Logistics is an indispensable vertical for every nation’s economic growth. It administers the flow of goods from its place of origin to consumption. The logistics industry in India comprises warehousing, shipping, rail and road freight, post-services, express cargo, and related value-added services. Ensuring productivity, cost-effective ways to distribute goods and additional commercial factors that rely upon it make this industry one of the building blocks of a flourishing economy.
Overall, the logistics market represents an approximate 11% of global GDP, and annually generates more than USD 8 trillion on an international scale.
The current Indian scenario
Speaking locally, the Indian logistics industry is expected to grow past the horizons and achieve over USD 2 billion by the year 2019. This incremental rise is linked to several noteworthy developments in the country.
The robustness of government campaigns such as ‘Make in India’ and its focus on the manufacturing sector has had a direct positive impact on logistics. Growth in international trade flows, rise of e-commerce marketplaces (both B2C and B2B), the recent implementation of the Goods and Services Tax Bill, investments in infrastructure development, relaxed foreign direct investment, and an increased adoption of technology are some of the other critical factors altering the logistics sector in India.
A concerted effort by logistics companies to digitize solutions, and increase online freight services is visible across the supply chain leading to an organized standard in the industry. Advanced technologies such as (RFID) radio frequency identification, (ASRS) automated storage and retrieval systems and (GPS) global positioning system for real-time tracking are being adopted to keep up with the growth in demand in this field.
Challenges in the Indian Logistics Industry
While the logistics industry is flourishing, challenges remain. The slow transportation time for the movement of goods through shipping and road networks is a major obstacle. Another challenge faced by the industry is the low standardization of cargo and containerization*. This increases the overall cost of movement while hampering the speed. Inadequate gateways for transit between inland waterways, linkages to coastal system, underinvestment in capacity constraints, redundant railway sliding, low proximity from cargo to industrial hubs, and absence of designated terminals for goods, results in an unfavourable modal mix that needs to be confronted.
Ongoing efforts by the government to address the challenges, and remove the bottlenecks will assist the logistic industry to overcome the disadvantages in the short run and provide cutting-edge competitiveness during the long term.
Challenges in the logistics industry are long-standing, and immediate solutions are imperative. Stay tuned as we’ll get you acquainted with the solutions in our next iteration!