates to remain rangebound in the near term.

“There’s supply coming in and also ships going for scrapping. There are chances of de-escalation of tension, which means that the supply constraints could go away. But at the same time, it will be coupled with economic revival,” Jakhar explained to CNBC-TV18.

He also pointed out that the trade momentum is now reviving, with volumes improving across the world.

Allcargo Logistics reported a revenue of ₹4,301 crore for July-September 2024, with margin at 3.1% and profit after tax at ₹37 crore.

This the verbatim transcript of the interview.

Q: Let us start with the current international scenario. What is the near mid-term outlook for freight rates? What are you pencilling in in terms of volumes and outlook for the remainder of this year?

A: This quarter gone by was quite good. We had the highest ever monthly volumes during this quarter. We saw that the trade momentum is now reviving. We have seen improved volumes across the world. We have seen the high growth. Markets in Asia continue to do better as compared to the last year.

Now we have seen marginal, though slightly volatile, improvement in Europe as well. We believe that the changing geopolitical landscape could potentially have an impact there. If the geopolitical tensions were to be de-escalated over the coming six months, that could potentially revive the European economy, particularly since with the rate cuts, inflation has already been in control in Europe, and there’s a greater disposable income which is available in the hands of the consumer. So, overall, we believe the economic environment should continue to improve.

On the freight rates, we expect them to remain range-bound. There’s supply coming in. At the same time, there are also ships going for scrapping. There are chances of de-escalation of tension, which means that the supply constraints could go away. But at the same time, that will also be coupled with economic revival. So, these are balances in place with which we believe that freight rates should remain range-bound. But what we are particularly happy is that across all the businesses, our strategies have been playing out, and we are happy with the performance in the quarter gone by.

Read Here | Allcargo Logistics hits record high in full container load shipments for August 2024

Q: Volumes, what are you targeting, the less-than-container load (LCL) volume for this year. For the second quarter, they were up around 5%?

A: So if you look at the volume, so about LCL is about 5% up. Full container load (FCL) is about 7% up. Air freight is about 13% up. That’s on the international business side. I believe that we would continue to outperform the trade market growth by about 3 to 4% and we have seen that in the last year, it was negative, and we were kind of holding flat. Now that the market has become flat to 1%, we have seen four to 5% growth.

Long term average for LCL growth is about 6% for the last 8 to 10 years, and we believe that we could do 3 to 4% over that. So that’s a data that we have always been guiding to us. We believe we remain confident that we would continue to outperform the market growth, but the market growth itself could be volatile, ranging from a couple of percent growths to recovering back to 6% normal growth as the economic situation improves.

For full management commentary, watch the video

The company, which has a market capitalisation of ₹5,289 crore, has seen its shares decline 22% over the last year.

Also Read | Freight rates firm despite new capacity additions, says Allcargo Logistics