Logistics service provider, EMO Trans has set up half a dozen stations in major Indian cities. The market is bourgeoning as many large but also mid-sized international companies are increasingly reducing their China involvement due to political risk considerations coupled with tightened bureaucratic restrictions. They are increasingly redirecting their investments to India and Southeast Asia, but also to Latin America, and Eastern Europe. For their logistics service providers, this means that they must pioneer new supply chains.
EMO Trans has been present in the Indian market for 26 years. Yet, it was more or less a no-name there because its local business was managed by a partnering firm. This recently all changed,
however. To stay in business and expand sales, EMO Trans has established its own offices in Bangalore, Chennai, Kolkata, Mumbai, New Delhi, and Pune.
The Indian market offers great potential for two main reasons among many, indicates Hans-Dieter Schmidt, Route Development Manager India at EMO Trans. First, the country’s economy is growing significantly, and second, the country is benefiting from the decoupling between western enterprises and China, the manager states, pointing to the investment avalanche of international companies in India.
Achieving profitability fast
Based on these and other favorable market conditions, the regional branches of EMO Trans will already be in the black after a short transition period, and at the latest by the end of this year, predicts Bernhard Stock, Director Air Freight & Global Network at EMO Trans GmbH. The de-coupling aspect is an important and nice-to-have factor, but it was not decisive for EMO Trans' commitment in India. This was mainly triggered by the positive market outlook in a country that is home to 1.42 billion inhabitants, and the spirit of economic optimism in the greater Southeast Asian region, stretching from India to the Philippines.
Since the economy between Kolkata and Mumbai is growing quite strongly, the demand for reliable air and sea transportation, including storage of goods, is steadily increasing. This is also a result of the fact that India is clearly benefiting from the Western embargo on Russian raw materials such as oil and gas, which India can now import for little money. How diversified the industry is, is exemplified by the city of Pune, which has become a center for mechanical engineering, automotive and light industry, and software development. Countrywide, India produces a wide range of semi-finished products as well as shoes and leather goods, clothing, and petroleum-based products. Perishables hardly play a role, at least not for the transport portfolio of EMO Trans, Manager Schmidt affirms.
According to World Bank data, India’s manufactured exports were higher in 2021 than those of every other emerging market except for Mexico and Vietnam. The electronics exports have increased the most, tripling from 2018 to USD 23 billion. A technology market study estimates that India will produce 19% of the world’s smartphone phones in 2023, up from just 9% in 2016. Foreign direct investment into India doubled between 2020 and 2022, reaching an average of USD 42 billion yearly.
The CargoWise challenge
Another positive factor is that the local workforce is mostly well educated and, in addition to their regional languages, all speak English, which is also a clear difference from the Chinese market. Arup Kumar Das, an experienced manager who knows the local conditions very well and is well connected in the Indian market, is responsible for setting up the new EMO stations and connecting them with each other. In addition to personnel and organizational matters, he will primarily be involved in implementing CargoWise, the cloud-based software platform designed to manage day-to-day tasks and ensure smooth operations. The system will be implemented first in India and Southeast Asia, and then worldwide to accelerate and streamline EMO’s booking processes.
Indian exports show strong increase
Manager Stock describes the export/import ratio between Western Europe and India as 60%/40%. In the meantime, however, Indian exports are outgrowing imports. This is also a consequence of the policy of Prime Minister Modi, whose government strongly promotes "Made in India" products and the associated label on international markets.
In air freight, EMO Trans’ exports/import ratio stands at 70%/30%. For carriage, the logistics company relies on two carriers: Lufthansa Cargo and Swiss World Cargo. “Both capacity providers fly non-stop and are very reliable,” Mr. Stock applauds. He is not a friend of transiting goods destined to India at one of the Gulf airports, “unless a shipper prefers that option.”
In addition to India, EMO Trans also runs offices in China, Vietnam, Singapore, Hong Kong, Thailand, and has established four stations in Indonesia and two in Bangladesh recently. This network enlargement enables EMO Trans to offer customers seamless services in these markets.
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