Growth of Ever Evolving Indian Logistic Industry

Article By Sumit Sharma, Co-Founder of GoBOLT

In today’s economy logistics is the most rapidly evolving industry, it is the trade of infrastructure, technology and new types of service providers. It is considered as the backbone of the economy, it is the mixture of infrastructure, technology and new types of service providers, which defines whether the logistic industry is able to help its consumers reduce their costs in logistic sector and provide effective services.

From last couple of years, it has seen significant development which is reflected in the global rankings. According to the reports of Global Ranking of the World Bank's 2018 Logistics Performance Index, India jumped to 35th rank in 2018 from 54th rank in 2016 in terms of overall logistics performance. 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, 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 the customized demands of the consumers, in turn, resulting the global logistics market to register a CAGR of over 7% by the end of 2022. The main areas for creating a sustainable roadmap for the growth of the Indian logistics industry are:

Infrastructure Development

The government has reiterated its firm commitment on modernizing the functionalities of Indian logistics with a key focus on infrastructure development. With a view to improving supply chain efficiencies and enhancing connectivity to support logistics players tap the under leveraged markets in the country’s hinterlands, key infrastructure developmental projects have been rolled out. Its further development depends upon its soft infrastructure like education, training and policy framework as much as the hard infrastructure. Growth of the international goods transportation as the ecommerce continues to thrive. International cooperation is also required to make logistics sector grow.

Policy & 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 for Indian logistics. 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, the logistics companies, which are currently forced to set up many small warehouses across multiple cities can set up just a few, big warehouses region and different model for freight movement from the warehouses to the different manufacturing plants, wholesale outlets, retail outlets and the various POS.

This growth is backed by the growth in the e-commerce sector and expansionary policies of the FMCG firms. The Freight transport between the smaller delivery companies will expand the service areas, improve service quality, increase loads on the trips and reduce the costs of delivery.

New tech leverage

The emergence of the newage technologies like artificial intelligence, internet of things and machine learning will disrupt the conventional workings of the country’s logistics sector. The impact of these technologies is anticipated to enhance productivity across the logistics industry and streamline operational processes. These technologies will largely play a vital role in boosting efficiencies of supply networks, reduce wastages and lead to supply chain optimization. The speed and scale with which we align our supply chain strategies to tackle the complexities of a changing global trade order will be key to determining our position in the global logistics ranking.

Some solutions to prevailing challenges

It is necessary to realize that the benefits which can bestly be practiced in logistics industry 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 the 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.

Future prospects

The global outlook, indeed that of India 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 the transport capacities that are available that will help this industry to grow and become the most rapid growing sector in the market. In the coming future specialized services for logistics delivery will be in demand to cope with delicate products such as fresh food and computer chips. These logistic centers will help to keep distances shorted between production and marketing.

The industry has moved from just a service provider to the position which provides end to end solutions to their customers. Thus, all these developments and growth has paved the way for Logistics industry in the coming years.