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UPDATE - INDIA SUB-CONTINENT (ISC) REGION - OCT 2010
Safmarine's Indian Sub-Continent Region includes the following countries; India, Bangladesh, Sri Lanka, Pakistan, Afghanistan, Nepal and the Maldives.
Note: This update on the ISC region was provided by Stephen Knight, the executive responsible for the West and Central Asia Region until the end of September 2010. The appointment of a new regional executive for the Safmarine ISC Region - Bimal Kanal - was announced on October 8. (See press release category for details). Stephen Knight is, as of October 2010, the Regional Executive for the Safmarine MENA (Middle East North Africa) region.
Safmarine in India - overview
- Safmarine has been a part of the Indian landscape since the late 1980s with CMB-T (which was acquired by Safmarine in 1996) being one of the first shipping lines to call at Nhava Sheva port when it opened for business in 1989.
- India is the largest economy in the Indian Sub-Continent Region and is one of the Safmarine's top three importing and exporting countries globally.
- Safmarine is well represented across India with nine own offices and five sub-agency offices throughout India. The company employs more than 95 staff in the India and Sri Lanka offices.
What has business been like for Safmarine in the India Sub-Continent region in 2010? Pse provide a high-level overview.
- The business environment in 2010 has been stronger than forecast, with high ship utilisation and freight rates increasing to a more sustainable levels than those seen in 2009.
- GDP growth remains strong in India at 8.8%. This, along with increasing populations and purchasing power parity (PPP) in the Indian Sub Continent, are key drivers of growth.
- The largest markets for Safmarine are Europe and North America however the Far East, the Arabian Persian Gulf and Africa have become more important markets in recent years with the increased volumes of machinery, consumer goods, textiles, foodstuffs and automotive products moving from India to Africa being particularly encouraging.
- From a Safmarine perspective, India and Pakistan are more export-driven although the market is generally balanced from an export/import perspective. These two countries are diversified markets and the business is essentially forwarder driven. (India is the largest market in the region, followed by Pakistan).
- There is a wide range of exports moving from the region including commodities such as tea and rubber, automotive parts, pharmaceuticals, garments and textiles.
- The import market is also very diversified with some of the major items imported being electronics, garments, foodstuffs and base materials such as paper and metal.
- We see positive future potential for Bangladesh, where exports of garments are growing at a fast pace. This is due to the major retailers in Europe and North America increasing sourcing from the country as the production costs are lower than other more traditional countries that produce garments.
How do/does container volumes/business to date compare with 2009 - exports and imports in to the region as a whole?
- Overall the India Sub Continent region is doing well on both exports and imports and we expect the growth to continue throughout 2010.
- Volumes in the first half of the year were higher than expected and showed a sharp increase compared with the same period for 2009.
- Exports have been strong to the consumer markets in Europe and North America as well as our core Africa markets. Imports have also increased from most markets with North America and the Far East showing the highest growth.
- Volume wise, 2010 started strongly and our main focus is to increase the freight rates back to a sustainable levels.
What is the status on rates into and out of India Sub-Continent Region? How do rates compare to 2010 and is there still a need to increase them?
The rates in 2009 were loss giving and unsustainable. They started to increase in the fourth quarter and that trend has continued in 2010 across most of the trades. However, freight rates in the India market - the biggest market in the region - remain a concern and there is a need for them to increase further in order for shipping lines to achieve a sustainable return on the assets that are deployed.
It is also important, for future growth and investment in India, that rate levels are economically sustainable. India is predicted to become one of the world's major economies and for the country to achieve success, it needs to have a stable shipping environment. If shipping lines do not consider it economically viable to serve this market (because of the low rates) this will result in fewer services and choice for Indian shippers - and this would hamper India's progress.
Liner shipping is heavily asset-based so it is important for the Indian market to acknowledge the importance of paying a fair price for the services offered.
What are your expectations for the container business in India for the rest of 2010?
The first half of 2010 has been very encouraging although there is uncertainty, particularly regarding the last quarter of 2010 and 2011. We need to remain vigilant.
What is Safmarine's business focus for the India Sub-Continent Region?
Our main focus is on our relationships with customers and the solutions we are able to offer them. We also pay high attention to improving our processes and reducing costs to ensure we improving our cost competitiveness.
The Indian Sub-Continent is a key area for Safmarine and we are continuously monitoring the market and reviewing how we can improve our service offerings. We are also focusing on how we can continue to improve on customer service and make it as easy as possible for our customers to do business with us.
What comments do you have on infrastructural developments in this region?
Globally, India is becoming more important and it is key that the country continues to invest in infrastructure to allow capacity to flow more freely into ports and inland points of origin and destination.
It is no secret that India's rapid growth has put pressure on infrastructure and while significant investments have been made, more needs to be done.
The A.P Moller-Maersk Group - Safmarine's parent company - has supported India's infrastructure development in the past via public-private partnerships and further investments will remain a consideration.
Has congestion been an issue for your region? If so, which ports have been affected?
Congestion has not been too much of an issue this year with the exception of the recent short term problems in Mumbai caused by a vessel collision.
Which are the highest performing sectors in your region and what are the reasons for this?
The automotive, pharmaceuticals and garments industries are performing particularly well.
Which countries are this region's key markets?
- As an Africa specialist, Safmarine has also been active in growing the trade between the Indian Sub Continent Region and Africa.
-The trades to Europe, Africa and the America are, from a Safmarine point of view, the three most important trades for this region.
Have you introduced any new services or service enhancements - if so, please provide details.
Safmarine is continually looking at how to improve our services to the Indian Subcontinent.
We currently provide a range of liner services from India to Africa, the Middle East, Europe and the USA and will continue to adjust and upgrade our service offering to meet the demands of the market.
We have re-introduced the ME3 service and in doing so, have strengthened our involvement in the Indian sub-continent/ Middle East/Mediterranean trade. More recently, we introduced slots on the Chennai Express service which offers the fastest transit times between the Far East and South East India. This service, which calls at Tanjung Pelepas, will also open up opportunities for better access to our existing shipping products to Southern Africa and the Horn of Africa, amongst others. Other enhancements have included adding a call at Bandar Abbas, Iran on our Middle East - South Africa service and the introduction of a Safmarine Asia -Gulf service which makes direct calls at Mundra.
What is the status on reefer?
Volumes for 2010 YTD are roughly in line with the same period in 2009.
The exports are loaded mainly from India and Pakistan and consist of grapes to Europe and kinos to the Arabian Persian Gulf.
Does Safmarine have any CSI projects in this region, as you do in Africa (notably, the Containers in the Community project)?
We recently reviewed our Corporate Social Investment strategy to ensure alignment with our business and those of our customers. An example for India is that we have decided to become a partner by supporting the establishment of a new maritime community centre in this region. The building of this centre is being done in partnership with one of our customers, Cargill, and the Sailors' Society. The centre will be located in the East Indian port of Kakinada (north of Chennai). Construction began in June 2010 and completion is planned for the end of 2010. The Centre will cater for needs of existing, retired, disabled seafarers and those interested in a career in the maritime industry. It also recognises the contribution made by the Indian seafaring community.
ends
Posted: 4 October; updated 8 October.
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