Maersk Line said India’s container trade increased at a double-digit rate in the first half of 2018, benefitting from a variety of external factors, as well as government economic reforms and other pro-business measures.
The ocean carrier, in a new trade analysis, stated that India’s exports during January-June increased 8 percent, and imports surged 12 percent, year over year. As a result, the emerging market economy achieved a combined 10 percent growth in container trade in the first half, according to the survey.
Maersk, which transports roughly 20 percent of India’s containerized freight, said three factors have essentially combined to drive that impressive, steady growth — a free-floating Indian currency, an uptick in domestic manufacturing, and infrastructure upgrades.
Further, the carrier said incremental import gains from China's restrictions on waste products and “dynamic” trade relations with the United States have supported India's export-import growth.
“Evolving external bilateral trade dynamics, coupled with an increasingly robust domestic trade environment, is enabling India to position itself as among the most pursued global destinations for foreign investments,” Steve Felder, Maersk’s managing director for South Asia, said.
Felder also said India’s renewed efforts toward closer economic/strategic ties with the Association of Southeast Asian Nations and its digitization programs — intended to eliminate trade barriers — will act as a catalyst for export-import growth in the months ahead.
Further, the report particularly highlighted a strong uptick in India’s automotive trade, with the United States emerging as one of the top export markets for domestic automakers. “India is emerging as an automobile export hub piggybacking on factors such as skilled resources, labor cost, quality of automotive manufacturing, and engineering," Felder stated. “The government’s focus on improving port infrastructure would further contribute to its automobile export competitiveness.”
Maersk also said India’s economy expanded by a robust 7.8 percent in the first quarter, as the effects of supply chain disruption caused by regulatory changes — such as demonitization in November 2016, and the goods and services tax rollout in July 2017 — largely tapered and normal trade sentiment returned to the market.
“The weaker [Indian] rupee and supportive government policies have helped Indian exporters to step up export orders, especially in the current dynamic trade environment,” Felder added.
North India - The survey found that North India essentially led that growth — with exports from the region jumping 13 percent and imports increasing substantially — and as a result, that market had the highest growth rate among all four regions in the country: 23 percent.
However, Ajit Venkataraman, APM Terminals’ managing director for South Asia, said India's inadequate infrastructure continues to be a major challenge for trade growth, which impacts reefer trade the most, given the handling complexities involved for that cargo.
“Development of cold chain infrastructure near the source of produce/catch combined with washing, segregation, and packaging in the same location, and transportation by temperature-controlled trucks, ensures a seamless flow of cargo through the supply chain,” Venkataraman said. “Such positioning will help improve the shelf life and cargo quality. It will also help reduce wastage. This is an untapped potential in the cold chain segment.”
As India’s reefer trade expands at a rapid pace, powered by its burgeoning middle class and expanding retail sector, Maersk has lately shown a keener interest in seamless, end-to-end cold chain logistics services to/from the emerging market.
To that end, the group believes further investment in “multi-commodity” storage infrastructure for export/import and domestic perishable goods handling will prove to be a viable, attractive bet to position itself on a stronger footing in the fast-growing economy.