Boston, MA -- (SBWIRE) -- 04/29/2014 -- India's state-run major ports continue to be the underperformers in the BRIC country's freight transport infrastructure, with volumes at many facilities struggling to grow. Ports have also been harmed by a ban on iron ore mining, and a fall in exports to Europe. A case in point is the Jawaharlal Nehru Port, India's largest in terms of containers handled, which has seen a decrease in its box throughput as it continues to chase the elusive fourth terminal. We see strong growth potential in the air freight sector, however, as air freight and logistics companies look to capitalise on India's growing pharmaceuticals export market, though national carrier Air India will struggle to take on this mantle given its financial constraints. The opening up of the air sector to foreign players could provide a boost to the market.

Headline Industry Data

- 2013/14 Port of Kandla tonnage throughput is forecast to decline by 6.0%, and is projected to average sedate growth of 0.8% a year to 2018/19.
- 2013/14 rail freight growth forecast is 5.5% and is projected to average 6.0% to 2018/19.
- 2013/14 air freight tonnes growth forecast is 11.8% and is forecast to average 7.3% to 2018/19.
- 2013/14 total trade real growth forecast at 5.3%, and to average 8.1% to 2018/19.

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Key Industry Trends

State-Owned Ports Will Lose Out To Private Firms In Short Term: The lack of interest in the tender to convert the Chennai Port Coal and Iron Ore terminal into a container terminal are indicative of a wider malaise in India's state-owned ports sector. We believe the project development plans for state-owned behemoths, such as Jawaharlal Nehru Port and Chennai, are unlikely to succeed over the short term because of incipient regional overcapacity, and the attractions of newer, privately owned ports.

Railways' Plan For Network Improvement May Create Additional Capacity: The Indian railways' plan to expand its network is likely to create extra capacity of around 15-16mn tonnes annually, devoid of spending over wagons. The plan, which will need an incremental investment of about INR20bn (US $3.2mn), will allow freight users to move more cargo per train; however, they will be required to make the same payment for each tonne. Additionally, the load per wagon will rise only by about 2 tonnes.

IAG India Expansion To Meet Sustained Pharma Exports Growth: IAG Cargo's route expansion in India and new B787 and A380 aircraft equipped for pharmaceuticals exports will cater for the strong growth BMI is forecasting in India's pharmaceuticals export market. We also expect this to pose upside risk to our growth forecasts for India's air freight sector between 2014 and 2018.

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