What’s Driving Growth of India’s Logistics Industry?

A recent report of ICRA states that the Indian logistics sector is projected to record a growth of 7-9% in the current fiscal; however, the industry players' margins are likely to remain sensitive to risks like the rise in oil and commodity prices amid the Russia-Ukraine conflict.

Continuous growth in e-commerce, D2C business, the government’s focus on Make in India, and development of roads, warehouses, ports, dedicated transport hubs etc, augur well for India’s Logistics Industry. Adding to the growth is the National Logistics Policy, increase in export volumes, and more connectivity between manufacturing centres and markets.

As per the report ‘Transport of India: Logistics Industry Outlook in 2022’ published by TCI (Transport Corporation of India Limited), Logistics is an integral part of essential service network. With demand rising, the sector is fast adapting and delivering. The pandemic has paved the way for innovations like GPS tracking, WMS (warehouse management system), on-demand warehouses / fulfilment centers, end-to-end customised solutions, multimodal rail and coastal transportation, big data analytics, drones and EVs.

There has been an uptick in last-mile deliveries and in handling operations more efficiently. Government initiatives like the Gati Shakti Master Plan for multimodal connectivity, dedicated freight corridors, and tech-driven warehousing, envision a seamless logistics infrastructure, to help cut down logistics cost and reduce turnaround time.

Presently, the logistics cost in India is quite high at 16-18% whereas it is 8-10% in China, and 12% in Europe and the USA. The government of India is taking several initiatives to significantly reduce the logistics cost in the next three years to increase exports.

The Union Budget 2022-23 has given multimodal transport of goods by a single transport operator a major thrust. The government has a target of developing 100 cargo terminals for multimodal logistics facilities over the next three years. It also plans to establish a Unified Logistics Interface Platform (ULIP) for data exchange among all mode operators, which will facilitate efficient movement of goods through different modes, thereby reducing logistics cost and time, assisting just-in-time inventory management, and eliminating documentation. ULIP will provide real-time information to all stakeholders and improve international competitiveness.

Observations of company heads on the supply chain and logistics ecosystem in India and use of technology and advanced equipment to bring efficiencies along with time and cost savings in daily operations.

Deepak Garg, Founder & Chief Executive Officer, RIVIGO Services: The Logistics and Transportation sector has been one of the key sectors contributing to the rapid growth of India's economy. It is heartening to see the Government's focus on fast-tracking growth with an outlay of Rs. 20,000 crores towards PM Gati Shakti Plan as an important focus area of Budget 2022. With the increase in infrastructural investments, we shall see drastic growth, allowing for multi-modal logistics facilities from intercity to intracity goods transport to become seamless.

For the unorganised sector, technology can be a game-changer. It is encouraging to see the Government's focus on making technology mainstream as it will help us utilise the right resources and raise maximum productivity to accelerate economic development and growth. The implementation of unified logistics interface platforms will drastically reduce the logistics costs and time, and this must be addressed in all the parts of our country as it will keep stakeholders informed in real-time and provide efficient movement of goods. This will also eliminate the tedious documentation processes and assist just-in-time inventory management.

With various technological interventions, it is also crucial to upskill the labour for faster and more efficient functioning. With all this in place, I am hopeful of a sustainable future for the Logistics sector and expect that the initiatives in the Budget will bring down the cost of logistics from 14% to 7%, making it less than the global average of 8%. Anshul Singhal, MD, Welspun One Logistics Park: The post-globalisation era saw the government investing heavily in industrial growth. Rapid digitalization is pushing the sector to become more organized. Today, automation and technology are changing how warehouses function; from being mere go-downs to becoming smart warehouses, their operations are smoother, more seamless, and efficient.

3PL and 4PL logistics service providers are addressing complex supply chain challenges. IoT, Blockchain technology, Cloud Computing, Big Data analysis, AI, and robotics, to speed up supply chain operations and processes, and bring efficiencies in the logistics industry.

Ashok Goyal, MD, BLR Logistiks: Most of the marginal players in the logistics sector of India have no access to technology and digitalisation. They are highly dependent on manual intervention, which makes them susceptible to errors. The Covid lockdown compelled us to use technology and reduce manual intervention by a good 30%. Billing pattern has changed tremendously, and you can now get bills cleared immediately via the digital mode. Use of paper has reduced. There was a time when we had to depend on our truck drivers to know the location of our cargo. Today, we can keep track of our trucks and monitor fuel consumption and driver behavior.

Sanket Sheth, Founder & MD, ElixiaTech: The Logistics Market in India is highly fragmented and unstructured. There is a need for a central governing body. Our spend on logistics needs to reduce. Also, comes the issue of different local languages in different areas. Today, AI and ML along with GPS can help solve all these issues and take the logistics sector to a new level of competence and growth. The boom seen now has never been seen before and is here to stay” Oomkar Kulkarnie, Head – Product and Technology, 1Pay: Use of RFID for tracking, recording and verifications from the point of manufacture to their distribution point or the retail level, is increasing. Fintech companies are providing automated financial services and processes to the logistics industry to speed up the efficiency of supply chains and also open up unique payment options and billing choices.

Digital payments have seen an exponential rise from e-commerce to digitally managing the supply chain. On-road expenses can be managed seamlessly these days due to digitalization. Kunal Gala, Director, JNK Lifters: The logistics sector is crucial for boosting international trade. This calls for building a robust infrastructure using high-tech construction machines like cranes and high-quality accessories. These days, people want to deploy newer machines of the OEMs along with better aftersales services. Competition due to the entry of Chinese manufacturers in the Indian market has improved the quality of our products as well. Akshat Gala, Chief Marketing Officer, Metro Groups: The capacity of cranes has increased to meet demand for development of mega infra projects, and so has the demand for related lifting accessories, which must match the higher crane capacities.

The logistics industry is constantly evolving, adapting, and growing as new challenges emerge. And it will continue to see advancements and innovations, which will take the industry to the next level of growth. Deepak Vig, COO, Barkat Cranes and Equipments: It is important for crane manufacturers to provide machines with in-built technologies for geofencing, fleet management, fuel consumption, monitoring utilization, operator performance etc. Load sensors give alerts or shut down the machine automatically if it exceeds 70% of its capacity; fuel consumption sensors show the rate of utilization of fuel and give alerts in case of a sudden drop. Remote analysis software helps clients understand the feasibility of a project; the varying loads that will come on the soil; and calculate the desired boom length of cranes at site.