Between The Lines-1
As a keen observer of the economy, particularly from the logistics and supply chain perspective, I often come across news items that spark immediate thoughts. In this series,’ Between The Lines’, I will provide regular commentary on these news items. Here’s the first one:
Business Activity Rises to 8-month High in March — The Economic Times, 22 March 2024
The HSBC Flash India Composite PMI Output Index, a crucial gauge of economic activity, recorded a significant rise from 60.6 in February 2024 to 61.3 in March. This upswing, combined with the manufacturing sector’s highest output in 3.5 years, bodes well for the Indian economy, signaling a positive trajectory.
Why is this news exciting? Any upward revision in the HSBC Flash India Composite PMI Output Index is a positive economic indicator. When the manufacturing sector, a pivotal driver of economic growth, performs exceptionally, it’s even more encouraging. Pranjul Bhandari, HSBC’s Chief India Economist, attributes this growth to a faster pace of new orders, both domestic and export, compared to the previous month.
Let’s not forget, we’re talking about the production of tangible goods, not services. In this collaborative process, the crucial role of trucking becomes evident. It’s the backbone of the manufacturing industry, moving raw materials or components from vendors in remote locations to the production centre, and then distributing the finished goods across the vast nation’s marketplaces.
No doubt, certain raw materials (iron ore, cement, etc) are transported by rail. But the first and last mile delivery must be by road and, therefore, trucking enters the fray. Rail has to coexist with road. On the export front even, ships cannot enter the land. The mushrooming growth of Inland Container Depots (ICDs) depends on trailer-trucks to reach ports.
Briefly, there is an increased business opportunity for trucking on account of the facts captured by PMI barometer. Such a situation improves the asset utilization resulting in better operational efficiency in trucking. More kilometer runs translates into higher fuel consumption — good tiding for oil marketing companies. After all, higher energy consumption is an indicator of economic prosperity. (Electricity (power generation) is a key ingredient for various economic activities. Fossil fuel (coal, lignite, gas, diesel) constitutes 57% in terms of installed capacity. Hydro, wind, solar, etc. contributes 11%. India is an energy importer, thus necessitating multimodal — sea, rail and road approach.)
In less than a fortnight, the current financial year 2023–24 will end. Hopefully, the final growth numbers would be another pleasant surprise. Will this better the Reserve Bank of India FY24 projection of 7.6%. Keeping fingers crossed. Nonetheless, the projected GDP figure is a moment to rejoice. How many countries can boast of such a robust growth? None.
