01/01/0001
India Trade Study Released
The Maersk Group Transport & Logistics Division, which includes APM Terminals, hosted a seminar in partnership with the Confederation of Indian Industry (CII) in New Delhi on January 19th, entitled “Stimulating India´s EXIM Growth – Reducing the Indirect Costs of Trade”. The seminar introduced the findings of an extensive study undertaken by the Maersk Group and CII on current obstacles to Indian logistics and associated trade growth.
The study found that the cost of trade in India is among the highest in the world when compared with peer countries. Indian transport and logistics costs represent 14.4% of India’s Gross Domestic Product (GDP) as compared with 8% for China. According to the report, “While there is often much debate about the direct costs of transportation and logistics, such as terminal rates, freight rates and inland transport costs, the most significant costs can be the indirect and hidden costs stemming from delays and inefficiencies. Reducing these costs is a significant source of potential savings and improved competitiveness for Indian exporters and importers, and our study enumerates the socio-economic value that could potentially be generated for India.”
Four business sectors were analyzed for the study: Textiles and Garments; Pharmaceuticals; Electronics; and Auto Components. The data indicated that India’s indirect costs of trade (including delays, road congestion and non-essential paperwork) represent as much as 38% to 47% of total transportation and logistics costs. A reduction of these extraneous costs by 10% would create the potential for up to 5% to 8% in additional exports for the country, or $5.5 billion in additional export revenue above the current level of $63.3 billion in these four sectors.
A recent World Bank Report cited in the study revealed that “Indian firms reported that while it takes 11 days for a container to travel from Shanghai to Mumbai, it takes 20 days to travel from Mumbai to Delhi. Poor infrastructure is one reason for these delays, but a survey shows that a quarter of the journey time is spent at check posts, state borders, city entrances, and other regulatory stoppages”.
APM Terminals is active in investment in Indian transportation and logistics infrastructure, including dedicated intermodal double stack rail service, and at present operates two port facilities in India, including APM Terminals Mumbai, India’s busiest container terminal, and APM Terminals Pipavav, along with seven Inland Services locations across the country.
The study found that the cost of trade in India is among the highest in the world when compared with peer countries. Indian transport and logistics costs represent 14.4% of India’s Gross Domestic Product (GDP) as compared with 8% for China. According to the report, “While there is often much debate about the direct costs of transportation and logistics, such as terminal rates, freight rates and inland transport costs, the most significant costs can be the indirect and hidden costs stemming from delays and inefficiencies. Reducing these costs is a significant source of potential savings and improved competitiveness for Indian exporters and importers, and our study enumerates the socio-economic value that could potentially be generated for India.”
Four business sectors were analyzed for the study: Textiles and Garments; Pharmaceuticals; Electronics; and Auto Components. The data indicated that India’s indirect costs of trade (including delays, road congestion and non-essential paperwork) represent as much as 38% to 47% of total transportation and logistics costs. A reduction of these extraneous costs by 10% would create the potential for up to 5% to 8% in additional exports for the country, or $5.5 billion in additional export revenue above the current level of $63.3 billion in these four sectors.
A recent World Bank Report cited in the study revealed that “Indian firms reported that while it takes 11 days for a container to travel from Shanghai to Mumbai, it takes 20 days to travel from Mumbai to Delhi. Poor infrastructure is one reason for these delays, but a survey shows that a quarter of the journey time is spent at check posts, state borders, city entrances, and other regulatory stoppages”.
APM Terminals is active in investment in Indian transportation and logistics infrastructure, including dedicated intermodal double stack rail service, and at present operates two port facilities in India, including APM Terminals Mumbai, India’s busiest container terminal, and APM Terminals Pipavav, along with seven Inland Services locations across the country.
India EXIM Report 2017