Dear Friends and Colleagues, The Collins dictionary announced the word “Permacrisis” as “The Word of the Year” for 2022. For 2020 it was “Lockdown” and 2021, it was “NFT- Non-Fungible Token”. Permacrisis described as an extended period of instability and insecurity, truly describes 2022. Interestingly, it was chosen ahead of the words, Kyiv, Party gate and Quite Quitting.
We have seen the wild swinging of the pendulum of events - rising commodity prices and then softening as well - crude oil not included; the war in Ukraine leading to an energy crisis and food grain supply disruption; China’s continuing COVID-19 induced lockdowns leading to supply chain and port disruptions; the ongoing geopolitical tensions between China and other countries, especially the US, India, Japan and Australia. We also saw ports across the world undergo unprecedented congestion and waiting time for berths. At one stage almost 20 percent of container ship capacity was waiting to berth at ports, but this seems to have eased. In other instances, cargo volumes seem to have reduced drastically, causing many of the top shipowners to cancel several voyages and also merge several services. The last two months of 2022 have pointed towards the possibility of a recession, especially in the western world. It is tempting to guess the Collins dictionary word for 2023. However, if it is to be a reflection of only India, the word in all probability would be “growth”, “progression” or “grow progression”!!!
2022 saw India celebrate its 75th year of Independence. The year also saw India become the 5th largest nation with a US $ 3.5 Tn GDP, displacing the UK – ironically, our ex-colonial masters who now have a Prime Minister of Indian origin. As per a recent UN report on population, by July 2023 the world’s population is expected to cross 8 Bn, and India is expected to become the most populated nation with 1.428 Bn people. This theoretically makes us the largest number of consumers and producers. With this positive dynamic we will also have the challenge of ensuring that human capital is educated, skilled and enabled t o contribute to the next phase - let’s call it, post @75.
Our Indian ports have seen a relatively flat growth rate in terms of volumes. There has been some amount of changes in terms of our trade partners for traditional commodities. With major trade disruptions, India has seen an increased amount of fertiliser and crude oil being sourced from Russia. However, this has not been at the cost of India’s traditional partners. The importation of gas has been impacted by rising prices and decreasing availability. In general, tanker and gas carrier prices have been on an up wards trend and in some specific cases at very high prices. On the other hand, container freight rates, and container ship rates have been falling drastically and quickly coming back to normalcy. Of course, how does one define normal is in itself very difficult. Container carriers will look back at 2022 as a dream year with large and not-so-large carriers garnering record profits - collectively amounting to around US $ 225 B n for 2022, a 50.6 percent upward increase compared to last year. How the major shipping companies will deploy these vast sums of money is to be seen. Some of the shipping lines are preparing themselves to be total transport and logistic solutions providers across sea, land, air and rail. There is also a focus on green shipping and clean fuel ships. Shipping companies are betting big on various types of green fuels of the future like methanol, ammonia, hydrogen, as also LNG. The new shipbuilding orders are of such a large magnitude that it accounts for almost 20 percent additional capacity of the existing fleet.
Several experts have commented and opined that India’s economy is weathering the global recession and inflationary trend well, and managing the quantitative tightening much better than most of the world. It is therefore likely the efforts of India’s China Plus Programme, Make in India, and Atmanirbhar will have a long-lasting and profound influence in shifting India to a much larger size, both in terms of volume and value. For India to see a volume of 40 Mn TEU plus 2 Bn Tonnes of non-container port throughput by 2030, ports, railways, roadways and inland waterways will need to keep up and enable these expectations. It is with this vision, that our company is positioning itself.
For our group of companies, the next 10 years will certainly see a greater embracing of technology. Remote controlled equipment and vehicles will be the norm in last-mile connectivity. The recent news of the French postal service introducing autonomous vehicles to deliver parcels and posts, is a clear pointer of the things to come. Recently, Korea too introduced some bus routes with autonomous vehicles. It is gratifying to know that our company and our colleagues are also pushing themselves to be at the forefront of creative growth with humility, honesty, innovation and perseverance. 2022 has indeed been exciting, where we have committed to add a very large capacity of cargo handling in India.
With these words of enthusiasm and confidence, I wish each and every one of you and your family members a very happy new year. Do continue to stay safe and secure, and I look forward to traversing 2023 with each of you.
Krishna B. Kotak
Chairman - J M BAXI GROUP