Logistic

Background

In today's world Logistics is considered as the backbone of an economy. Being the fastest evolving industry the Indian logistics sector is currently growing at a rate of 10.5% CAGR since 2017 and estimated to be of $250 Bn by the end of 2025. "India's last-mile delivery market is moving in a similar direction to markets like China and USA, where the penetration has reached more than 10%

LOGISTICS – INDIAN PERSPECTIVE

The Indian logistics sector is valued at USD$ 150 billion, contributing 14.4 % of country’s GDP. With the easing of FDI norms, proposed implementation of GST, increasing globalization, growth of ecommerce, positive changes in the regulatory policies, and government initiatives such as “Sagarmala”, “Make in India”, the sector is expected to touch $200 billion by 2020. In the World Bank’s Logistics performance ranking 2016, India’s ranks has improved from 54 in 2014 to 35 in 2016, jumping 19 places.

Out of this USD 150 billion logistics cost, almost 99% is accounted for by the unorganized sector (such as owners of less than 5 trucks, affiliated to a broker or a transport company, small warehouse operators, customs brokers, freight forwarders, etc.), and slightly more than 1%, i.e. approximately USD 1.5 billion, is contributed by the organized sector. However, the industry is growing at a fast pace and if India can bring down its logistics cost from 14% to 9% of the GDP (level in the US), savings to the tune of USD 50 billion will be realized at the current GDP level, making Indian goods more competitive in the global market. Moreover, growth in the logistics sector would imply improved service delivery and customer satisfaction leading to growth of export of Indian goods and potential for creation of job opportunities.

Case Study

The Problem

Logistics Sector In India Overview And Challenges 2019

The logistics industry in India can easily be called the backbone of any sector’s supply chain. Be it the healthcare, hospitality or manufacturing industries, logistics companies play one of the most important roles of connecting the organizations to their clients.

An hours-worth delay in reaching the right medicine to the facility may lead to dangerous consequences, while failing to deliver high-value goods as per the client’s schedule may cause a loss of Lakhs of Rupees to both parties.

When we speak of logistics, everything is time-bound. Each process depends on the one preceding it and a minor delay on one stage causes a magnified ripple effect on all the other stages. By the time we reach the stage of delivery, there ends up being a delay of days because of a few hours of down-time.

Every logistics organization wants to achieve the same target: reducing the time for a supply cycle by streamlining processes efficiently. However, this does not always go according to the book and is to be expected.

From minor set-backs to acts of God delaying the entire procedure, logistics revolves around one concept, which is ETA.

Here is where we have it wrong. These challenges are merely a symptomatic mirror of the core issue, which is idealizing an ETA. When we fail to look at the big picture, we also fail to treat the root cause of the issues faced by logistics companies in India.

Today, we’re going to take a nice hard look at what we think the problems are versus what the real problem is.

Here are a few of the perceived challenges faced by Indian logistics companies in India:

Our Solutions

Challenges beget innovation and change. More alliances and cooperatives of small players for reducing cost are important.

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