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Road transportation sub-segment

India has the worlds second-largest network of roads 3.83 million km after USs
6.43 million km national highways form only 2% of the total by length and carry
about 40% of the traffic. About 80% of the roads in India are village roads. The road
sector is significant to Indias Transportation segment as it account for nearly 65%
of the freight and 85% of the passenger traffic in the country. This sub-segment is
highly fragmented with the truck operators owning less than five trucks estimated
to account for over 75% of the truck fleet.
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It is estimated that 10% of the market belongs to those with 6-10 trucks; 4% to
those with 11-15 trucks; 3% belongs to those with 16-20 trucks; and only 4% of
fleet belongs to those with more than 20 trucks. This industry is also characterized
by intense competition which is the result of relatively lower capital requirement
ease of obtaining driving licenses and permits.
The small operators are involved mainly in the physical movement of goods and
depend on brokers and other fleet operators who in turn depend on the booking
agents for obtaining business. The small operators are not in a position to perform
functions of aggregating handling delivering of cargo and marketing. Besides they
do not have geographical reach and necessary infrastructure to tap business on a
continuous basis and thus rely on brokers.
The large fleet operators are small in number and generally operate throughout the
country. These fleet operators primarily work on a hub and spoke model. The hub
and spoke distribution system enables optimization of costs and higher revenues for
the transport companies and fleet operators. These transport companies generally
have formal contracts with the users which is very rare in the case of small
Large operators can also bid for the contracts with customers. They utilize the
services of the smaller operators when additional vehicles are required. Over the
period FY 2001-07 for which detailed data is available from the Government of India
Go I the average annual growth in the road sector was around 14.3% at current
prices and 9.6% at constant prices. Which was much higher than the overall GDP
growth during the period.

Railway Transportation Sub- Segment

India has the second largest rail network 63,000 km in the world. The Indian
Railways have grown in to a vast network of over 7,500 railway stations a fleet of
about 8,600 locomotives, 41,000 coaches & over 2,40,000 wagons.