Transport & Logistics Industry in India: An Overview
Why investing in the logistics industry is a good idea?
India’s logistics Industry has witnessed an exponential growth in the last few years. Now contributing to around 14% of our country’s total GDP, the logistics market in India is expected to move up to a staggering $ 301.89 billion by 2020, serving as a backbone to the economy. As India becomes more open to trade and investment in recent years, the need for logistics services is also increasing proportionately, providing more opportunities for service providers. Investing in this industry is a good idea as it is still in development stage.
Challenges in Indian Logistics Industry
In India, inter-state trade and logistics are considered to be a complex and critical issue, increasing the cost of doing business up to a great extent. The lack of sound inland transport infrastructure and the poor state of national and state highways have been hindering the growth of the industry for a long time now, leading to high transit times. Probably one of the most significant challenges faced by the industry today is the insufficient integration of information technology in transport networks, warehousing and distribution processes. Besides, regulations in our country exist at a number of different tiers imposed by national, regional and local authorities, and may vary from city to city, thus creating bottlenecks in the creation of national networks. Last-mile delivery for e-commerce continues to be a pain-point, even for the established delivery companies.
A major share of this industry in India is dominated by unorganized players resulting in barriers to entry for new technologies and innovations and global supply chain models. Also, the industry is facing a shortage of skilled human resource with sound operational and technical knowledge of supply chain management, in-turn making it difficult to employ latest technologies to the benefit the customers. With 65 per cent of freight moving on the road, transportation delays not just impact the transit time, but also adds to the costs. Curbing roadblocks can cut freight time by 20-30 per cent and logistics costs by approximately 30-40 per cent, suggest industry estimates.
How is technology making a difference?
Like several other industries in India, tech-integration is bound to offer immense value for the Indian logistics industry also. On-demand consumer logistics space in India is burgeoning, with several start-ups coming up with innovative technologies and approaches to revolutionize logistics. Tech-driven solutions for this sector are getting better and smarter with every passing day, addressing various pain points in the supply chain in India.
By using tech-aggregation models, start-ups are nowadays allowing individual fleet operators to expand without losing on the profitability part, thus also reducing the problem of fragmentation in the industry. Solutions built on artificial intelligence are assisting fleet owners in designing route optimization for vehicles, enabling optimum utilization of their assets. Further, real-time GPS-based vehicle tracking has introduced ‘never-known-before’ transparency and reliability to India’s trucking industry.
By combining core capabilities of the Internet of Things (IoT), data assessment and automation, moving and tracking of cargo have been made easier than ever before. In the past one year, more than 200 start-ups have come up to solve infrastructure and last-mile problems and help businesses smoothly operate their distribution network. New inventions like mobile DGPS, RFID, etc. have helped the industry in minimizing the issue of identification and location of the products along the supply chain, eventually leading to better profit margins.
Technology is also helping in the reduction of a lot of paperwork involved in lorry receipt, proof of delivery, invoicing, and other processes in logistics. New-age cloud-based solutions have proven to be particularly useful in this context. Post-GST implementation, it is predicted that swift billing will become quite essential for customers to claim GST input credits, and again banking on IT and technology integration will be the only way out.
In a consumption-driven economy, there always lies a definitive need for efficient and reliable logistics solutions connecting every household for inclusive deliverables. In the logistics and transport industry, start-ups that provide powerful back-end technology, hyper-local delivery services, and truck aggregators were seen to be in the news recently.
Come 2017, and we see India been ranked second (only after China) on the Emerging Markets Logistics Index, a welcome news for the logistics fraternity. With the proliferation of smartphones and call for ‘Digital India’, the logistics sector does not want to remain constrained and backdated anymore. Investing in better data analytics to forecast customer demand has become the need of the hour. While start-ups have already begun to reinvent the supply chain with fresh ideas and resources, real emphasis must be put at the moment on embracing technology by stakeholders at each and every level of the supply chain.
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