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from major big box retailers and manufacturers , suggest a tipping point is in the works . Firm signs are coming from manufacturers , with Tesla following the likes of Apple and Samsung with a $ 3 billion electric vehicle plant after waffling on its investment commitment for years because of import customs duty concerns .
In parallel , North American retailers are shifting their focus to India and sometimes to the detriment of China , as in the case of Walmart , according to a data analysis by Reuters . That trend is mirrored by other retailers , such as Five Below , which opened an India office last year to manage its sourcing from some 50 factories .
“ It ’ s another example that will help us innovate ,” Five Below CEO Joel Anderson said in late November during a third-quarter earnings call . “ It will help us move faster . It will help us keep costs down , and it really starts to spread out our supply to other countries .”
India now
For two decades , India has been heralded as the next global manufacturing powerhouse for shippers looking to source closer to North America , only to be outshone in trade diversification initiatives by Vietnam and , more recently , Mexico . Bureaucratic hurdles , protectionist policies , labor costs and the vast disparity in port and inland support infrastructure have continually pushed back the diversification dream .
Nevertheless , there are now clear signals that India is beginning to hit its stride , as evidenced by an analysis of laden containerized imports over the past 20 years . The share of US imports originating from India has risen
steadily , albeit modestly , from 3.3 % to 4.1 % during that period , according to data from PIERS , a sister company of the Journal of Commerce within S & P Global . That ’ s still a minuscule piece of the pie compared to China ’ s share of nearly 40 % in 2023 and Vietnam ’ s 8.7 % share , which has more than doubled since 2013 .
Still , even marginal shifts away from China translate into significant volumes for ocean carriers and ports , particularly those on the US East Coast , which are geographically better positioned than their West Coast counterparts to receive the volumes shifting away from China . East Coast port directors expect continued growth , partly thanks to the relatively shorter transits via the Suez Canal — in the normal course of events — to their docks .
In the last decade , US imports from India have doubled to the 1 million TEU range , with East Coast ports reaping the largest gains . Containerized shipments from India to the US East Coast have swelled 132 % since 2013 . The Port of New York and New Jersey has been by far the largest benefactor , handling nearly 300,000 TEUs of imports from India in 2023 , followed by Savannah with 170,000 TEUs and Virgina with 155,000 TEUs , according to PIERS .
Expanding port stakes
Container lines are expanding ocean services and bolstering their presence on land to capitalize on the inbound momentum from India . Ocean Network Express ( ONE ) in May will launch its first standalone container service to the US East Coast from India ’ s west coast ports of Hazira , Nhava Sheva and Mundra , with HMM purchaisng slots on the new loop .
12 Journal of Commerce | April 22 , 2024 www . joc . com