Dun & Bradstreet India study revealed Optimism level fell for export and import freight demand in Q4 2022

2024-04-23 03:23:27 Business

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Mumbai: Dun & Bradstreet, a leading global provider of business decisioning data and analytics, has released the 4th edition of Railway Freight Activity Optimism Index (RFAOI), in collaboration with Jupiter Group, a premier manufacturer of railway wagons, passenger coaches, wagon components and castings.

The RFAOI survey of rail freight users (industry and service providers) gauges optimism levels for rail freight activity in the forthcoming quarter. The index comprises of 14 factors across four sub-indices of optimism ? supply factors, operational efficiency, investment, and demand.

Key findings
Railway Freight Activity Optimism Index, indicating optimism level of users; industries and logistic service providers towards transporting goods using railways, stands at 68 for Q4 2022, only one percentage point higher than Q3 2022.

The highest level of optimism is towards loading and unloading of goods (optimism index of 76). Businesses in the eastern region are the most optimistic with an overall optimism index of 77 in Q4, while optimism level fell for business in the southern region and western region.

Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet said: ?Optimism levels for railway freight activity continues to improve in Q4 2022, although the pace has slowed down as businesses have become more cautious towards international trade. The survey also reveals optimism for domestic trade in Q4 2022 has remained unchanged from the previous quarter, reflecting resilient domestic demand.

The findings of the survey also mirror weak global demand, as several major economies face the risk of recession; which, in turn, is impacting emerging and developing markets. The fall in optimism levels for utilization of wagons/containers from the previous quarter also indicates freight activity could remain lower as compared to the levels witnessed during the earlier part of the year.

Given the current developments in the domestic and global economy, we expect the optimism level to remain subdued going ahead. The severity of recession and consequent reaction from central banks will have impact on global trade, thereby further impacting domestic freight movement.?

Vivek Lohia, Director, Jupiter Wagons said: ?It is encouraging to gauge from the survey that businesses are optimistic about the investment activity in the railway sector. Optimism for investment activity in Q4 2022 is the highest amongst the four sub-indices, increasing from Q2 2022 by four points to 71. This bodes well not only for the sectors associated with Railways, but it also indicates a shift of freight from roads to rail, fall in logistics costs and, importantly, reduction in greenhouse gas emissions (GHG). In turn, this will make Indian firms more competitive.

The loan approved from the World Bank to modernize rail freight and logistics infrastructure, and the government?s own thrust in capital expenditure will further improve performance of railways. These will strengthen India?s multimodal transport hubs and terminals and will help in achieving first and last mile connectivity for which the increase in optimism was highest in Q4 2022, besides frequency of rakes on existing/new routes.
Going ahead, we expect the government to continue to place its thrust and increase its capital allocation for railways in the Union Budget for 2023-24.?

Key findings of the four sub-indices of RFAOI
Optimism around demand
Businesses were least optimistic about import freight demand (optimism level at 60) amongst the 14 parameters used to gauge the optimism level of business across the five railway zones.
Businesses operating in the southern region remained the least optimistic about the indicators of freight demand.
Optimism around factors of supply
Size-wise, optimism for medium players were lowest for availability of wagons/containers (optimism level at 60) and availability of labour (optimism level at 63)
Businesses in the eastern region were the most optimistic for all supply side parameters while businesses in the southern region were least optimistic about availability of wagons/containers and labours
Optimism around operational efficiency
Optimism level fell the most for utilization of wagons (optimism index at 67 in Q4 compared to 71 in Q3)
Businesses were most optimistic about loading and unloading of goods (optimism index at 76), with large businesses revealing the highest optimism on this parameter

Optimism around investment activity
Businesses across regions and all sizes are optimistic about investment in railways
However, businesses using the western railways are less optimistic about investment in mechanization (optimism index at 64) and business using the southern railways are least optimistic about connectivity in their operational routes (optimism index at 63)

About the Index

Dun & Bradstreet conducted a pan India survey of more than 300 Large, Medium, Small, and Micro players to create the Rail Freight Activity Optimism Index (RFAOI). Unique forward-looking index, capturing optimism of user industries and logistics service providers on rail freight activity for the forthcoming quarter. The index is composed of four sub-indices viz Optimism for freight demand, Optimism for supply factors, Optimism for operational efficiency and Optimism towards investment activity. Each of the four sub-indices constitute of four factors each, except for investment. There are a total of 14 parameters.

About Dun & Bradstreet:

Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet?s Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity.

Dun & Bradstreet Information Services India Private Limited is headquartered in Mumbai and provides clients with data-driven products and technology-driven platforms to help them take faster and more accurate decisions across finance, risk, compliance, information technology and marketing. Working towards Government of India?s vision of creating an Atmanirbhar Bharat (Self-Reliant India) by supporting the Make in India initiative, Dun & Bradstreet India has a special focus on helping entrepreneurs enhance their visibility, increase their credibility, expand access to global markets, and identify potential customers & suppliers, while managing risk and opportunity.