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Best of both worlds?

Among south Asian nations India looms large, while its neighbours still look west, but Rob Coppinger finds the region is increasingly in Asia Pacific’s orbit

S outh Asia is not a region whose trade and cargo flows are internally focused. Instead Europe, China and the USA dominate exports and imports, but there are signs of an intra-regional growth that will change the picture in the longer term.


India will be key to this intra-regional growth, already dominating the trade between the south Asian nations of Afghanistan, Bangladesh, Bhutan, the Maldives, Nepal, Pakistan and Sri Lanka. “Intra-south Asian trade was $21 billion in 2015, but India is dominant, accounting for 83% of that intra-south Asian trade,” says market research firm Transport Intelligence’s economist, David Buckby.


However, that intra-regional growth is still small compared to the imports and exports of the region as a whole. While there is $21 billion of trade between the south Asian nations, in 2015 the region’s exports were $331 billion and it imports $494 billion. India accounted for 79% of these extra-regional imports and exports and this domination of the region is only going to continue, according to the Emirates SkyCargo’s Commercial Cargo Vice President for west Asia and Southeast Asia, Jassim Saif.


Emirates SkyCargo serves the Indian market with 183 weekly flights out of nine locations in the country. Key exports from India tend to be pharmaceuticals, automotive parts, garments and electronics. There is also a significant export of perishable products from India, which includes meat, seafood and vegetables.


“According to a study by IATA, India is projected to be one of the top ten international freight markets in the world by 2018 and this has significant implications for airfreight from the country and the region,” says Saif. He adds that in 2015 the Indian airfreight industry grew by ‘a strong 4.5%’ over the previous year.


On 1 June this year, Emirates SkyCargo launched a new weekly freighter service from Hong Kong to Dubai via Delhi using a Boeing 777 Freighter. The new weekly service is being introduced for the increasing number of cargo movements between Hong Kong and Delhi. Some of the key exports from Hong Kong to India include pharmaceutical raw materials, electronics and machinery.


India is also becoming a destination for Chinese manufacturers seeking a labour cost advantage. As Buckby explains: “I do think India will see manufacturing relocated from China, it has already and will do so in the future. Its economy will benefit from that, but the difficulty is it’s hard to quantify how significant that impact will be.” Li Wenjun, Senior Vice President and Head of DHL Global Forwarding Asia Pacific, adds: “India’s influence over the Asia Pacific region will continue to grow, along with China. We are seeing double-digit growth in terms of both cargo flow to and from India.”


While India will see the products it imports, electronics and machinery, increasingly become a greater share of its exports back to Asia Pacific, the bulk of south Asian intra-regional trade is textiles and meat, particularly fish. Among the seven other south Asian nations, Bangladesh, does a great deal of trade in fashion and textiles with India.


Bangladesh is seeing double-digit growth according to air cargo market data provider, WorldACD. Of the south Asian nations, Bangladesh came second with 27.1% growth in outbound chargeable weight from 2014 to 2015 (see WorldACD graph). The Maldives came first with 29.2%. In 2015, Bangladesh had a strong performance and in January and February this year Bangladesh saw a 10% year-on-year growth in its US dollar revenues.


“Bangladesh’s exports range from garments and accessories to betel leaves and food products, while imports include fabrics, yarn, mango and other food items,” Li explains. With its historic links to Pakistan, Bangladesh has a lot of imports from that country. Indian imports are also important, due to their shared border. For exports, however, the European Union is a major market for Bangladesh. It is a major market for the region as a whole, with the EU taking 38% of south Asia’s air cargo volume, according to World ACD.


Pakistan, perhaps due to historic tensions with India, has very little trade with its more populous rival. According to Buckby, a World Bank report published in January this year concluded that there would be no statistically significant effect for Pakistan from a negative economic shock from India. >>

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