Date:10/04/2006 URL: http://www.thehindubusinessline.com/2006/04/10/stories/2006041001030600.htm

Back Logistics on the move

ON THE expressway.

The increase in international trade (exports projected to rise by 20 per cent this fiscal) will have a huge impact on India's transportation and logistics market, which was valued at $14 billion in 2004 and is expected to grow at a CAGR (compound annual growth rate) of around 7 per cent. One of the major hurdles faced by the logistics sector is inadequate infrastructure but the Government is trying to improve it by expanding port operations, investing in highway projects and improving rail network, often through private participation.

At the same time, several leading foreign logistics service providers have committed huge investments in India. Thus, in 2004, DHL committed euro 128 million for investment in express services in India and acquired a majority stake in Blue Dart, a domestic courier with an extensive network. Rivals TNT and FedEx too are not lagging behind, with TNT recently announcing its foray into India and FedEx declaring that, after China, India will be next major market. In March 2006, Neptune Orient Lines announced that its joint venture has received `in principle' approvals from the Government to run freight rail services. As the market becomes more liberalised, it is felt that the pace of mergers and acquisitions too will pick up.

Our Bureau