In India, the demand for today and the future is integrated end-to-end Logistics solutions. This would encompass integrated infrastructure / assets platform, integrated services platform and integrated digital platform. There is a wide spectrum of players in the domain ranging from the very small exporters and importers, to medium-sized and large traders to MNCs. Hence, the sector would continue to witness consolidation, process standardisation, technological upgradation and digital transformations for more agility, and integration not only between modes of transportation but also the users and third party service providers. Efficient, cost effective customised solutions is what customers are looking for. Emergence of third-party (3PL) and fourth-party (4PL) logistics service providers would address complex supply chain challenges.
There would be further development of Multimodal Logistics Parks (MMLPs), streamlined economic corridor routes for efficient freight movement, and intermodal stations to connect various transportation modes to ensure service integration. Cold Chain Logistics is poised to grow and we are currently witnessing the contribution of the sector in the COVID-19 vaccine supply chain. Integrated cold chain and preservation infrastructure facilities using high-end technology, without any break, from the farm gate to the consumer would continue to grow. Large logistics players would focus on using sustainable and environment friendly infrastructure for eg. using fleet of electric vehicles for last mile delivery. Increasing investment into Logistics Startups from VCs and Enterprises will also drive growth and innovation in the sector.
New age technology has revolutionised the Logistics sector by being a key differentiator. Digital transformation of the Logistics sector could translate into value of USD 1.5 trillion for the participants and an additional USD 2.4 trillion worth of societal benefits by 2025, according to World Economic Forum(2016). Logistics startups will be leveraging technology to provide smart solutions and disrupt the traditional way of operating.
Internet of Things (IoT), Automation technology, Cloud Computing, Advanced / Big Data Analysis, Artificial Intelligence (AI) and Robotics will be leveraged by market leaders in this domain to provide end-to-end lean and smart logistics solutions, enhance quality, reduce cost and minimise human intervention. Driverless vehicles, wearable devices, warehouse digitization / automation will help achieve operational efficiencies to counter supply-chain cost pressures in the industry. The industry will continue to witness fast paced technology disruptions resulting in real time supply chain visibility.
GOI initiatives in the Logistics Sector
Strong growth supported by government reforms, transportation sector development plans, growing retail sales and the E-commerce sector are likely to be the key drivers of the logistics industry in India in 2021. Online freight platforms and aggregators have been on the rise in the Indian logistics market, given the need for low entry barriers and less capital investment compared to setting up of an asset-based business model. Manufacturing in India holds the potential to contribute up to 25%–30% of the GDP by 2025 which will drive the growth of the warehousing segment in India. The logistics market in India is forecasted to grow at a CAGR of 10.5% between 2019 and 2025. E-commerce is another major segment which is expected to support growth of the logistics industry during the forecast period. Increasing investments and trade point towards a healthy outlook for the Indian freight sector. Port capacity is expected to grow at a CAGR of 5% to 6% by 2022, thereby, adding a capacity of 275 to 325 MT. Indian Railways aims to increase its freight traffic from 1.1 billion tons in 2017 to 3.3 billion tons in 2030. Freight traffic on airports in India has the potential to reach 17 million tons by FY 2040. However, lack of supporting infrastructure, automated material handling systems and skilled manpower, slow adoption of technology and high manual processes are some areas where the Indian air cargo industry needs to buck up as compared to its global peers. (Report Linkers: ‘Indian Logistics Industry Outlook, 2020’)
The National Logistics Policy that would be released by the Government of India this year aims to promote seamless movement of goods across the country. It will focus on several areas such as process re-engineering, digitisation, focus on multi-modal transport, EXIM trade etc. and will look at improving logistics in core sectors. It will address many issues in a seamless manner. Effective implementation of the policy would help provide an impetus to trade, enhance export competitiveness, and improve India’s ranking in the Logistics Performance Index.
With opportunities galore and a business environment filled with hope, there’s no looking back for our country and the Logistics sector in 2021!
Source: Economic Times