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PwC report highlights logistics infra challenges

Business

Financing the maintenance of transport infrastructure, managing urban congestion, supply chain disruption on account poor rural connectivity, loading of environmental costs as an integral project cost would be few of
the challenges that global transport infrastructure industry will be facing in the next 20 years, according to the second report from the "Transportation & Logistics 2030" thought leadership series, carried out by
PricewaterhouseCoopers (PwC) and Supply Chain Management Institute (SMI) of the European Business School (EBS).
India is no exception, since half of the increase in global trade in goods and services will come from the BRIC economies. While the country may be able to offer cost advantages due to lower labor or production costs, these effects could easily be offset by higher transport costs resulting from inadequate transport
infrastructure.
The study employed a technique called real-time Delphi sector expert survey. Respondents to the Delphi survey of 104 experts in 29 countries predict that industrialised countries would maintain their leadership position in transport and logistics infrastructure provision over the countries like India even by 2030. Although emerging markets, such as India and Russia, currently heavily invest in transport infrastructure, they will not be able to close the gap completely by 2030.
The Delphi panel expects that strong regulatory measures, such as toll roads or congestion charges, will compliment the increased requirement of investment in transport infrastructure.
Amrit Pandurangi, India Leader for Transportation & Infrastructure practice, PricewaterhouseCoopers, commented: "Traditional government businesses in the Transportation & Infrastructure sector will now in the long-term be managed by the private players and government will act as a regulator. In the future, free services would be paid by the user and the element of straight or cross subsidy would be eased out.
The present lackadaisical quality of transport services would transform to a value added and high-tech experience which will however come at a price. Transport cost, till now a manageable part of value of products and services, would assume much more significance with every coming year."
As true of its global peers, India too would face constraints in allocating sufficient capital to transport infrastructure. Moreover, the government would not be able to completely shift transport infrastructure investments to the private sector through means such as PPP. Also, financing the maintenance of existing infrastructure will be more difficult than attracting investment in new infrastructure.
The report also suggests that population density is a key indicator for the assessment of future needs for public transport infrastructure development. India stands out as a country, which will need extensive infrastructure enhancements, given that its already-high population density will increase further by 22% by 2030. Estimates suggest that India will be home to a whopping 452 people per square kilometre.
The Delphi panel rates a continued focus on investments in urban areas as very likely and notes that a key obstacle to the provision of rural transport infrastructure is that often development does not go beyond the
implementation of basic infrastructure, when a more holistic approach that assesses adequate financing and coordination with other transport services is critical.
The report suggests that rural transport development needs to take into consideration the access needs of rural communities. The goal should be to design transport infrastructure at a low cost, which supports the establishment of networks within a rural area.
Awareness about sustainability and climate change is omnipresent, since the effects of transport infrastructure and transport networks on the environment are profound. On the long-term impact of the environmental costs in the full cost of transport infrastructure projects, Pandurangi concluded: "Presently the transport and logistics infrastructure project cost does not have an element to account for environmental compliance. Going further, the environmental costs, also contingent operational liabilities and benefits such as carbon credits would not only affect the project profitability but sometimes also may dictate the very viability of the projects. Yet, the environmental regulations would not take a special toll on transport infrastructure projects as their impact would be uniform across all sectors."

Contact for the complete report: Nandini Chatterjee
PricewaterhouseCoopers Pvt Ltd
Email: nandini.chatterjee@in.pwc.com
Direct: +91 (124) 4620756
Mobile: +91 9810508447

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