Dear Friends and Colleagues,we are already in the first quarter of 2021 and if we were to c ompare this quarter with the first quarter of 2020, we can observe some similarities and differences. In both years, cargo volumes from Asia to the US and from Asia to Europe were high and the ships were full. The difference is that freight rates are twice or even thrice higher and not 20% or 30% higher. The other differences are that the US has a new president and a new administration and the new fuel and SOx emission guidelines for ships have been successfully implemented. The world has just endured almost 12 months of interruptions due to the COVID-19 pandemic, with lockdowns, partial lockdowns, and disruption to long and short journeys. These COVID-19 times have permanently changed some things. They have accelerated some trends and strengthened some practices. They have brought to the fore some issues we have all tended to underestimate, such as the importance of robustness, resilience, repairing, reforming, resurging, reassessing, redressing, and restoring.

We, in India, entered 2021 with a spirit of positivity, as some of the relevant numbers are positively promising. Cargo volumes at ports
– both container and non-container
– have seen a steady upward trend.
The demand for goods and services also has witnessed an increasing trend, and inflation seems to be partially under control. Exports are showing a positive trend. The long tail of COVID-19 will last for at least six more months, maybe 12 months, but India will take positive strides along the path it has taken for the last few years.

In the last few months of the pandemic crisis, as also in the coming times and months, some of the policies of the government of India give an interesting perspective, which will be very useful for the future. Specifically, in the port sector, we have seen the formation of the Sagarmala Development Company(SDCL), the Indian Port Rail Corporation company (IPRCL), the strengthening of the Inland Waterways Authority of India, the dredging and creation of terminals on various riverways, the corporatization of ports, the introduction of new laws and acts, which are contemporary and aligned with modern needs, the port-led development model, which aims to bring ports and port land into the SEZ, maritime clusters etc. The pandemic also accelerated the adoption of more technology and digitization into our work and processes. Moreover, due to geopolitics, socioeconomic factors and the geo-economic realities, India will try to increase its self-reliance. India’s coming of age as one of the top 10 economies of the world entails increasing the competitiveness of our manufacturing, agriculture, services, infrastructure, and technology sectors. To achieve this objective of being in the top five or top 10 nations, India needs to own and create a strong manufacturing and technology base. Therefore, schemes like Atmanirbhar, production-linked incentive schemes, Made in India etc., will increasingly need to happen. They will happen and India will grow.

Ports, transport, logistics, warehousing, FTWZs and SEZs, are going to play a larger and larger role in this new framework. It is, thus, with a deep sense of excitement and adventure that we have welcomed Bain Capital to partner us on our journey ahead. Bain has acquired a significant minority stake in our terminals, infrastructure, and logistics activities. Our combined strength gives us considerable financial heft. The partnership will increase our financial and administrative discipline. Our network of terminals and facilities are well positioned and deeply embedded into the logistics and supply chains of the top industrial clusters and companies in India, handling almost all types of commodities and cargo. Most of our facilities have the ability to grow in size, scope and scale. Similarly, our logistics vertical is uniquely placed, as we have multimodal capability including rail, road, water and air and we are also specialists in moving multiple types of cargo, such as containers, break bulk, bulk and, of course, heavy lifts and projects. Our partnership allows us to think higher and better. It will enable us to attain bigger goals and larger objectives, while being sustainable and profitable! We shall continue to do what we have done for 100 years of sustainable growth.

We have seen volumes at ports and shipping and transport volumes, by and large, coming back to pre-COVID levels. Some ports, especially in the US and China, have higher volumes than pre-COVID. Almost all commodities have made a sharp recovery to price levels comparable to pre-COVID times. In some cases, commodity prices are even higher. There are orders for most types of new ships, especially container ships, tankers and gas carriers. Concerns and commitments regarding the environmental impact of ships, such as their CO2 and SOx emissions, have seen increased experimentation and studies on new and different types of fuel, such as LNG, hydrogen, ammonia, wind power etc. The coming decade is likely to see phenomenal changes in this sphere. Just as we saw in the last decade with the ever-increasing and unimaginable growth in the size of ships, the coming decade is likely to witness a paradigm shift in ship technology.

These and other several plans and schemes will lead to substantive growth and therefore a quick recovery and rebound. Most commentators and business leaders are expecting a V-shaped recovery.

The next 3 to 6 months will see the privatization/disinvestment process of the Shipping Corporation of India (SCI), Bharat Petroleum Corporation Limited (BPCL), Container Corporation of India Limited (CONCOR) and other PSUs.

In India, we are seeing cargo volumes beginning to come back to pre-COVID-19 levels. We are also seeing many exciting developments in our neighbourhood, with Bangladesh and India becoming increasingly connected by road, river and coastal shipping, but also by rail as well. India’s connectivity with Nepal is also witnessing strong steps.

One of the plans to combat the economic after-effects of the COVID-19 pandemic has been for India to create and build world-class infrastructure. The government of India has published a national infrastructure pipeline, which lays out all the infrastructure projects. Interestingly and thankfully, the port sector has a sizeable percentage of this national plan, which presents interesting opportunities. Linked to this, there are also various gas projects, especially in the LNG sector, such as port terminals, FSRUs, city gas distribution concessions and pan-national highway gas filling stations.

The first quarter of 2021 has seen the 2^nd or 3^rd wave COVID-19 pandemic in various countries. Some of these countries has also seen a second or third lockdown or shutdown. Thankfully in most countries the vaccination drive has begun as also in India. But let us know and remember that vaccine is not a total complete cure. COVID-19 virus is not yet eradicated. So, whilst we need to go ahead with confidence and hope for 2021, we also need to be cautious and careful in terms of masks and physical distance.

We are looking forward to working with you and let’s hope and wish for a great year ahead for all of us.

Krishna B. Kotak
Chairman - J M BAXI GROUP