Growth of ever evolving Indian logistic industry
07 October 2019
Today's logistics is a blend of infrastructure, technology and new types of service providers, says Sunit Sharma, co-founder of Delhi-based technology driven end- to-end logistics service provider GoBOLT
Logistics is the most rapidly evolving industry in India today and considered as the backbone of the economy. It is the blend of infrastructure, technology and new types of service providers, which defines whether the logistic industry is able to help consumers reduce their costs and provide effective services.
Over the last couple of years, logistics has seen significant development which is reflected in the global rankings. According to Global Ranking of the World Bank's 2018 Logistics Performance Index, India jumped to 35th rank in 2018 from 54th in 2016 in terms of overall logistics performance.
The Indian logistics sector is currently around $160 billion and estimated to be of $215 billion by 2020. This phenomenal growth is driven by emerging ecommerce retailers especially in Tier II cities, a corresponding increase in demand and the entry of more multinational companies in the FMCG segment. This has further resulted in the rapid advancement of retail channels requiring efficient inventory management and warehousing solutions.
Many companies have started engaging with logistics service providers for catering to the customised demands of consumers. The global logistics market will register a CAGR of over 7 per cent by the end of 2022.
There are several areas for creating a sustainable roadmap for the growth of the Indian logistics industry.
The government has reiterated its firm commitment on modernising the functionalities of Indian logistics with a key focus on infrastructure development. Key infrastructure development projects have been rolled out to improve supply chain efficiencies and enhancing connectivity to support logistics players tap the under-leveraged markets in the hinterlands. Further development depends upon soft infrastructure like education, training and policy framework as much as the hard infrastructure. International cooperation is also required to make the logistics sector grow.
Policy and regulatory boost
Key reform measures and policy interventions like the unveiling of the Goods and Services Tax (GST), relaxed FDI regulations and granting of infra status has boosted the core competencies of the Indian logistics industry. GST was a game-changer as it laid the foundation for the setting up of large format multi-modal logistics parks along key consumption and industrial centres, which can function as freight aggregation and distribution hubs.
With the implementation of GST, logistics companies, which are currently forced to set up many small warehouses across multiple cities can set up just a few big warehouses and have models for freight movement from the warehouses to different manufacturing plants, wholesale outlets, retail outlets and the various POS.
This is backed by growth in the e-commerce sector and expansionary policies of FMCGs. Freight transport between the smaller delivery companies will expand the service areas, improve quality, increase loads on the trips and reduce the costs.
New tech leverage
The emergence of new age technologies like artificial intelligence, internet of things and machine learning will disrupt the conventional working of the country’s logistics sector. The impact of these technologies is expected to enhance productivity across the logistics industry and streamline operational processes. These technologies will play a vital role in boosting efficiencies of supply networks, reduce wastages and lead to supply chain optimisation. The speed and scale with which we align our supply chain strategies to tackle the complexities of a changing global trade order will be the key to determining our position in the global logistics ranking.
Some solutions to prevailing challenges
It is necessary to realise that the benefits can be brought about by the companies by establishing training intuitions. Proper and safe storage and warehousing facilities are important for the growth of the logistics industry. By solving the problem of automatic stockpiling, inventory removal and maintenance of the available stock portfolio, we have the opportunity to develop new cost-cutting processes.
Warehousing is required for changing dynamics of manufacturing, global procurement and new models of sales and distribution. It is also important to enhance research and development because it encourages the use of indigenous technology, which can make the industry competitive in respect to cost and bring improvement in the service attributes.
The global outlook is expected to significantly improve as India Inc begins to tackle the economic downturn. Future cooperation between companies will reduce logistics costs and make use of transport capacities that are available, which will help the industry to grow and become one of the fastest growing sectors. Specialised services for logistics delivery will be in demand to cope with delicate products such as fresh food and computer chips.
The industry has moved from the status of just a service provider to one which provides end-to-end solutions to customers. Thus, all these developments and growth have paved the way for a bright future for the logistics industry over the coming years.