Indices tip India to light up logistics in 2018

Indices tip India to light up logistics in 2018

Bollore Ports' Tuticorin Terminal is in one of India's 12 major ports. Phoro credit: Bollore Ports

India has been labeled as a leading economic star of the future and a top logistics investment destination by two trade indices as the country builds on growing imports and exports and adapts to sweeping goods and services tax reform.

Agility’s annual Emerging Markets Index and the DHL Global Trade Barometer, both released today, point to a country with a renewed sense of purpose and a determination to emerge from the shadow if its giant neighbour, China. A survey of 500 logistics industry executives by Agility found that India was the most attractive emerging market for investment over the next five years, while DHL’s report assigned India the highest growth indices of seven countries assessed.

Agility Global Integrated Logistics CEO Essa Al-Saleh said there was a huge amount of investment being made in India’s infrastructure to support growing trade. As the country adapts to the GST that was rolled out on July 1, 2017, trading will be simplified and business growth stimulated.

“Given the size of the economy itself, the potential is tremendous. Trade has been robust in 2017 and will continue to grow,” he said.

John Manners-Bell, chief executive of Transport Intelligence that partners with Agility to produce the Emerging Markets Index, said the GST implementation will settle in and provide huge opportunity for manufacturers and retailers. GST has replaced existing multiple cascading taxes levied by the central and state government with a unified tax that is expected to benefit the economy.

“A combination of government reforms and new ideas and innovation in the marketplace will provide opportunities for the next few years,” Manners-Bell said.

The positive projections can be seen in data from JOC.com’s parent company IHS Markit that expects India to grow its GDP by 7.4 percent this year, an acceleration from 6.4 percent growth in 2017. It is the sixth-best forecast of all nations in 2018, and the highest of major developing  countries. Indian GDP growth is expected to continue accelerating into 2019, with 7.7 percent growth that year, before moderating to 7.6 percent in 2020.

India recorded solid improvement in both merchandise exports and imports in 2017 after at least two years (and four for imports) of contraction, IHS Markit data shows. With imports recovering faster than exports, the record-low trade deficits registered in 2015 and 2016 have come to an end. In value terms, both imports and exports are forecast to rise by double digits through 2020.

Data from Drewry shows that after 11 months of 2017, Indian port throughput was up by about 9 percent to 12.15 million TEU, based on a sample of nine major ports that provide monthly figures. To cope with growing container volume, India’s Ministry of Shipping is making efforts to improve the operational efficiency of its ports and increase traffic while better utilizing the country’s river system and inland waterways.

China is India's largest trading partner by value, with India importing $59.1 billion through October, an increase of 16.2 percent year-over-year, according to IHS Markit data. China is the number-four destination for Indian exports, with $9.7 billion through October, an increase of 44.7 percent.

George Lawson, managing director of DHL Global Forwarding India, said India’s heavy investment in infrastructure would support continued growth. “India's economy has built up terrific momentum in recent times: since 2008, its GDP has risen every single year to $2.44 trillion last year, more than double the levels of a decade ago,” he said.

According to the DHL Global Trade Barometer, developed jointly by DHL and Accenture, businesses in India can expect ocean trade to further improve on already-high levels, largely thanks to demand for commodities and industrial materials from overseas. Air freight demand is projected to remain stable at its current highs, sustained by growth in machinery and technology imports. Both India's air and ocean freight forecasts proved stronger than those of any other country in the Global Trade Barometer, in large part due to every major sector making a positive contribution to the country's trade.

"We're expecting strong performance in not just one or two sectors, but across the entire Indian economy," said Lawson. "That implies two things: Indian enterprises of all stripes are not only growing fast, but becoming more and more globally connected in how they do business.”

The Agility survey found that emerging markets growth prospects were brighter than they have been in years, with logistics industry executives believing small and medium-sized companies were the most likely to benefit from fresh acceleration of those economies.

“People on the logistics industry are quite upbeat about the year ahead in the emerging markets,” said Al-Saleh. “The past few years, the survey respondents have been gloomy but this year two-thirds of respondents concur with the rosy outlook and expanded growth in 2018.

“The logistics industry’s optimism comes as a relief. A year ago, there was great concern that populism in the United States and Europe were going to hurt trade and damage emerging markets economies. In 2018, we are looking at renewed growth overall, although it is likely to be very uneven from region to region and country to country.”

Agility’s index is in its ninth year and ranks 50 emerging markets countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers, and distributors. Some of the highlights from the 2018 index include China and India topping the 2018 rankings and putting more distance between themselves and the United Arab Emirates that was at No. 3 in the survey. Russia climbed three spots to No. 7, an indication that its economy was stabilizing after years of low energy prices, capital flight and US economic sanctions, while Brazil, struggling to emerge from political turmoil and its worst recession in a century, slipped two places to No. 9.


The logistics executives polled could not agree on the future of the North American Free Trade Agreement, which has come under intense criticism from President Donald Trump’s administration. The US, Mexico, and Canada are in negotiations aimed at updating the agreement, and logistics executives were sharply split about whether a new pact would help Mexico (24.3 percent), hurt Mexico (21.8 percent), or leave trade unchanged (25.7 percent).

Manners-Bell said emerging markets enjoyed favourable market conditions in 2017 with trade growth the healthiest in years, but tempered the optimism with a cautionary note. “There are many storylines yet to fully unfold, such as China’s debt, the renegotiation of NAFTA and ongoing political and economic transition in the Middle East. While the going looks good for now, there are numerous challenges on the horizon,” he warned.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler