Chapter 7 Transport and Communication

Transport and Communication

The spatial separation between natural resources, production centers, and markets necessitates systems to connect them. Transport and communication services fulfill this crucial role, establishing vital links that facilitate trade and economic activity. In the modern world, these services have become highly distinct and specialized, essential components supporting mass production, complex exchange systems, and contributing significantly to high living standards and quality of life.

A transport network is formed by joining various places (known as nodes) with a series of routes (referred to as links), creating a interconnected pattern across space.

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Introduction

This section provides an overview of the fundamental need for transport and communication in economies where resources and markets are geographically separated. It highlights their role in supporting trade, mass production, and overall quality of life, noting their evolution into distinct and specialized services today. It also defines the concept of a transport network.

Modes Of Transportation

Transportation involves the physical movement of people and goods from one location to another. This movement can occur over land, water, or through the air, utilizing various carriers ranging from humans and animals to complex vehicles. Pipelines are a specialized mode for transporting liquids and gases.

Transport is an organized service industry meeting the need for mobility, comprising routes, vehicles, and the infrastructure/organization for maintenance and handling goods. Efficient transport promotes cooperation and unity among geographically dispersed populations and is vital for defence.

The choice and significance of a particular mode of transport depend on factors like the type of goods (bulky, perishable, valuable), distance, transport costs, and the availability of the mode. A well-managed transport system integrates different modes, allowing them to complement each other for optimal efficiency.

Mode	Primary Use	Key Advantages	Key Disadvantages
Land (Roads)	People & goods (short distances, door-to-door)	Economical for short haul, flexibility, door-to-door service	Costly for long distance/bulky goods, affected by weather/traffic
Land (Railways)	Bulky goods & passengers (long distances)	Efficient for large volumes over long distances, less affected by weather than roads	Fixed routes, not door-to-door, less flexible than roads
Water (Sea/Ocean)	Bulky/heavy cargo (inter-continental, long distances)	Cheapest for bulky goods over long distances, no route construction needed (oceans)	Slow, limited to waterways/coasts, port dependence
Water (Inland Waterways)	Bulky cargo (rivers, canals, lakes)	Cheaper than land transport for heavy cargo where navigable	Limited by navigability of water bodies, seasonal restrictions, competition
Airways	Passengers (long distances), valuable/light/perishable cargo, inaccessible areas	Fastest, overcomes geographical barriers, global reach	Very costly, requires expensive infrastructure, capacity limitations
Pipelines	Liquids & gases (uninterrupted flow)	Efficient for continuous flow of specific substances, less affected by weather/terrain once built	High initial cost, limited to specific materials, fixed route

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Land Transport

Historically, land transport evolved from humans carrying loads to using animals, carts, wagons, and eventually mechanized forms like railways and motor vehicles. The invention of the steam engine powered the rise of railways in the 19th century, opening up vast continental interiors. The internal combustion engine revolutionized road transport with improved vehicles and road quality.

• Early Forms: Human porters, pack animals (mules in mountains, camels in deserts, horses, bullocks in India, dogs/reindeer on snow), carts/wagons (after the wheel). These are generally the most expensive per unit of cargo/distance.
• Roads: Economical for short distances and offer door-to-door service. Quality varies; unmetalled roads are seasonal, while even metalled roads can be affected by heavy rain/floods. Roads are crucial for trade, commerce, and tourism, especially in developing countries with limited rail networks. Developed countries have extensive networks of high-quality highways (motorways, autobahns, inter-state highways) for fast, unobstructed movement. North America has the highest road density.
• Traffic Flows: Dramatic increase in road traffic leads to congestion, particularly in cities, with predictable peak hours. Solutions often involve investing in improved public transport and road infrastructure.
• Highways: Metalled roads designed for high-speed, uninterrupted vehicular movement over long distances. Connect cities and ports. Examples include the Trans-Canadian Highway, Pan-American Highway, Stuart Highway (Australia), major networks in Europe and China, the Golden Quadrilateral in India, and routes in Africa.
• Border Roads: Strategic roads built along international boundaries for defence purposes and connecting remote border areas to major cities.
• Railways: Suitable for transporting bulky goods and large numbers of passengers over long distances. Gauges (width of tracks) vary globally (broad, standard, metre, smaller). Commuter trains are important in many large cities. Europe has a dense rail network, with high densities in industrial regions; passenger transport is significant. Russia relies heavily on railways (90% of transport); density is highest west of the Urals. North America has the most extensive network, primarily used for bulky freight. Australia has a significant network, including a trans-continental line. South America's network is dense only in specific regions (Pampas, Brazil's coffee region); links are limited elsewhere. Asia has dense networks in highly populated areas (Japan, China, India) but is less developed in West Asia. Africa's network is limited, with South Africa having a substantial portion linked to mining areas; networks often connect ports to the interior but lack inter-country integration.
• Trans–Continental Railways: Rail lines that span across a continent, connecting its two ends. Built for economic and political reasons to facilitate long-distance travel and transport.
  • Trans–Siberian Railway: The longest (9,332 km), double-tracked, and electrified trans-continental railway in the world, connecting St. Petersburg in Western Russia to Vladivostok on the Pacific coast. It is a major artery opening up Russia's Asian regions and has southern connecting links.
  • Trans–Canadian Railways: Links Halifax on the east coast to Vancouver on the Pacific coast (7,050 km). Connects industrial, wheat, and forest regions, serving as Canada's economic artery, including links to the Great Lakes waterways.
  • The Union and Pacific Railway: Connects New York (Atlantic) to San Francisco (Pacific) in the USA. Important for transporting ores, grain, paper, chemicals, and machinery.
  • The Australian Trans–Continental Railway: Runs west-east across southern Australia, linking Perth to Sydney.
  • The Orient Express: Historically famous line from Paris to Istanbul, significantly reducing travel time compared to earlier sea routes, transporting goods like cheese, wine, and machinery.
• Pipelines: Used for uninterrupted transport of liquids (water, petroleum, milk, sludge, sewers) and gases (natural gas, LPG, liquidified coal). Extensive networks exist in the USA (e.g., Big Inch for petroleum) and in Europe, Russia, West Asia, and India connecting oil wells to refineries, ports, and markets. International pipelines connect countries (e.g., Turkmenistan to Iran/China, proposed Iran-India).

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Water Transport

Water transport is advantageous because it requires no route construction on existing water bodies, offering cheaper haulage due to lower friction compared to land. It is particularly cost-effective for carrying bulky materials over long distances. Requires providing port facilities at ends.

• Sea Routes: Oceans act as natural highways. Sea transport is crucial for carrying bulky material between continents. Modern ships are equipped with advanced navigation aids, refrigerated chambers, specialized tanks, and containers for efficient cargo handling.
• Important Sea Routes:
  • The Northern Atlantic Sea Route: Links the highly industrialised Northeast USA and Northwestern Europe. It is the busiest route globally, handling one-fourth of the world's foreign trade ("The Big Trunk Route"). Both ends have advanced port facilities.
  • The Mediterranean–Indian Ocean Sea Route: Passes through the Old World, serving many countries. The Suez Canal significantly shortened this route by connecting the Mediterranean and Red Seas, avoiding the longer journey around the Cape of Good Hope. Important ports include Port Said, Aden, Mumbai, Colombo, Singapore.
  • The Cape of Good Hope Sea Route: Connects Western Europe with West Africa, South Africa, Southeast Asia, Australia, and New Zealand. Traffic has increased with the development of Africa's resources.
  • The Southern Atlantic Sea Route: Links Western Europe/West Africa with parts of South America (Brazil, Argentina, Uruguay). Traffic is less due to limited development and population density in regions it connects, and similar resources in South America and Africa.
  • The North Pacific Sea Route: Links ports on the west coast of North America (Vancouver, Seattle, San Francisco) with ports in Asia (Yokohama, Shanghai, Hong Kong). Several routes converge at Honolulu; the Great Circle route provides a shorter link.
  • The South Pacific Sea Route: Connects Western Europe and North America with Australia, New Zealand, and Pacific islands via the Panama Canal. Also used for reaching parts of Asia.
• Coastal Shipping: Transporting goods along a country's coastline. A convenient and cheaper mode for countries with long coastlines (USA, China, India, European Schengen States). Can help reduce congestion on land routes.
• Shipping Canals: Man-made waterways facilitating sea navigation, significantly shortening distances.
  • The Suez Canal: Constructed in 1869 in Egypt, linking the Mediterranean and Red Seas. A sea-level canal without locks (approx. 160 km long, 11-15 m deep). Greatly reduced the sea distance between Europe and the Indian Ocean. Heavy tolls may make the longer Cape Route cheaper for some ships if time isn't critical.
  • The Panama Canal: Connects the Atlantic and Pacific Oceans across the Isthmus of Panama (approx. 72 km long). Uses a six-lock system to raise and lower ships across different levels. Significantly shortens distances between New York and San Francisco and between Europe/Eastern USA and the west coast of the Americas and East Asia. Economically vital for Latin America, though its significance is considered less than the Suez for global trade flows.
• Inland Waterways: Utilize rivers, canals, lakes, and coastal areas. Important since ancient times (e.g., riverways as main highways in India). Suitability depends on channel navigability (width, depth), water flow continuity, and transport technology. Can transport heavy cargo (coal, cement, timber, ores). Importance declined in some areas due to competition (railways), water diversion (irrigation), and poor maintenance. Developed countries have invested in enhancing river navigability (dredging, bank stabilisation, dams).
• Important Inland Waterways:
  • The Rhine Waterways: Flows through Germany and the Netherlands, navigable for 700 km from Rotterdam to Basel (Switzerland). Heavily used, connects industrial areas of several European countries to the North Atlantic Sea Route.
  • The Danube Waterway: Important for Eastern Europe, flows east from the Black Forest. Navigable for a significant length, exporting wheat, maize, timber, machinery.
  • The Volga Waterway: Russia's important waterway (11,200 km navigable), draining into the Caspian Sea. Connected to the Moscow region and the Black Sea by canals.
  • The Great Lakes – St. Lawrence Seaway: Connects the Great Lakes (Superior, Huron, Erie, Ontario) in North America via canals (Soo, Welland) to the St. Lawrence River estuary, forming a commercial waterway deep into the continent. Ports like Duluth and Buffalo are equipped for ocean-going vessels.
  • The Mississippi Waterways: The Mississippi-Ohio system links the interior USA to the Gulf of Mexico, navigable for large steamers up to Minneapolis.

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Air Transport

Air transport is the fastest mode, suitable for long-distance passenger travel and rapid movement of valuable, light, or perishable cargo globally. It is often the only viable option for reaching inaccessible areas, overcoming geographical barriers like mountains or deserts. Air travel has significant strategic importance (e.g., military operations).

The rapid expansion of air networks has led to a connectivity revolution, making travel time between places drastically shorter (e.g., London to New York in hours by supersonic aircraft). However, air transport is very costly, requiring elaborate and expensive infrastructure like hangars, fuelling facilities, maintenance support, and airports. Airport development is concentrated in highly industrialised countries with large traffic volumes.

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Inter-Continental Air Routes

The Northern Hemisphere has a prominent east-west belt of inter-continental air routes, with dense networks in Eastern USA, Western Europe, and Southeast Asia. The USA has the most extensive network, accounting for a majority of world airways. Major airports like New York, London, Paris, Tokyo, etc., serve as crucial nodal points connecting routes across continents. Areas with sparser populations, limited landmass, and lower economic development (e.g., Africa, Asiatic Russia, South America, and the Southern Hemisphere) have fewer air services.

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Pipelines

Pipelines are extensively used for the continuous and uninterrupted flow of liquids and gases. Common substances transported include water (familiar for domestic supply), petroleum, and natural gas (LPG). They can also transport liquidified coal or, in specific cases like New Zealand, milk from farms to factories.

The USA has a dense network of oil pipelines. Europe, Russia, West Asia, and India also use pipelines to connect oil wells, refineries, ports, and markets. International pipelines like Turkmenistan's links to Iran and China, and the proposed Iran-India pipeline, transport energy resources across borders.

The Foreign Exchange Market

So far, we have looked at international transactions in aggregate. Now we will consider a single transaction and the concept of foreign exchange required to complete it. When individuals or entities in one country want to purchase goods, services, or assets from another country, they need the currency of that foreign country. The market where national currencies are traded is called the foreign exchange market.

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Foreign Exchange Rate

The Foreign Exchange Rate (Forex Rate) is the price of one currency in terms of another. For example, if $\textsf{₹}80$ is needed to buy one US Dollar, the exchange rate is $\textsf{₹}80/$ or $\$1/\textsf{₹}80 = \$0.0125/\textsf{₹}.$ The exchange rate links the currencies of different countries and allows for the comparison of international costs and prices.

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Demand For Foreign Exchange

People in a country demand foreign exchange when they need to make payments to residents of other countries. Reasons include:

• Purchasing goods and services from foreign countries (Imports).
• Sending gifts or making transfers abroad.
• Investing in financial or physical assets in foreign countries.
• Travelling abroad (tourism).

The demand for foreign exchange is generally inversely related to the exchange rate. If the exchange rate (price of foreign currency) rises, foreign goods and services become more expensive in domestic currency terms, reducing demand for imports and thus reducing the demand for foreign exchange, ceteris paribus.

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Supply Of Foreign Exchange

Foreign currency flows into a country (supply of foreign exchange) when residents of foreign countries make payments to residents of the home country. Reasons include:

• Purchasing goods and services from the home country (Exports).
• Sending gifts or making transfers to the home country.
• Investing in financial or physical assets in the home country (Capital Inflows).
• Travelling to the home country (tourism).

The supply of foreign exchange is generally positively related to the exchange rate. If the exchange rate rises, domestic goods and services become cheaper for foreigners in their currency terms, potentially increasing exports and thus increasing the supply of foreign exchange, ceteris paribus (though the exact effect depends on the price elasticity of demand for exports).

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Determination Of The Exchange Rate

The method by which a country's exchange rate is determined falls into different categories: Flexible, Fixed, or Managed Floating.

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Flexible Exchange Rate

In a Flexible Exchange Rate System (also known as Floating Exchange Rate System), the exchange rate is determined solely by the free interaction of demand and supply for the currency in the foreign exchange market. Central banks do not intervene to influence the rate.

The equilibrium exchange rate is set where the demand curve for foreign currency intersects the supply curve. If demand increases (shifts right), the exchange rate rises. If supply increases (shifts right), the exchange rate falls.

In a flexible system, an increase in the exchange rate (price of foreign currency in domestic currency) is called Depreciation of the domestic currency. A decrease in the exchange rate is called Appreciation of the domestic currency.

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Speculation

Expectations about future exchange rate movements drive speculation. If speculators anticipate a foreign currency will appreciate, they will buy it now, increasing current demand and potentially causing the expected appreciation to happen sooner. If they expect it to depreciate, they will sell it now, increasing current supply.

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Interest Rates And The Exchange Rate

Differences in interest rates between countries (interest rate differentials) influence short-term capital flows. Higher interest rates in a country attract foreign investors, increasing demand for that country's currency and leading to its appreciation, as funds flow in seeking higher returns.

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Income And The Exchange Rate

An increase in domestic income typically leads to increased demand for imports, increasing demand for foreign currency and causing the domestic currency to depreciate. Conversely, an increase in foreign income boosts demand for exports, increasing the supply of foreign currency and potentially appreciating the domestic currency. The overall effect depends on relative income growth rates and the sensitivity of trade to income.

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Exchange Rates In The Long Run

The Purchasing Power Parity (PPP) Theory suggests that in the long run, exchange rates between two countries should adjust to equalize the price of a common basket of goods in both countries. This implies that long-run exchange rates reflect differences in national price levels. A country with higher inflation is expected to see its currency depreciate according to PPP.

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Fixed Exchange Rates

In a Fixed Exchange Rate System, the government or central bank sets the exchange rate at a specific level and actively intervenes in the foreign exchange market (buying or selling foreign currency) to maintain this pegged rate. If market forces would push the rate above the fixed level (excess demand for foreign currency), the central bank sells foreign currency from reserves. If market forces would push it below (excess supply), the central bank buys foreign currency, accumulating reserves.

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Devaluation And Revaluation

In a fixed exchange rate system:

• Devaluation is a deliberate action by the government to raise the fixed exchange rate (making the domestic currency cheaper).
• Revaluation is a deliberate action by the government to lower the fixed exchange rate (making the domestic currency more expensive).

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Merits And Demerits Of Flexible And Fixed Exchange Rate Systems

Each system has trade-offs:

• Fixed Rates: Offer stability and certainty for international trade/investment. But require substantial reserves, limit independent monetary policy, and are vulnerable to speculative attacks that can force devaluation.
• Flexible Rates: Don't require large reserves, allow independent monetary policy, and automatically adjust to help correct BoP imbalances. But they create exchange rate volatility and uncertainty, which can hinder trade and investment.

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Managed Floating

Most countries use a hybrid system called Managed Floating (or "dirty floating"). The exchange rate is primarily market-determined, but the central bank intervenes occasionally to moderate excessive fluctuations or guide the rate, without targeting a specific fixed level. This system blends market determination with central bank discretion.

Communications

Communications services involve transmitting information, messages, and ideas across distances. Historically linked closely with transport, electronic technologies have revolutionized communication, making it faster and less reliant on physical movement for immediate transmission.

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Satellite Communication

Satellite communication emerged significantly in the 1970s. Artificial satellites placed in Earth's orbit connect even remote areas globally. They have made the cost and time of communication largely independent of distance, meaning sending a message over 500 km costs the same as over 5,000 km via satellite. India has made notable contributions to satellite development (Aryabhatt, Bhaskar, Rohini, APPLE, INSAT), enhancing long-distance communication, television, radio, and weather forecasting.

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Cyber Space – Internet

Cyberspace is the realm of electronic computer networks, primarily encompassed by the Internet and the World Wide Web (WWW). It is a digital space for communicating and accessing information without the physical movement of people or paper. The Internet has seen unprecedented growth, connecting billions of people worldwide, with a significant shift in user base towards developing countries in recent years.

The Internet, along with fax, television, and radio, allows information to be accessed across geographical barriers and time zones, expanding the economic and social space of humans through applications like e-mail, e-commerce, e-learning, and e-governance. Modern communication systems, particularly the Internet, have been instrumental in making the concept of a "global village" a reality.