The Red Sea trouble will benefit this logistics solution provider. Here’s how

The addition of new containers is expected to boost growth for the company according to the research house.

The disruption of shipping on the Red Sea trade route is expected to create inflationary pressure, at least in the short run. Soaring shipping costs and rising oil prices will keep inflation simmering and may have negative consequences on the global economy.

Nearly 80 percent of India’s trade with Europe passes through the Red Sea. The maritime route, a vital conduit for East-West Trade, is witnessing disruptions owing to attacks on ships by the Yemeni Houthi militia, posing a fresh challenge to the logistics sector.

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However, one logistics company could benefit in a big way from the disruption. According to Capital Square, Lancer Container Lines can benefit by 1) increasing the total number of containers to “45,000 TEUs (twenty-foot equivalent units) by FY26e from 15,181 TEUs in 2QFY24”; 2) improving its EBITDA margin profile on account of “better bargaining power” on spot rates with vessel operators; 3) adding new regions to bring “better realisation and better mix.”

The addition of new containers is expected to boost growth for the company according to the research house. Lancer is a Non-Vessel Operating Common Carrier (NVOCC), a model under which the company owns containers and gives them to importers and exporters for the movement of cargo.
The company owns 15,000+ TEUs and provides services in 30+ countries to 86 ports worldwide, as well as 36 Inland Container Depots in India. The company plans to add around 31,000 more containers by FY26e and take its total to 45,000 TEUs.

In one year, shares of Lancer Container have surged over 48 percent. The stock had risen by more than 2 percent in morning trade on January 24. The Nifty 50 was in the green by more than 65 points and the BSE Sensex was up by about 200 points. The BSE Small Cap index was up by nearly 1 percent and the BSE Midcap index by 0.75 percent.

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