Globally the excess capacity (supply) and dropping trade volumes (demand), has resulted in continual erosion of freight rates on almost all long and short haul trades.
While there may be short term improvements (seasonal) on freight rates, in general, we do not anticipate any marked or sustainable improvement, in freight rates, or capacity utilization in near future, i.e. for 2018 & 2019.
The Indian EXIM trade has different dynamics, compared to global trade, because of infrastructural bottlenecks, coupled with significant seasonal variations in demand for agro commodities (both exports and imports).
The exports and imports out of /into India are subject to constant shifting of the goal posts (by way of frequent changes in government directives, and policies), which create a lot of uncertainty, in creating any long term strategies.
SS: Trade wars have broken out between United States and China, What will be the impact on international trade and shipping? Will certain shipping routes become premier routes and some others uneconomic? Protectionism is gaining ground in free market areas in the name of Nation first. How do you see these global trends impacting the international trade?
CAS: The current USA Government and administration various steps, by way of imposing huge import tariffs, on friendly as well as not so friendly nations across the world, have begun to cause huge disruption to currently well established trade patterns. This has also caused a lot of uncertainties in the short & medium term.
SS:Logistics remains a nightmare for the industry in India as goods from China and FarEastern countries bound for Hyderabad or Nagpur find their way through JNPT and Mundra ports while it makes economic sense to handle them in East coast ports. There are both time and cost over runs as the goods move to west coast ports. How do you reverse these trends and contain Logistics cost?
There are 2 aspects to this:
1. Shipping companies find it cheaper to drop off imports bound for multiple interior
locations, at NHV( orMundra), from a time, cost and efficiency perspective.
2. Landside infrastructure for inland haulage - rail and road networks are much better developed on the West Coast than the East Coast.
3. Therefore, with current infrastructure, the East coast ports can only cater to ICD's within a 400-500 kms range and not beyond.
SS: What needs to be done to improve the railway infrastructure between National capital region and Nagpur with ports in the East Coast?
CAS: In my personal view, it is futile exercise because East coast ports are not really on the global EAST-WEST trade lanes and most shipping lines have to deviate from principal trade lanes to call the South and East coast ports, of India. The Current EXIM volumes of the South and East coast ports, do not justify calls by more major shipping lines.
SS: Ports in the West Coast especially Mundra, JNPT and Kandla are over worked while the infrastructure created in the east coast ports from Vizag to Tuticorin are under-utilized or working at 50 per cent of their capacity. Railways had promised a dedicated railway corridor between Delhi and Chennai and Mumbai and Chennai in parliament ten years ago but they still remain on paper. Will creation of such corridors improve the situation or you have any other suggestion in mind.
CAS: The cargo availability in the hinterland of the North West INDIAN ports, is huge, where-as the same cannot be said of the hinterland of the South and Eastern INDIAN ports. The amount of available EXIM cargo in SE INDIA vis-à-vis available vessel space, tonnage deployed is already over tonnaged, thus making a dedicated freight corridor is uneconomical, at this point in time, without developing the manufacturing infrastructure along the corridor.
(To be continued)