Time for South Asia shipping and logistics to rise

South Asia in Asia

Asia continues to dominate global economic growth and South Asia as a subsector of Asia is positively indicating over 6% economic growth led by reforms made by the major economy of India. 

As of now the region is considered the poorest in Asia. A population of over 2 billion along with the BIMSTEC region will benefit if economic activity is enhanced with greater connectivity through oceans, roadways, canal ways and airways. Consumption and demand for goods and services will see a probable double-digit annual growth of regional GDP with increased middle class consumption. This growth will transform into a requirement to handle greater trade through multiple logistics corridors efficiently, which will be a challenge and a priority for all South Asian nations in the coming years. 

Most of the time businesses in the subcontinent wait until governments do everything for them, but the time is right for the industry to join together to lobby for the right reforms and dialogue with governments to move towards greater facilitation and integration of trade and logistics. 

South Asia trades very little among its neighbours compared to a region like ASEAN.  Little or no communication means less business activity. The countries in the South Asian region joining hands in the logistics and shipping industry can give the impetus to push towards a common goal and reduce the political rhetoric we often hear about rather than proper business plans.

Networking among stakeholders will create the needed platform

Thousands of shipping and logistics companies operate under difficult circumstances in South Asia due to a lack of proper infrastructure, systems, skilled people and educational and technological gaps. This reflects as a cost to the manufacturers, exporters and consumers, also affecting the profitability of shipping and logistics companies. 

A recent international report indicated that the transaction cost of shipping and logistics in South Asia is double that of the ASEAN region. It says that if this gap alone is brought on par with ASEAN, exports out of South Asia will increase by 7%. 

These are serious matters and numbers which regional business leaders must discuss and go forward with one voice to regional authorities to get their attention for the necessary restructuring and reforms of the transportation sector. Working in isolation with less understanding will not help the shipping and logistics industry of the region to rise.

It is a fact that the entire world is now seeing new opportunities in the Indian subcontinent and the Indian Ocean led by regional economic growth and space for investment. During his short visit, Indian Prime Minister Narendra Modi made a statement in Sri Lanka that India’s economic rise would help its neighbours as well. He requested greater corporation and dialogue between stakeholders to work towards a prosperous South Asia.

Bay of Bengal focus

As of now, Colombo plays a key role as the leading hub of South Asia for containerised cargo, facilitating cargo transshipment to the South Asian container markets and the Bay of Bengal. The Bay of Bengal region is now becoming a topic in geo strategic discussions and the economic corridors of the countries in the Bay of Bengal are seeing significant focus. International research organisations predict a minimum doubling of cargo handling at all major ports of South Asia by 2030. 

These volumes will certainly grow from the Bay of Bengal and the BIMSTEC countries as well. Therefore, maritime connectivity will be a crucial factor for trade growth in this region. Hence the need to upgrade the ports and facilities and the potential for businesses to service the Bay of Bengal maritime or logistics services is a priority. The space for joint ventures and PPP will be available once a master plan is outlined and opportunities are given to investors by respective governments.

Maritime and logistics connectivity between South Asia will continue to grow benefitting all nations in many aspects. The regional countries need to work out a maritime and ocean framework corporation policy and work as partners as the ocean economy of the Indian subcontinent will be a great strength for economic prosperity not only for the Bay of Bengal region but for South Asia. 

If infrastructure and economic corridors are properly understood and designed with the investment of technology and digitalisation for efficient connectivity, the ocean economy will help many millions of South Asians to be lifted out of poverty. Therefore, a regional corporation body of South Asia and BIMSTEC countries should be established with private sector participation for planning as well as other reforms for ocean and land connectivity. This can be done through mutual agreements for trade, logistics and security.

(The writer is the CEO of the Shippers’ Academy Colombo).