Missile and drone attacks in the Red Sea by Yemen's Houthi militants, who say they are acting in solidarity with Palestinians in the Gaza war, have forced many ocean freight firms to re-route vessels away from the Suez Canal to around the Cape of Good Hope on the southern tip of Africa. The crisis has begun to upend global supply chains, with Chinese exporters also stumbling in pain. Many suppliers sign export deals on a cost, insurance and freight basis, making them responsible for any increases in freight and insurance costs.
‘India's small exporters reel as Red Sea crisis helps rivals nab business’, Economic Times
MGH Group's perspective on trade and freight capacity issues
Anis Ahmed, the Founder and Group CEO of MGH Group, a prominent freight and logistics firm, underscores the significant air cargo potential between India and China. This potential is driven by the strong demand from Chinese exporters for the Indian market. However, the trade flow is predominantly one-sided, with Indian airlines often returning from China with empty cargo holds.
“You can’t change much because Indian exporters aren’t selling to China, but the Chinese are eager to sell everything to India,” Ahmed noted in a recent interview. MGH Group, which serves as a general sales agent for ocean carriers and airlines and provides comprehensive logistics solutions, manages air freight operations from China to India through its alliance with IndiGo, India’s largest airline.
Ahmed pointed out that MGH’s operations in China are crucial for managing these shipments, but challenges persist. “There isn’t enough capacity available for air freight to support the online business from China to India. India doesn’t send much to China, so when the aircraft return, they are often empty,” he explained.
Chinese freight carriers such as SF Express and YTO Cargo handle most of the freight flights from China to India. Recently, IndiGo has started offering freighter services between Kolkata and Ezhou in Hubei Province, China. MGH utilizes both IndiGo and Chinese freighter companies for cargo transport.
“IndiGo is our gold standard. We aim to integrate with their network wherever possible. We’re connecting service belts for agriculture and industry that require faster transportation,” Ahmed added.
Despite the promising logistics opportunities, the bilateral relationship between India and China remains strained. Tensions have persisted since deadly clashes erupted along the Line of Actual Control in May 2020. Indian External Affairs Minister Subrahmanyam Jaishankar has consistently emphasized that normalizing relations with China is contingent on achieving peace and tranquility at the border.
Ahmed, originally from Bangladesh and now based in Singapore, believes that for India to become a significant global supply chain hub, major players in the air freight industry need to emerge, particularly in the realm of cargo transport to and from India.
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