Slowing demand puts brakes on Indian container growth

Global economic woes due in large part to the United States-China trade war and a downturn in domestic demand because of regulatory reforms by the Indian government appear to have put a halt, at least for now, to a long streak of volume gains for Indian ports.

India’s major public ports saw combined throughput dip 2 percent in October, to 801,000 TEU from 817,000 TEU a year earlier, according to the analysis of the latest port data.

Jawaharlal Nehru Port Trust (JNPT) and Chennai Port, the two busiest public container handlers, suffered sharp year-over-year declines last month — down 5 percent to 402,000 TEU and down 13 percent to 123,000 TEU, respectively. Other relatively smaller ports in the “major grouping” took some volume cuts or saw muted growth, data showed.

The slowdown is also reflected in the growth rate at Indian ports during April-October, the first seven months of the fiscal year, which shrunk to 3 percent from 8.4 percent during the same period in 2018.

The 12 major ports collectively handle approximately 65 percent of containerized freight shipped in and out of India.

The reversal of port volume trends can upset the market competitiveness that has prompted global transport giants to upsize their investment and service offerings in India. The Indian government has also prioritized port infrastructure improvements under its flagship Sagar Mala investment program, along with a wave of logistics reform and digitization measures to meet rapidly evolving trade demands.

Thanks to those efforts, India has built sufficient container capacity — currently pegged at 27 million TEU annually, against which the country sent and received 15.2 million TEU (export-import movement) last fiscal year, according to the data. Given that context, slowing growth can only make the already-daunting supply overhang scenario at Indian ports even more serious.

Carriers still see opportunities

Notwithstanding the headwinds seen at present, ocean carriers and other transport providers continue to hold high hopes for India, with Maersk and DP World leading the chorus of optimists.

“There is immense opportunity for India to position itself as a beneficiary of the global trade tensions, provided it can attract more sourcing,” Steve Felder, Maersk’s managing director for South Asia, said in the company’s latest regional trade report.

DP World, which has six terminal concessions in India, has significantly expanded its landside capabilities in the country in recent years, as it works to transform itself into a container logistics integrator.

“We have been making significant investments in India into new assets as well as modernizing terminal operations across all ports that we are present in,” Rizwan Soomar, CEO and managing director of DP World Subcontinent, said in a statement on Tuesday, welcoming a new service addition at DP World Nhava Sheva (JNPT).  “Over the last one year, we have built a strong portfolio of integrated logistics assets, including rail freight, warehouses, container freight station, private freight station, free trade zones, cold chain logistics, and supply chain services.”

Source: JOC