Will India Overtake China?

Pointing out that India’s economy is growing only a little slower than China’s, Transport Intelligence reports interest in logistics on the Asian Subcontinent is on the rise. India could offer even more opportunities than China, says the U.K.-based consulting firm.

As Transport Intelligence was expressing its opinion, British Airways World Cargo (BAWC) was in the process of launching a scheduled trucking service in India covering Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune and Cochin. Six bi-directional, daily services will move import and export freight to and from the interior. The BAWC move will allow shippers more opportunity to move freight that had been constrained by limited interior air services.

In separate news, Indian Railways announced rate increases. The railroad, which has seen steady declines in freight traffic, had not raised rates for three years. It could no longer continue to absorb cost increases.

Rail makes up only 30% of freight volume in India. It had accounted for 90% of the freight traffic in 1950 but fell to 70% by 1970 and 45% by 1990.

With a fast-growing economy, the Indian government plans to invest $17 billion in transport infrastructure by 2010. “At present, bottlenecks and delays are endemic within the country’s road, air and sea networks, hindering investment by foreign companies,” comments Transport Intelligence. about a quarter of the $17 billion will be spent on modernizing airports. India’s national airline, Air India, has also announced expansion plans. It will increase fleet size from 34 to 74 to 2013. The airline is also buying 18 short-haul Boeing 737s.

With delays at India’s 12 major ports currently running as long as three and a half days to turn a ship, India is planning additional container terminals and dredging between Sri Lanka and India to help cut transit times.

Highways will also expand, with the government expected to build an additional 10,000 km (6,215 miles) roads.

Transport Intelligence sounds one note of caution. Economic reform is not moving as fast as in China, in part because the government has focused on the service sector and attracting information technology and call centers rather than on developing manufacturing. This has led to a gap between economic growth and the growth of freight volumes in India.

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