South Korea's top container shipper HMM Co. has announced the launch of a new container liner service connecting Busan and India in the coming year. This move comes after providing similar services in December 2021 and August this year.
HMM is making this strategic investment in response to the rapidly growing shipping volumes, as more companies are exploring India as a viable alternative to China.
In August, HMM introduced an exclusive service that connects Busan to India and the Mediterranean Sea. The ports of call in India include Kattupalli near Chennai in the southeast; Nhava Sheva Port (JNPT) near Pune in the west; and Mundra in northwestern Gujarat, the fast-growing political home of Indian Prime Minister Narendra Modi.
Hyundai Motor Company operates a plant in Chennai, which is often dubbed 'Detroit of Southern Asia', while LG Electronics and HD Hyundai Construction Equipment own production facilities in Pune, respectively.
"Companies are trending toward shifting their manufacturing away from China, and India is reaping the benefits of this move," said Kim Yi-seop, the president of HMM India. "India's domestic market is expanding, and multinational corporations are extending their operations into the country. As a result, cargo volume in India is rapidly increasing, and global shipping companies are becoming more active in the region," he added.
In December 2021, HMM launched a 5,000 TEU liner service between the Far East and South America. The route starts in Busan and ends in Brazil and Argentina via Kattupalli, India, and Durban, South Africa.
According to Kim, this is HMM's busiest time in India. "This is the first time we have launched a new service every year since we first entered India in 1996," he said.
HMM India was established in 2005 and has since been serving as a strategic base for HMM's presence in the Southwest Asia region. The company employs nearly 300 local staff members under the Global Documentation Center (GDC), which is responsible for producing and managing shipping documents like Bills of Landing (B/L). HMM is also working to strengthen its local business base by partnering with terminal operators (GTOs) such as Adani Group and PSA International.
The Indian shipping logistics industry is experiencing rapid growth. Nhava Sheva Port, which is among the leading container ports in the country, recorded an annual container volume of 6.05 million TEUs during FY 2022. This is a 6.44 percent increase from the previous year's volume of 5.68 million TEUs.
However, logistics in India is expensive due to the lack of infrastructure and high energy prices. This sector accounts for approximately 13 percent of India's gross domestic product (GDP), which is comparably high compared to developed economies where it is around 7 percent, and other emerging economies where it is around 9-10 percent.
As a result, India is less competitive as a manufacturing base. Kim also pointed out that "India's primary port, Nhava Sheva, cannot accommodate large container ships that exceed 18,000 TEUs."
The Indian government is taking proactive measures to address the country's infrastructural issues. Starting in 2021, it is investing 100 trillion rupees (approximately 1.2 billion dollars) in a National Master Plan for Multi-modal Connectivity (PM Gati Shakti).
This plan aims to improve transportation across all modes and is especially hopeful about the shipping sector, which can supplement land transportation and leverage the country's long coastline of about 7,500 kilomerers.
The Sagarmala and Inland Waterways Development plan for the ports sector, which has been underway since 2015, aims to develop six new mega ports, improve connectivity with land transport, and utilize inland waterways such as the Ganges River.
"HMM, too, plans to continue investing in India," he said.
This article was originally published on Nov. 20, 2023.