A vigorous growth in the Indian economy has led to a boom in the logistics sector. This sector is currently worth $100 Billion and is estimated to reach $385 Billion by the end of 2015. With a rise of e-commerce and shipping culture, this sector is quickly becoming a key determinant of the economic growth of India. In spite of the rapid growth and market size, logistics in India has its own challenges and discrepancies.

Too Many Hands

Logistics sector in India is extremely fragmented involving an array of participants:

  • Shippers (manufacturers, retailers, distributors) who make or sell the products that need to be stored or moved,
  • Logistics service providers (third-party logistics providers (3PLs), 4PLs, freight forwarders, ocean shipping, trucking, rail, air cargo, drayage) who store and move products,
  • Logistics hubs (airports, sea ports, rail terminals),
  • Regulatory authorities (customs).

From pickup to the final delivery, shipments and consignments change a lot of hands e.g. if a shipment was picked by Company A, it would be transited to the next hub by Company B and then delivered by Company C. Integration of systems across so many companies gets challenging and that leads to almost zero visibility over delivery networks. Executives and workers are left with no option but to manually call up every individual participant of the delivery chain to check on the status of their shipment, which has brought in the culture of manual “follow ups”.

Poor Quality Infrastructure

Infrastructural issues affect this industry the most. Poor road coverage, expensive air freight charges, huge turnaround times at sea ports and substandard warehousing options are huge pains.Due to lack of infrastructure in tier-3 cities and rural towns, the penetration of the system and processes is restricted to a bunch of stations. This has created a state of confusion, as neither the customers nor the courier company would get a complete picture on the whereabouts of a package throughout its journey.

Low Technology Adoption

Low technology adoption stems from the problem of unskilled manpower and traditional business methods promoting a manual “follow up” culture rather than adopting new age tracking and data analytics solutions. Additionally, the industry has become used to undemanding and quality-neutral client who is used to a non-standard product and service. Due to this, logistic suppliers do not bother to invest into providing quality solutions. More emphasis on price than quality drives down the investment in efficiency-driven solutions.

The Changing Face of Logistics

Despite these challenges, entrepreneurs in India are successfully running large logistics companies. However, as the economy grows, the demand for logistics will only grow exponentially. To harness this growth and enhance its contribution to the economy, the logistics industry will have to play a pivotal role by providing value-driven solutions. Lots of new players are working to get their share of the pie of this Billion-dollar Industry, which has brought about intense competition and a need to be different and to stand out.

In addition to traditional industries, the rise of e-commerce has led to a shift in the way logistics was perceived in India with emphasis not only on shorter delivery times but also online tracking of deliveries. This has compelled logistics industries to look at investing in quality-driven solutions. The technology industry has been a major contributor in developing solutions which will not just aide growth in logistics but also bring about a paramount shift in the way the Logistics business functions on a day-to-day basis.

40 1 Subscribe