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Issue 5 2012


///INDIAN SUBCONTINENT


A potential powerhouse of the global economy


The old tourist cliché about the Subcontinent being a blend of the ancient and modern is equally true of the region’s freight industry. There may be dual-carriageways and container ports but there are also bullock carts and bicycle rickshaws – and the lights have a habit of going out when you least expect it. But the countries of the region are slowly getting to grips with the global economy – and a market of well over a billion people simply cannot be ignored.


Big numbers – but do they add up to a trade boom?


The Indian subcontinent, home to 1.2, or 1.5 billion people – no one is quite sure as censuses are out of date as soon as they are produced – could be the next big thing in global trade. With a population not too far off China’s, it will only be a matter of time before India emerges as one of the world’s top four or five trading nations – or will it? India, while growing as a


producer, is not by any means a second China, at least in terms of the physical volume of goods traded. As consultant Ti’s latest report, Global Freight Forwarding 2012 – published on 12 July – points out, sea trade from India to the EU is among the world top ten sea trade lanes at 11m tonnes, but it is dwarfed by China’s 50mt. In fact, India ranks ninth among Ti’s top ten world seafreight trade lanes, somewhat ahead of Egypt-EU (8mt) but behind South Africa-EU’s 11mt. For airfreight, India to the EU


is though one of the top three global trade lanes at


212,000


tonnes, though again way behind the top two – China to EU and China to US – which are, respectively 1.1mt and 977,000t respectively. India to the US is the world’s sixth-busiest airfreight trade lane, at 124,000t. Historically, India’s economic


policy was based on self-reliance and what economists call import substitution (which can be


summarised as: ‘Why import it, if we can make it ourselves?’) As a spokesman for leading carrier Luſthansa Cargo puts it, India has opened up to the outside world at a later stage than China, and its economic policy is still


far


less export-orientated. And quite a lot of the country’s expertise is in intangibles like soſtware or telesales, rather than the manufacture of physical goods. The theme of self reliance


extends to areas like retailing. The


Indian Government has


been quite hesitant in allowing the likes of Tesco to set up shop there, and there have been frequent and oſten quite bewildering changes of policy in this respect. There is still a question-mark


over much of its infrastructure, which can best be described as patchy - as the millions of people who endured the massive power cut that hit the north of India in late July will testify. India does have some very modern airports, but also some of the world’s oldest and most hemmed-in. It has built a lot of seaports lately, although seemingly not enough to cope with demand. Roads and railways are better, though always in danger of being overwhelmed by the sheer crush of people and goods. Still, there is no doubt that


the country will become a global powerhouse and that its


trade with the outside world will increase still further - the question is, how quickly. Before complaining at the slow rate of progress, it is important to take stock of the advances that have been made, in many cases almost from a standing-start. In 1991, there were a mere 120,000 cars on India’s roads, today the figure is 3 million which is still very low in terms of cars-per-head of population, but nonetheless impressive for a country whose international symbol is still the bullock-cart rather than the BMW. And as one spokesman put it, the number of Indian middle class people grows by the equivalent of the population of Belgium, every year. India’s neighbours are smaller


but are still substantial countries by any standards and are increasingly finding a role in the


sorts of areas, particularly garment producing, that have been pushed out of the bigger country by rising labour costs. Pakistan is seen as high risk, mainly because of events in its far-flung fringes, while Sri Lanka does at last seem to be emerging from the shadow of its once seemingly endless endless civil war. A small market, it is however attracting the attention of multinational manufacturers and it would only take a couple of major


investment decisions


to transform the situation there. The island has also been touted as a suitable location for high tech industry, in much the same way that the Penang region of Malaysia did about 15 years ago. Perhaps prospects are brightest


in Bangladesh, which has carved itself a niche as the low-cost manufacturing country in the region.


Burma back in business


With the first UK trade mission for many years in July, Burma (Myanmar) is back on the freight industry’s agenda. EU sanctions against the Asian country were lifted in April and a trade mission led by Lord Marland, Chairman of UK Trade & Investment’s Business Ambassadors’ Group became the first such visit since the ending of the house arrest of opposition leader, Aung San Suu Kyi. UK Export Finance has also re-opened short-term insurance cover to Burma. The shipping industry, too has


geared up for the revival of trading links. OOCL and X-Press Feeders have started a new joint feeder service between Yangon (Rangoon) to Singapore and Port Klang using two ships of around 1,000teu. Evergreen Line is to start a new


Straits-Yangon (Myanmar) service with the the first sailing scheduled to depart Singapore on 21 August. Port rotation will be Singapore – Yangon - Port Klang- Singapore and transit time will be about 11-12 days transit time. Evergreen will exchange slots with with Advance Container Lines on its


Yangon routes serving Singapore and Port Klang. Rickmers-Linie


is also once


again able to offer calls at Myanmar. Initially, the heavylift shipping line is serving the main port, Yangon, on an inducement as part of its Indian service, catering for cargo of up to 800 tonnes. Gerhard Janssen, Rickmers-Linie’s


director of sales and marketing, said that Myanmar’s infrastructure will require significant improvements to match other major cities in Southeast Asia: “We anticipate longer term that this issue will be addressed. Free of sanctions, Myanmar’s economy should develop quickly and an increase in construction activity is inevitable. That will drive demand for breakbulk and project cargo.” Myanmar’s new capital


Naypyidaw, just over 300km north of Yangon, is said to be one of the world’s ten fastest-growing cities. Burma has also been talking to


foreign government,s including those of Thailand and Italy on on developing a $8.6 billion port and adjacent industrial zone at Dawei.


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