The volume of shipments by third-party logistics (3PL) firms in India is expected to grow between 6x to 8x from 2022 to 2030, rising from 2 billion to about 13 billion to 17 billion, according to a report.
This rise is propelled by ecommerce platforms like Meesho, which currently holds over 40% of the market share.
Meesho in particular prefers to work with the likes of Delhivery, Xpressbees, and Ecom Express. These platforms typically offer advanced analytics and tailored offerings to their clients.
Delhivery, for instance, recently acquired Algorythm Tech for US$1.8 million, which helps provide end-to-end supply chain planning and execution through AI-powered software.
Traditional logistics companies like BlueDart, however, remain the preferred choice for giants like Amazon.
The growth in the number of shipments is also tied to the burgeoning demand for ecommerce products in smaller cities in India. Indeed, the report indicates a significant increase in mass consumers in Tier 2 cities.
Cost per shipment will also likely go down once these 3PL firms scale. Currently, India’s average cost per shipment is at 60 rupees (US$0.72), which is 5x the cost in China. The report estimates that by 2030, this figure will reach 47 rupees (US$0.56).
With the increase in demand, India’s 3PL players are in a good position to save on costs. They can combine the demand in remote areas, partner with local delivery vendors, and subsidize from more profitable operations in metro areas.
However, 3PL companies should expect to see an uptick in issues like disputes on package weight, lengthy resolution processes, and more damaged packages.