IS IT A YEAR OF re­vivAl?

Cargo Talk - - Cover Story -

Af­ter fac­ing vo­latil­ity in do­mes­tic and in­ter­na­tional mar­kets be­cause of the un­prece­dented de­pre­ci­a­tion of In­dian ru­pee and slug­gish de­mand from the in­ter­na­tional mar­ket in 2013; the cargo and lo­gis­tics in­dus­try in In­dia is ex­pect­ing a re­vival in 2014, de­pend­ing on the early sign of re­cov­ery. Car­gotalk spoke to lead­ing trade prac­ti­tion­ers to present the ground re­al­ity.

in­dian ex­ports, which con­trib­ute up to 70 per cent of the growth in GDP in July-Sept quar­ter af­ter clock­ing four months of dou­ble-digit growth, posted a 5.9 per cent in­crease in Novem­ber, 2013. A close anal­y­sis of the over­all ex­ports and prod­uct pro­file sug­gest that In­dian ex­porters are on track to not only re­alise the ex­port tar­get, but also ex­ceed it by US$ 10-15 bil­lion. In the mean­while, gems & jew­ellery sec­tor bounced back show­ing over 20 per cent growth in Oc­to­ber.

A Sak­thivel, Chair­man AEPC, has ex­pressed sat­is­fac­tion over the growth in ex­port for the month of Novem­ber 2013. “The garment ex­ports have been reg­is­ter­ing a pos­i­tive growth since last 8 months. The growth of RMG for the month of Novem­ber 2013 is 21.29 per cent, reg­is­ter­ing to the tune of US$ 1,051 mil­lion; the cu­mu­la­tive growth of 16.15 per cent for April-Novem­ber 2013,” he said.

Ac­cord­ing to him, ap­parel ex­porters’ con­stant ef­forts to work on tech­nol­ogy upgra­da­tion, up-skilling, in­no­va­tion in terms of prod­uct and de­sign, along with strin­gent com­pli­ance prac­tices has yielded this kind of growth. AEPC has or­gan­ised 24 shows across the world in 2013, and re­sponses from buy­ers were very en­cour­ag­ing. “We have to lever­age our strengths of raw ma­te­rial, and de­sign, to grab the space left open by China. We can do much bet­ter if gov­ern­ment ac­cepts our de­mand of a sep­a­rate chap­ter for pre/ post pack­ing credit rate of 7.5 per cent,” Sak­thivel main­tained.

How­ever, said Rafeeque Ahmed, Pres­i­dent of the Fed­er­a­tion of In­dian Ex­port Or­gan­i­sa­tions ( FIEO), “The gen­eral fore­cast is that 2014 will be a bet­ter year than this year. How­ever, the global sit­u­a­tion is still very fluid. There are a few green shoots here and there, but the sit­u­a­tion will con­tinue to be un­cer­tain in 2014.” He pointed out that US has posted re­cov­ery with un­em­ploy­ment rate of less than 7 per cent and in­crease in con­sumer spend­ing, but hous­ing mar­ket and busi­ness spend­ing have slowed. EU is still try­ing to come out of the woods and its GDP grew by 0.1 per cent in third quar­ter over pre­vi­ous quar­ter. “We are con­cerned with the in­sta­bil­ity in Mid­dle-East, North Africa ex­pro­pri­a­tion and le­gal dis­pute with many Gov­ern­ments of Latin Amer­ica. The for­eign ex­change of Ar­gentina has come down to US$ 30 bil­lion and Venezuela has im­posed many re­stric­tions on cur­rent and cap­i­tal ac­counts,” he ob­served.

In his opin­ion, the ma­jor chal­lenge lies at home where man­u­fac­tur­ing is not back on track. Af­ter four months of mod­est IIP growth, the coun­try wit­nessed neg­a­tive growth in Oc­to­ber. “I would like to re­it­er­ate that ex­ports can­not be sus­tained even on medium-term ba­sis, un­less man­u­fac­tur­ing backs ex­ports. There is need to push man­u­fac­tur­ing by aug­ment­ing in­vest­ment in the sec­tor both for mod­erni­sa­tion and ex­pan­sion. The new man­u­fac­tur­ing pol­icy and new In­vest­ment & Man­u­fac­tur­ing Zone should be given thrust to achieve this ob­jec­tive,” the FIEO Pres­i­dent main­tained.

He also pointed out that the trans­ac­tion costs should be re­duced through on­go­ing im­prove­ments. The Trade Fa­cil­i­ta­tion Agenda would pro­vide In­dian ex­porters an op­por­tu­nity to quickly ad­dress the trans­ac­tion cost is­sue im­part­ing com­pet­i­tive­ness to our ex­ports.

LSP Per­spec­tive

Ac­cord­ing to Vikram Man­sukhani, Na­tional Op­er­a­tions Head, DIESL; the macro eco­nomic per­for­mance so far in FY1314 has by and large been one of gloom, tight­en­ing of purse-strings and look­ing at ev­ery ex­pense through a mi­cro­scope. “3PL ser­vice providers and lo­gis­tics play­ers at large have been in front of this bat­ter­ing ram and have had to find in­ge­nious ways of deal­ing with spi­ral­ing in­put costs in terms of man­power, land, rentals and in­fra­struc­ture,” he said. Ac­cord­ing to him, the ma­jor­ity of the larger 3PL op­er­a­tors have par­tic­i­pated in bids this year, which to a large ex­tent have just been dip­sticks by SCM groups of var­i­ous or­ga­ni­za­tions, to check if their cur­rent rates are com­pet­i­tive. Cargo agents still seem to rule the roost with their lo­cal “ju­gaad” ca­pa­bil­i­ties which are per­ceived as re­spon­sive­ness by cus­tomers.

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