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The contribution of logistics in India’s GDP is about 14.4% of the GDP and is expanding at a rapid pace. The logistics market in India is expected to grow at Compound Annual Growth Rate (CAGR) of 15.5% by 2024. Moreover, the logistics sector in India employs over 22 million people and is further expected to create employment to another 1.2 million by 2025.
Some of the growth drivers in the sector includes government’s focus on infrastructure development, FDI reforms and the recently implemented Goods and Services Tax (GST) that will have an impact on the logistics industry in India. Different initiatives like Make in India and Digital India are also expected to contribute towards the growth of the logistics industry in the country.
This article will give you an overview of logistics industry in India – its existing and emerging scenarios, its challenges and the trends that is likely to contribute to its transformation.
Types of Logistics Services in India:
- Transportation logistics
- Warehousing logistics
- Distribution logistics
- Supply chain management
- Project logistics
What are the challenges faced by logistic industry in India?
It is a fact that logistics industry in India is evolving rapidly and is regarded as the backbone of the economy for moving goods across the country. However, evolutionary changes like technological innovations, change in consumer demands and new regulations often bring challenges to this sector. In addition to that, the meaning of logistics services has also expanded over the years, especially with the advent of eCommerce business, posing different challenges with reference to timely delivery, cost reduction, returns and refund management, and more.
Here are some of the challenges that logistics companies face in India:
- Transportation cost: One of the biggest heads in any logistics company is transportation cost and unstable fuel prices and maintenance can increase it further. If you are looking at saving transportation cost, you can adopt alternatives like combining shipments, installing routing software and reducing carriers. Many businesses today switch between partial-truckload, less-than truckload, and full truck load shipments (FTL vs PTL vs LTL) to manage costs based on cargo.
- Manpower management: Manpower plays a significant role in logistics and communicating with drivers and staff who mostly are on the road gets difficult. The logistics sector needs skilled manpower and shortage of drivers is a never-ending challenge. Moreover, there is a lack of training institutions too.
- Handling customer experience: The logistics industry is highly competitive, and customers are spoilt for choices. Logistics companies are expected to deliver the best to create customer delight and thereby generate repeat business. Providing assistance at every touchpoint can be challenging for providers and affect customer experience.
- Visibility: Lack of complete control and visibility of the supply chain map is often a challenge for logistics companies. It is important to have complete visibility of the supply chain at all stages to ensure that shipments are been transported through the correct route and delivered on time.
- Regulations: Logistics rules and regulations in India that are enforced by national, regional and local authorities keeps changing at times and needs constant monitoring. If not handled in a timely manner, these impact logistics and delivery timelines, and efficiency is compromised.
- Technology adaption: It is a must to adopt technology in logistics, and inability to implement tools like shipment tracking systems, automation systems, data analytics, etc. often prove to be a deterrent for logistics companies.
Who are the major players in logistics industry in India?
Every business requires an efficient logistics partner to take care of their logistics and delivery operations. Finding an end-to-end logistics company may get challenging considering the range of players and types of logistics and transportation services offered. Depending on the size of your business and the requirement, you can choose from these major players for your logistics needs.
- Blue Dart: A global carrier with a huge network across India and abroad, Blue Dart offers you options to select your preferred date of delivery and time, through scheduled and slot-based delivery. It also offers specialised services like automated proof-of-delivery updates, weather-resistant packaging, cash-on-delivery and online payment options.
- Delhivery: Another Indian logistics company that handles logistics for 7,500+ e-commerce businesses across India. Their USP includes on-demand delivery, including next-day and same-day delivery services and scheduled deliveries. Equipped with API integration, Delhivery ensures picking, packing, shipping label generation, and delivery of orders within timelines.
- FedEx: FedEx is a well-equipped logistics provider with trained personnel and top-of-the-line transportation services equipped to handle all kinds of cargo. They also aid in customs clearances for cross-border and interstate shipments.
- Ekart Logistics: Originally a Flipkart initiative to serve inhouse orders, Ekart has now evolved to provide logistics support to various other eCommerce enterprises. Popular due to low rates and delivery to remote locations, Ekart caters to same-day delivery in 13 cities in India and next-day delivery in 50.
- DHL: An international logistics company, DHL has an extremely wide distribution network across India to optimise supply chain and logistics solutions domestically and globally. DHL logistics also provides warehousing services and has over 800 fulfillment centres scattered throughout the world.
What are the key trends in logistics industry in India?
The transportation and logistics sector in India is witnessing transformational growth with the rise e-commerce and retail businesses and has been successful to keep pace with the latest demands of the sector. Some of the trends in logistics are highlighted below:
- The eCommerce boom in India has deeply impacted the logistics industry. Customers prefer to shop online, and this has led to a huge increase in demand for logistics services.
- Another upcoming trend is the importance of last-mile delivery in logistics as businesses strive to complete deliveries to their customers as efficiently and quickly as possible.
- Express delivery also has shown a strong growth in the logistics sector with customers expecting faster deliveries like never before. With availability of options like same day deliveries, logistics companies need to up their operations to meet this demand.
Another service that is fast trending is the rise of reverse logistics. Companies to create better customer satisfaction are ensuring that returns are handled efficiently and on time.
How to improve logistics efficiency
- Monitor Key Progress Indicators (KPIs)
- Invest in new technology
- Train your staff thoroughly
- Good communication
- Outsource to 3PL
What is the future of the logistics industry in India?
As per a study titled ‘India E-commerce Logistics Market Performance and Future Outlook to 2027’, the size of the Indian logistics market is expected to grow at a CAGR of 5% from 2022-27, generating market revenue of USD 633.6 billion by 2027. Some of the recent developments in the logistics sector are discussed below.
The pandemic had a positive impact on the Indian eCommerce logistics sector. Logistics providers were forced to take several actions to streamline operations during the period when there were severe supply chain disruptions due to prolonged lockdowns. Players expanded their service in small towns and rural areas to ensure business continuity and this helped in building larger networks.
Further, government initiatives like Make in India and the Secured Logistics Document Exchange (SLDE) along with a calculator for Green House gas emissions has helped this sector to improve the ease of doing business.
There has been maximum adoption of digitisation in the past two years as businesses realised the importance of embracing a computerised supply chain ecosystem for business growth. On the other hand, Indian consumers are increasingly becoming tech-savvy thus creating an opportunity for e-Commerce logistics service providers to grow. The fact that there are 820 million smartphone users in India has given rise to better opportunities for penetration of e-commerce.
To sum up: Choosing the right logistics partner in India
The logistics and warehousing industry in India need to invest in technologies to develop innovative and efficient solutions to reduce the reliability on human assistance. Businesses looking for logistics support should look for providers who offers the best in terms of efficiency and price. It is recommended to collaborate with 2-3 different logistics partners. This will give you the option to have backups and identify partners who offer efficient services.
Alternatively, you can explore logistics services on Tata nexarc’ nexarc Logistics. You can find doorstep pick-up and delivery services offered by trusted partners for your logistics needs.