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Indian Logistics Industry

Indian Logistics Industry

Logistics Industry is the most rapidly evolving economy and considered as the backbone of Indian economy. Growing at rate of 8-10% annually, comprises 13% of India’s GDP, the industry supports manufacturing, e-commerce and retail industry. Indian logistics sector is valued at USD 160 billion for FY 2018. The industry is expected to grow at a CAGR of 10.5% between 2019 and 2025. By the number itself we can imagine how vast the market is. Logistics segmentation mainly comprises of Warehousing, Transportation and Inventory Handling. Major contribution and key player among the three segments is Transportation (almost 50%), in which road transportation plays a major role. But the transportation industry is fragmented, unorganized and inefficient.

Major challenges faced by logistics industry is lack of regulation, Trade regulations, poor infrastructure facilities, slow adoption of technologies and lack of skilled man power. There are few hurdles like trucks are not allowed in city limits 24/7, speed limit, state policies etc. Hence partnering in all possible ways can bring in more efficiency. Insurance and permit costs will be higher for higher capacity vehicles; this reason is stopping the owners to buy a higher capacity vehicle which is drawback for Infrastructure. On top of all these the current pandemic made situations more challenging for logistics industry. Still logistics industry would be a vital enabler and catalyst for attaining the true growth potential of India.

Now let us see how technology adoption can change logistics in India. It can bring operational efficiency by minimizing issues of product identification and location, reduced paper work, integrating stakeholders, increase in transparency and reducing time of supply chain management. By deploying digital methods fleet owners can reduce of around 8% to 15% of their overall costs. Building digital platforms helps in integration of end-to-end logistics. Vehicle routing and scheduling (VRS) applications are evolving into solutions. Amid pandemic VRS technologies will be a boon to fleet based organizations to enable seamless journey. The industy can embrace technologies such as

  • Internet of things
  • Radio frequency Identification
  • Automation Technology
  • Blockchain
  • Cloud computing
  • Big Data Analytics

Along with all these technologies bringing in Telematics, voice enabled applications for drivers and Data Science will be a game changer. Machine Learning and Artificial Intelligence are playing a significant role to save time, reduce costs and increase productivity and accuracy with cognitive automation. These new technologies are witnessing more demand with changing needs and expectations.

Technology penetration is challenge as most of the truck drivers and owners are from Tier 3, as it is difficult for them to understand the importance. Still technologies provide an opportunity for different levels of optimization in manufacturing, logistics, warehousing and last-mile delivery. Hoping the technology adoption, infrastructure development and policy amendments will become a reality in near future.

Author: Tejaswini Kolli || Senior Analyst and Marketing Data Associate