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India’s container trade recovering sequentially, still lower than last year: Maersk

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India’s containerised trade is recovering sequentially although it continues to contract compared to last year, said a note from AP Moller-Maersk. “During Q3 of 2020 (July to September), the Indian containerised trade contracted by about 8% as compared to the same period last year. However, compared to Q2 of 2020, there has been a 31% increase in volumes, indicating that trade is on a path of recovery. Exports out of India are up by 14% over Q3 of last year while they are 47% higher than Q2 of 2020. Imports are however 28% lower than Q3 of 2019, but have recovered by more than 30% from Q2 2020,” said Maersk in the note.

The COVID-19 pandemic put the world through unprecedented challenges, leading businesses to reimagine their operations. The pandemic also highlighted the significance of global trade and the interdependency of nations, bringing to fore the importance of logistics sector as essential for the continued delivery of critical supplies in time of crisis, and for enabling economic recovery.

“Changing patterns in retail behaviours are reshaping the supply chain trends to an extraordinary extent, leading to a growing focus on risk mitigation and resilience-building, while dealing with threats of growing trade protectionism,” said Steve Felder, CEO of Maersk South Asia. The rising demand for Indian textiles and apparels, especially to the North American markets, has driven “tremendous growth” in exports in the past quarter, said the note.

Textiles and apparels contribute a quarter of exports to North America, and these volumes delivered a growth of 10% over the same quarter last year. The exports of textiles and apparels to the Mediterranean markets also grew by 10%. Other commodities that witnessed growth in exports include tile, stone and glass to the North European region, and seeds, beans, cereal and flour to the Middle East and Mediterranean countries.

Imports of commodities such as paper, metal, appliances and kitchenware have increased since the last quarter, though they are far below the levels in the same period last year. Volumes of appliances and kitchenware coming from China are almost half of what they were last year in the same quarter but are showing the growth of 25% over Q2 2020. Imports of paper from the USA show a similar trend, being 40% lower than last year’s third quarter, but with a growth of over 25% from the last quarter, this year.

As trade continues to navigate foggy conditions, the most recent trends indicate that an overall recovery of import-export trade in India will begin in the first half of 2021, said Maersk in the report. Felder said, China + 1 sourcing strategies (having additional sourcing partners) are benefitting South East Asian countries, “and there is much potential for India to take advantage of this shift”.

Key factors favouring this development are the government’s initiatives to attract investments, focus on developing port and landside infrastructure, technology adoption and automation, lower labour cost and availability of raw materials, he said. “An impetus towards long term policy reforms should encourage local manufacturing, and developing bilateral and multilateral trade partnerships hold the potential to propel India further, and support its economic growth,” he added.

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