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Road transport is one of the most widely used and preferred forms of B2B transportation services availed in India. The country’s wide-spread roadways network has not only made road transportation convenient, it has also encouraged logistics and trucking companies to offer diverse logistics services based on location, demand, budget and availability. Needless to say, road transport in logistics has its advantages, disadvantages and challenges. While it can enable goods transportation to remote locations, it can also be expensive and subject to delays caused by poor weather conditions and infrastructure.
So, what is road transport? Put simply, it refers to the movement of people and goods via roadways through trucks, lorries, motorbikes and other vehicles. Road transport is used prominently in India across B2C and B2B logistics making it vital to maintain an efficient road transportation network for supply chain and logistics operations.
Let us discuss the benefits and drawbacks of road transportation, challenges it faces, the road logistics market, and the future of road transport in India.
What are the advantages of road transport?
As a MSME owner, seeking to avail road transportation services for the movement of goods, it’s beneficial to understand how it is good for business. Alternatively, if you want to start a new logistics company specialising in road transport services, it’s important for you to understand how road logistics services can help you grow your business.
Here’s a list of the road transport advantages that you can avail:
- Door-to-door pickup and delivery
India has the second largest roadways network in the world. Because of its landlocked nature, road transportation services are convenient and easy. This makes it possible for logistics companies to provide doorstep pickup and delivery services.
For commercial goods, doorstep delivery can be made to warehouses, wholesalers and distributors. For consumer goods, last mile delivery services can take goods to the end-user directly.
In brief, though other modes of transportation, such as railways, is faster and often cheaper, it is not accessible everywhere, making road logistics a better suited option.
- Long and short distance freight
Another advantage of road logistics service is that it can be used for delivering to long and short distances. Whether it is for delivering small parcels and documents to nearby locations via courier services, or long distances to rural and difficult terrains, road transport can be availed.
Logistics and freight forwarding companies use different types of vehicles to move goods. They also enable easy connectivity with railway stations, airports, shipping ports, logistics parks and industrial and commercial centres. Lesser time is spent and risks involved during materials handling. Packaging expenses are also lower. Packaging goods for cargo is also less cumbersome though at times it may require special packaging e.g., movement of fragile goods or pharmaceuticals.
- Cost-effective for small businesses
Another road transportation advantage for business is that it can at times be more economical and cost-effective that other modes of transport, namely by air and water.
Though the fuel price hike has affected logistics costs, along with unavailability of skilled drivers, technology adoption and infrastructure gaps, road logistics in India is essentially less expensive and often necessary.
For instance, small businesses with less cargo can easily opt and benefit from part truckload services. This allows them to share truck space with another business and save on logistics costs by paying only for the space they occupy.
Even for logistics companies, there is less capital investment, i.e., trucks and lorries are less expensive than ships and airplanes. Moreover, there are easily available commercial vehicle loans to buy the required vehicles.
- Easy to track vehicle movement
Vehicles on road are easier to track than ships and airplanes. Today, most vehicles are GPS enabled that makes real-time tracking of vehicle easy. Most logistics companies today use technology such as GPS, transportation management systems, fleet management software etc. all of which simplifies vehicle tracking.
This is also helpful to customers as they have better insights on the status of their orders and delivery timelines.
- Flexibility in pickup and delivery schedule
One of the benefits of road transport is the flexibility it provides for goods pickup and delivery. Railways, airplanes and ship move cargo in bulk. As such, they have fixed timetables that all must follow with negligible room for change. At best, goods can be kept in storage at additional charges.
With road transportation there is greater flexibility in when goods are picked up and delivered. Though transporters provide estimated TATs, there is the flexibility to modify the pickup and delivery dates as per convenience.
In the case of B2C logistics, customers also have the option to schedule next-day deliveries as per their preferred time slots. That is, services for road logistics can be personalised to a large extent.
- Simpler documentation process
In goods movement by road, there is minimum paperwork and formalities involved compared to sea and air transport. True, compliance requirements such e.g., raising invoices as per transport bill format, GST, toll bills, transit insurance etc. have to be followed but overall, it is less time-consuming and complex.
What are the disadvantages of road transportation?
Now that we understand what is road transport and its advantages, let us take a look at the disadvantages that businesses face in parcel delivery services by road.
While some of the challenges of road transport is specific to small businesses (e.g., cost), there are other problems that’s common to all businesses (e.g., infrastructure).
Let us take a look at some of the disadvantages of road transport services:
- Slow movement of goods
As can be guessed, moving goods by road is slower than moving goods via railways and air. There are multiple factors affecting it, namely poor infrastructure and road conditions, unforeseen road blockages, vehicle breakdown, changing weather conditions, rest time for drivers, cooling time for engines and more.
These factors lower the speed and increase the delivery turnaround time for road logistics.
- Limitation in freight weight
Another road transport disadvantage is related to the weight of goods that can be carried. If you need to move goods such as heavy metal or bulk cargo, road transportation services are not the most suitable option. The cost of transportation and packaging will be higher and additionally there will the risk of damaging the goods during loading and unloading. Special equipment e.g., cranes will have to be used during material handling adding to the overall cost.
All trucks and heavy-load vehicles have maximum loading capacity and will not be able to carry load beyond the stipulated limit. Moreover, when transporting over long distances, bad road conditions and terrains will further increase chances of wreckage and delay. Many businesses today are preferring pallet shipping to help solve the challenge of transporting heavy weight/ bulk load items safely.
In such cases, an alternative to road transportation should be sought.
- Inconsistency in service quality across players
A major disadvantage of road transport in India is the inconsistency in service provided by logistics service providers.
While there are some established best-practices for logistics operations, not all logistics players are consistent in their services.
Established freight and logistics companies try to ensure consistency and superior logistics services. They have the resources, manpower, technology, infrastructure and expertise to maintain top notch service. However, many regional small players cannot provide consistency in logistics services. Small players moreover are often not well organised internally, adding to their service quality challenges.
- Lack of uniformity in logistics costs
Whether you are shipping from Delhi to Mumbai or Bangalore to Chennai, there is no uniformity in shipping quotes from different logistics partners.
When it comes to transportation by air and railways there is basic uniformity in rates. This makes it easier for businesses to get fair prices on their cargo and freight bookings.
However, when it comes to parcel service by road, transporters charge differently. Apart from government taxes and toll charges, there are packaging charges, materials handling charges etc. which are not provided upfront and adds to the overall logistics cost.
Road logistics challenges and solutions
Road transport is a vital component of the overall logistics systems enabling connection between organisations (sellers) and their customers. While there are several initiatives being taken up by the government to bring improvement, there are visible problems that B2B road transportation face.
Problems of road transportation in India for business
|B2B road transport problems||Solutions to logistics challenges|
|Fuel price hike in India causing increase in transportation charges and fees||Route optimisation, fuel-efficient vehicles, EV trucks, PTL shipping over FTL etc.|
|Poorly maintained road infrastructure and traffic including congestion, parking, multiple crossings||Government initiatives for better road maintenance to reduce vehicle wear and tear, better traffic management to save time, suggestion for having separate lanes for heavy commercial vehicles in cities and highways, building new roads in busy routes etc.|
|Tax burdens and tolls especially on highways||Government initiatives on reducing tax burden that increase overall logistics costs|
|Unforeseen obstructions caused by traffic, weather condition, vehicle breakdown etc.||Automation and use of technology for real time updates and suitable action-plan|
|Environmental impact (e.g., almost 40% of air pollution caused by road transport – TOI, April 2023)||EV vehicles, shared load e.g., PTL and LTL, green highway projects, vehicles with flex machines etc.|
The future of road transport systems in India
The multiple challenges that road cargo transportation in India witnesses is a priority for the government, considering logistics costs impacts trade and business. The road transport market size in India is enormous and growing, owing to the multiple benefits it offers transporters.
- Innovation in road logistics:
According to data from MoRTH almost 60% of the freight movement in India is carried out via road transportation, making innovation and development in road logistics a must for business, trade and growth. As per the credit rating agency ICRA’s predictions, the road logistics market in India will continue to grow in FY2024. Revenue growth will continue, driven by digitisation and demand across e-Commerce, FMCG, pharmaceuticals and other sectors.
- Infrastructure development:
There have also been significant investments and plans of development of National Highways. According to the Ministry of Road Transport and Highways (MoRTH), almost 10,993 kms of national highway roadways was constructed in 2022-23 (Source: The Economic Times, April 2023). Better highways will help to reduce the poor road logistics challenges enabling faster and safer movement of goods by road.
- Role of eCommerce:
The growing e-Commerce sector and retail sales moreover has surged demand for freight transport by road, with predictions taking the road logistics market size to reach USD 330 billion by 2025 (Source: The Economic Times, Dec 2021).
- Logistics cost:
All these figures indicate that the future of road transport in India is on the forward track. However, the overarching challenge of higher logistics costs remains an area of concern. Though there are multiple initiatives being undertaken, e.g., financial aid for multi-modal logistics parks to reduce costs and time in freight movement, it continues as a permanent challenge for all logistics businesses.
Additionally, there are also environmental and ecological concerns which makes it important to initiate necessary policies to improve and create sustainable road transport systems in India.