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India Shipping Report Q1 2011
Business Monitor International, Dec 2010, Pages: 106
Business Monitor International's India Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on India's freight transportation industry.
Going into 2011 the Indian macroeconomic environment will remain supportive for the freight transport sector. In 2010 the local economy recovered strongly from the previous year's global recession, with manufacturing and trade service components of GDP leading the way. Fears of a poor farming performance due to a rainfall deficit receded, and the agricultural sector registered satisfactory growth levels. For 2011 BMI sees continued growth with the risks on the downside owing to the effect of monetary tightening at home (the Reserve Bank of India, RBI has been relatively hawkish in its interest rate policy) and the slowdown in external demand because lower growth in the US and the eurozone.
BMI is estimating 7.8% GDP growth in 2010/11 (the fiscal year ending March 2011), followed by 7.8% again in 2011/12. In the medium term (the five years to 2015/16) we expect GDP growth to average a healthy 8% per annum. At this level of growth, freight demand for a number of key traded bulk commodities (such as coal, iron ore and agricultural foodstuffs) will expand at double-digit rates.
At the Port of Jawaharlal Nehru (POJN), total tonnage handled will increase by an estimated 6.4% in 2011 to 66.918mn tonnes, an acceleration on the 3.6% growth experienced in 2010. We expect tonnage growth in this key Indian report to rise back to double digits for the rest of our five-year forecast period, running to 2015. At the Port of Chennai (POC), another member of the country's group of top-12 maritime facilities, we are expecting growth of 6.3% in 2011 to 67.397mn tonnes, after 3.9% expansion in 2009.
Box traffic at POJN in 2010 expanded by a slow 3.8% but in 2011 will accelerate slightly with 5.9% growth to 4.467mn 20-foot equivalent units (TEUs). Box traffic typically follows the curve of general trade, but is more volatile, as containerised trade is usually more representative of income-sensitive consumer goods. At POC container business will follow a similar trend, although with stronger growth in 2011 (+11.0% to 1.393mn TEUs).
BMI's view is that looking forward the engine of Indian growth will be its internal consumer market, driven by an expanding middle class and rising standards of living. However, that is not inconsistent with a dynamic foreign trade performance. In real terms foreign trade slumped by 16.5% during the global recession year of 2009, recovered quite vigorously in 2010 with an estimated growth rate of 12.3%, and is forecast to advance strongly once more in 2011 with growth of 12.1%. In nominal terms in 2011 we seem imports growing by 14.7% to US$417.5bn, while exports will grow by 15.4% to US$344.1bn. India is running a significant balance of trade deficit, and is likely to continue doing so over the next five years.
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