The impact of the standstill caused due to the coronavirus outbreak made the Q2 a challenging one for the nation as it hit the containerised trade adversely and brought it down by 30%.
Mr Steve Felder, MD – South Asia, A.P. Moller – Maersk, in conversation with CNBC, revealed that while low consumer demand has contributed to the declined of imports, exports were making faster recovery as we move towards Q3.
He said, “Q2 was a much challenging quarter as India was hit much harder than the global market. We saw the market for containerised trade decline by around 30%. Imports were hit a bit harder than exports and the initial phases of lockdown was very difficult. But, in current picture, if we see Q3, we see containerised trade showing a V-shaped recovery. The imports are somewhat L-shaped and within the various segments in the industry, there are different trends where we have seen Ws, Ms and even horizontal Ss. I think it is very much of a mixed picture. But what is interesting is to see the improvement in exports.”
During the first unlock, Prime Minister Narendra Modi awakened the country to raise a voice for local with the slogan “Vocal for Local” and made the nation realise the upsides of Indian products. With the increase in export, it seems that the nation has taken its first step towards the PM’s call of Vocal for Local.
Speaking on the increased exports of the nation, Mr Felder informed that a very strong demand of Indian products in overall destinations of Asia was witnessed, as Asia came out of the pandemic quite a lot quicker. However, he says that as the pandemic moved towards the west, we saw the western economies shutting down and locking down and that resulted in reduced demand.
Mentioning the increased demand of Indian commodities, he said, “Now we are seeing more of a broad-based recovery in exports primarily driven by plastic and rubber. We have also seen strong demand in agro-commodity such as rice, fruits and vegetables, chemicals, pharma, textile and garments which were badly affected in Q2 and are now driven by a very strong recovery in the destination market particularly in North America and Europe.”
Furthermore, speaking on the opportunities that the country could leverage, he says, “We can leverage the intention extended by a lot of companies to diversify and future proof their supply chains and look to what extent can it be leveraged to make India a manufacturing and sourcing hub for multiple products and commodities in multiple markets.”
“We also have an opportunity in terms of reducing inland logistics, increasing rail capacity and definitely digitization has really taken off across the industry and I think we need to leverage this momentum to accelerate digital journey in logistics across the country as we move forward,” he added.
Speaking on increasing efficiency and improving logistics cost, he said, “As we know India’s logistics cost is around 14% as compared to the globe which is at 9-10%, there is certainly a lot that we could do including increasing rail capacity, fast-tracking the production of dedicated freight corridors, improving digitization and transparency and simplifying the logistics landscape.”