India’s EXIM container trade volumes have grown by 7% in the first quarter of 2017 as compared to 10% in the same period last year. The slowdown has been due to a short-term decline in imports. While the container export volumes have registered a growth of 8% in Q1, same as the year before, import growth volumes declined to 5% against 13% in Q1 2016.
“This dip in import growth was due to piling up of inventory in the market post demonetisation and lack of clarity around Good and Service Tax. It is noteworthy that despite the looming threat of the current geopolitical environment worldwide on global trade, India has been able to maintain its growth trajectory.” Franck Dedenis, Head of West
Central Asia Trades.
The country’s growth performance has indeed been stronger than global trade, which in the past two quarters has increased to around 4-5%, driven by improvements in exports to regions such as Far East, North America and Latin America.
EXPORTS FROM INDIA OUTPACE IMPORTS
TRADE WITH EUROPE REMAINED FLAT
“Traditionally, United Kingdom is India’s largest export market in the region. However, a spending binge in the holiday season last year followed by rising prices post Brexit and news of France potentially cutting off ties with EU have affected consumerism negatively in the UK which has resulted in this drop. Additionally, the appreciation of the rupee against the euro has adversely impacted India's exports to the EU bloc.” Franck Dedenis, Head of West Central Asia Trades.
On the matter of imports from Europe, however, this has remained flat as against an 8% growth in 2016.
Adds Dedenis “The time taken to revive the economy after demonetisation in Q4 of 2016, and the uncertainty around implications of GST in Q1 2017 led to conservative buying patterns in India which are the main reasons for the drop in demand and hence drop in imports.”
BEEF, AIMING FOR THE TOP
Indian refrigerated cargo has been growing consistently with the demand for commodities like vegetables, meats and sea food on the rise. Infact, India has consolidated its top spot as the largest exporter of beef to Vietnam. “Although, Vietnam is the biggest buyer of Indian beef, it is just a destination market and from Vietnam Indian beef finds its way into China where the consumption is very high. Lower prices, along with the proximity to key markets in Southeast Asia and West Asia, gives a huge competitive edge to Indian buffalo meat exports”, avers Dedenis. He adds, “To stay ahead in technological innovation in refrigerated containers, Maersk Line recently became the first shipper to invest in Star Cool reefers by Maersk Container Industry (MCI) which will help power cold chain transparency and raise the Industry standards in the segment.”
IMPACT OF DEMONETIZATION AND UPCOMING GST ROLLOUT ON IMPORTS
Imports of products such as furniture, electronics and automobiles from China, United States and Germany have been hit by negative growth owing to evolving economic reforms.
“These commodities are cash sensitive and have been impacted by demonetisation, effects of which were felt in the first quarter of the year. In fact in some cases inventory from the previous quarter also trickled into the first quarter of this year. In addition to that, with GST rollout around the corner, a lot of people have taken a wait and watch approach towards making high-end purchases on certain consumer products,” points Dedenis.
Domestic reforms have slowed down India’s trade momentarily, thereby weakening domestic demand. However, A.P. Moller – Maersk expects Indian EXIM trade to pick up pace in the next quarter.
Policies such as GST are taking final shape and the global economic outlook for 2017 is offering favourable prospects. According to the World Trade Organisation (WTO) the value of goods shipped around the globe is expected to grow by around 2-4% in 2017, up from just 1-3% in 2016.
“India’s EXIM trade forecast remains strong and we expect growth in imports in Q2 as the effects of demonetisation are expected to fade away. The country is also expected to benefit from the predicted improvement in global trade. But these prospects come with a caveat; the recovery will be much slower if protectionist policies and restrictions on imports persist.” says Dedenis.
Container trade growth signifies an overall improvement in the global economy as compared to 2016. In the past two quarters, global demand picked up by around 4-5%, driven by improvements in most regions, especially Far East, North America and Latin America imports.
A.P. Moller – Maersk expects global container trade to grow by 2-4% in 2017. Imports in Asia and the US will lead the trend, supported by a reversion of past year’s developments in Latin America and later in Africa.
Source: Press ReleasePrevious Next