Despite US tariffs, container cargo volume seen growing 8 per cent to 380 mt this fiscal
Thursday, 22 May 2025
MUMBAI: Despite the for-sure dip in shipments bound to the US ports following the punitive 50 per cent duties on Indian goods from last week, overall container cargo volume is likely to clip at 8 per cent this fiscal to touch 380 million tonne, according to a CareEdge Ratings report.
However, this growth is much lower than the 11 per cent it had clipped in FY25 at 351 million tonne despite the Panama Canal, the Red Sea and other geopolitical crises. The sector had a compounded annual growth of 8 per cent in the past three years ending FY25.
This is because despite the US being the largest export market for the country accounting for 20 per cent of total exports, its share in sea-based trade (excluding electronic items) is not even 5 per cent, implying a moderate direct impact on port volumes and as result, the total container cargo volume will growth at 8 per cent this fiscal to 380 million tonne, CareEdge Ratings said in a weekend note.
Despite geopolitical disruptions, Indian container cargo to grow 8 per cent in FY26: CareEdge Ratings.
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On the unlikely impact of the US tariffs, the report said the total merchandise exports stood at $437 billion in FY25, of which the US accounted for 20 per cent. Also, excluding electronic goods, which currently face no tariff, sea-based merchandise exports to the US are estimated to represent around 5 per cent of the total sea trade, indicating a moderate direct impact on overall cargo volumes.
Cargo volumes have been heading north for some years now, driven by port capacity expansion, rising transhipment activity and the entire Western Dedicated Freight Corridor, which is nearing the last leg of completion.
However, overall coal volume is projected to decline by 3 per cent in FY26, driven by increasing domestic production and rising share of renewable energy in electricity generation. While reduced reliance on coal imports continues, healthy coastal volumes, particularly on ports on the Eastern coast, partially offset the decline.
But coastal coal volume is expected to grow by 10 per cent this fiscal, while on an overall basis, ports sector volumes are expected to increase by 2 per cent aided by container growth in the same period, the report said.
Domestic coal production increased 5 per cent to 1,048 mt in FY25, accompanied by a steady rise in the share of renewable energy in electricity generation—from 11 per cent in FY22 to 14 per cent in FY25. This shift has reduced dependence on imported coal, resulting in an around 8 per cent decline in coal imports in FY25. Nevertheless, capacity additions on the Eastern Coast and increasing coastal coal volume thereof led to its healthy annualised growth of 20 per cent during FY22-25.
Cargo volumes on Gujarat’s coast have fallen 6 per cent in May due to the India-Pakistan tension.
In the past three years ending March 2025, the container shipping sector has faced multiple disruptions—from the Russia-Ukraine war and water-level-induced delays at the Panama Canal, to the prolonged crisis in the Red Sea.
So far in 2025, new geopolitical flashpoints such as the Iran-Israel conflict and Operation Sindoor have further strained commercial shipping operations. Compounding these challenges, the US trade tariffs are expected to disrupt further global trade flows and consequently the growth metrics.
Last fiscal, additional container capacity was commissioned on the West Coast, including 2.4 million TEUs at the Jawaharlal Nehru Port (JNPT) and 1 million TEUs at the Vizhinjam Transhipment Port. These developments are expected to drive container cargo growth in FY26.
Further capacity expansion is anticipated through terminal upgrades, and the expected completion of full connectivity of the Dedicated Freight Corridor to JNPT by December 2025 is another growth enabler.
Nonetheless, rising insurance costs, shipping rates owing to volatility in the Shanghai freight index and transit times are weighing on the sector’s growth trajectory.