While we spill a lot of ink in this country about the potential hundreds of millions of dollars that could be spent improving our highways, rails, and ports, we’re missing the big picture and the bigger payoff, too.
The real opportunity isn’t here: it’s in Asia, where the dollars spent over the next five years will dwarf even the most optimistic projections for any other region on the planet.
If a picture is worth a thousand words, the next one, from a study by the consulting firm PricewaterhouseCoopers, should suffice for quite a few paragraphs. The bar chart shows, in trillions of dollars, the likely cumulative amounts of transport-oriented infrastructure spending for key world regions between 2015 and 2025.
Asia Pacific wins it, hands down.
It’s one thing to make projections, of course. Another is to demonstrate why such spending will actually occur.
In India, it is about removing bottlenecks in its economy. For example, it takes just over two days on average to unload a large container ship at an Indian port and then reload it with goods for export. That’s roughly double the typical turnaround time for a major international port like Los Angeles or Yokohama, Japan.
As Standard & Poor’s analysts noted in a report last year: “Infrastructure development is critical to enhancing the competitiveness of Indian manufacturing and achieving higher growth.”
The cost of logistics (moving goods from one place to another) is extremely high. The World Bank’s Logistics Performance Index ranks India 35th, slightly better than countries with much smaller economies and populations, such as Portugal or Estonia.
China too, despite the headlines about bullet trains and new highways, still has a long way to go to develop world-class transportation infrastructure. When the World Bank puts all the logistics cost factors together, it ranks China a distant 27th (with Germany at #1, Hong Kong as a separate economic region at #9, the US at #9). #10 and Japan at #1). 12).
Not to disappoint, a few months ago China’s State Council said it planned to spend the equivalent of $2.17 trillion on its railways, highways, airports and seaports. And if you meet those goals, all that money would be spent over the next three years alone!
If China hopes to fulfill its own ambitions for a new “Silk Road” – one that places the country at the center of its own financial, trade and economic network – it will have to spend much more to further improve transport links between its main ports of entry and those of its trading partners.
Of course, those are just the two largest economies in Asia. A recent paper outlined immediate plans to increase infrastructure spending in Asian nations as varied as Indonesia, Thailand and Malaysia.