India's box volume growth is impacted by global volatility: Maersk report
DANISH shipping giant Maersk foresees a bumpy road ahead for shipping lines that have ramped up their service offerings to take advantage of reforms and infrastructure developments in India, according to the company's regional trade report that contains a bearish outlook for India's container shipping sector
DANISH shipping giant Maersk foresees a bumpy road ahead for shipping lines that have ramped up their service offerings to take advantage of reforms and infrastructure developments in India, according to the company's regional trade report that contains a bearish outlook for India's container shipping sector.
India's container port throughput slowed substantially during the second quarter, rising only one per cent compared with the nine per cent growth recorded during the same period last year, the Maersk report noted.
The lacklustre sentiment eclipses a general bullish outlook the country has presented in recent years, with Maersk being a key proponent of that 'high-hopes' picture. The ocean liner accounts for one-fifth of India's containerised freight transportation, reported IHS Media.
Maersk said mounting global trade tensions and a variety of domestic factors, including rural consumer distress, tightening liquidity and a slowdown in key manufacturing areas, have together led to the growth deceleration.
'Amidst increasing global volatility, a slower local economy and the US' withdrawal of preferential access for certain Indian products, India's import-export trade is expected to continue to face headwinds in the coming months,' Maersk's South Asia managing director Steve Felder said in a statement.
On the other hand, the current downwards trend can be short-lived provided the Indian government positions itself as a brighter investment spot in comparison to other Asian markets as multinational conglomerates search for alternative manufacturing locations beyond China amid the US-China trade dispute.
Notwithstanding the headwinds seen at present, Maersk remains optimistic about India's long-term growth prospects. It said the Indian economy may start to see some positivity as a result of new proactive measures that the government has introduced, including a more robust export promotion policy.
'There is immense opportunity for India to position itself as a beneficiary of the global trade tensions, provided it can attract more sourcing,' said Mr Felder. 'In its second term now, the (Narendra Modi) government is extremely focused on continuing to enhance ease of doing business and reduce overall logistics costs for the industry through the new proposed draft National Logistics Policy, all of which is expected to benefit trade.'
On a positive note, Maersk's report found that India's overall container trade with North America and Europe rose in the second quarter by 14 per cent and 10 per cent, respectively. Even more significant is the fact that the growth rate for exports to North America doubled from a year earlier, to 15 per cent, driven mainly by north India, with relatively lower contributions from the other regions.
On the downside, two-way trade between India and China, which reached a record high last year, shrunk considerably during the second quarter. As a result, India's outbound trade to China declined by 20 per cent, with textiles, apparel, plastic and rubber products hardest hit, Maersk said. China's imports into India were down 22 per cent during the second quarter.
Maersk also said India's ongoing efforts to ease trade issues with the United States are noteworthy, with the reinstatement of Generalised System of Preferences (GSP) - under which an estimated US$5.6 billion worth of Indian exports to the US had long enjoyed zero-duty benefits - being the most contentious issue.
Maersk also praised India's continuing technological advancements in logistics and infrastructure both on the waterside and landside, with a long-term goal of establishing an integrated, seamless supply chain environment.