Gurcharan Singh, Founder, LogixGRID
To develop India’s Logistics sector, focus on new technology, improved investment, skilling, removing bottlenecks, improving inter-modal transportation, automation, single window system for giving clearances, and simplifying processes are required, observes Gurcharan Singh, Founder, LogixGRID

Where does India’s Logistics Industry stand vis-à-vis the world?

Logistics costs in India exceed those in other countries. The figure is higher compared to 10-11 percent for BRIC countries, and 8-9 percent for developing nations. USA spends 9.5 percent of the GDP on logistics, while Germany is even more competitive with a share of 8 percent. Higher logistics costs in India could be ascribed to the lack of efficient inter-modal and multi-modal traditional systems.

As of now, the logistics sector is dominated by transportation, which has over 85 percent share in value terms; its share is set to remain high for the next few years. The rest 15 percent share is borne by storage. The sector is employment intensive, absorbing 22 million people.

Currently, the Indian logistics industry is highly fragmented owing to the presence of numerous unorganised, with organized players accounting for approximately 10 percent of the total market share. With the consumer base of the sector encompassing a wide range of industries including retail, automobile, telecom, pharmaceuticals and heavy industries, logistics industry has been increasingly attracting investments in the last decade. Also, the industry faces challenges such as under-developed material handling infrastructure, fragmented warehousing, multiple regulatory and policy making bodies, lack of seamless movement of goods across modes, and minimal integrated IT infrastructure.

How has technology helped the logistics sector become more efficient?

The emergence of technological innovation is creating strong ripples in the logistics sector in India. On the one hand, it is reducing the friction in the world of logistics, while on the other side, it is making it a more efficient and automated process. Some of the most significant tech trends that are currently disrupting the logistics sector of India include:

Blockchain: Documentation and information verification continues to remain the Gordian knot of the global logistics industry. The biggest challenges are faced perhaps in areas such as procurement, transportation management, order tracking, and customs collaboration. Blockchain, the revolutionary technology that made crypto currencies a global phenomenon, has the potential to address this complication with considerable ease. Blockchain technology is enabling us to counter the areas of friction in logistics seamlessly. The technology is also optimizing the cost and time in logistics operation, including ocean freight shipments, and is experiencing widespread adoption in India’s logistics sector.

AI and ML for supply chain optimization: Artificial Intelligence has lately become the buzzword for nearly all industries, including logistics. It is enabling logistics players to automate their supply chain and collate first-hand insights that otherwise remain hidden in the constantly generating data. They fundamentally enhance the visibility of operations, decrease turnaround time, increase output, and eliminate bottlenecks by automating and streamlining processes. This significantly boosts operational efficiency, eliminates SLA breaches, and makes the customer experience more pleasant.

IoT for tracking: Today, shipment tracking (of a separate product and the entire consignment) can be done in real-time with the use of RFID tags, GPS, and specialized sensors. This helps in pre-emptive detection of potential SLA breaches and enables logistics players to fast-track their shipment to avoid the same.

Other supply-chain-related bottlenecks can also be removed with the use of specific approaches such as geo-fencing, geo-tagging, and proximity alert. For instance, the forward supply chain can be readied when a shipment is approaching the warehouse, thereby reducing times in stopovers. This decreases delays in transfers and boosts operational efficiency.

Autonomous transport
: These technological interventions have already materialized in the western markets and wouldn’t take long to surface in India as well. It is projected that autonomous transport solutions can save as much as 20% of the fuel costs by supporting transportation, warehousing operations, and last-mile deliveries. India has already approved a regulation for drones, and related frameworks for other use cases are in the pipeline. The launch of 5G services by 2020 is also anticipated by the industry and will pave the way for logistics 4.0 in India.

According to domestic rating agency ICRA, the Indian logistics sector is expected to grow at a rate 8-10% over the medium term. This is an improvement over the CAGR of 7.8% at which the industry grew during the last five years. The industry is currently estimated to be around US$ 160 billion. With implementation of GST the sector is expected to benefit and touch US$ 215 billion over the next two years, as per the Economic Survey 2017-18.

Logix Grid

What is the role of new-age start-ups and companies like LogixGRID in the Indian Logistics Industry?

In India, logistics start-ups majorly gained their foothold after the onset of the e-commerce industry. As players like Flipkart, Snapdeal, Amazon gave way to their in-house logistics services, a number of start-ups started tapping other areas to support the existing supply chain solutions, or to fill the gaps in the otherwise fragmented and unorganised Indian logistics industry. And the difference is widely visible in the last 10 years.

As per a June 2016 report by World Bank, India has jumped 19 places in the Global Logistics Performance Index, from 54 in 2014 to 35 in 2016. Also, in November 2017, the government gave Infrastructure status to logistics, clubbing it with transport which means that in the near future, Indian start-ups can sell their goods in global markets at much better competitive prices.

A significant role here is being played by government initiatives such as Make In India, geared towards improvements in the country’s infrastructure and increased domestic consumption. During the Budget 2019, it was announced that Indian customs plans to fully digitize its transactions and utilize RFID technology to improve export logistics. This, along with a few other developments such as the grant of ‘infrastructure’ status to the logistics sector and a substantial increase in the number of tech-focused start-ups has spelt great news for Indian logistics in recent times.

However, cohesion is still lacking in Indian logistical growth. Smaller, unorganized players still eat up a large segment of the customer base, setting a lower benchmark for operations while influencing pricing as well. The inefficiency of these players has even encouraged e-commerce players such as Amazon to develop their own cutting-edge logistical fleet, equipped with drones and RFID/sensor-based technologies that optimize the entire process. Such a trend enhances competition for the dedicated logistics players, and only those which are able to incorporate digitized processes driven by Artificial Intelligence (AI) will be able to thrive through this onslaught.

Existing infrastructural and cost inefficiencies need to be addressed as well. This includes a fragmented warehousing and inadequate material handling infrastructure and still poor integration with modern information technology. One of the main points of focus, however, is the improvement of last-mile delivery framework.

For the logistics industry to really prosper and spearhead India’s growth worldwide, the start-up infrastructure should be boosted and the use of technology in the sector should be encouraged. Companies like LogixGRID, one of India’s leading platform for managing global logistics, are bringing forth the need and advantage of cutting-edge technology, and helping in revolutionising the sector by giving the much needed technological thrust.

Recently, LogixGRID announced Logix.Network, a digital tool which will allow manufacturing companies to optimally manage and monitor fleet activity, hassle-free controlling and more such features to ease managing the logistics. Prior to this, the company also launched two of its major Clobz Sales and LogixERP which helped logistics companies to regulate and boost their sales and productivity. LogixGRID provides ERP solutions with more than 300 modules within the system. The solutions which the company offers are specialized in road, rail, air, and sea logistics and pickup management and last mile logistics.
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