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Future of Logistics service provider in India

20 Oct 2020

Indian logistics companies are growing and creating a various business, trade, and employment opportunities directly and indirectly. With the emergence of third-party logistics, it has become a hassle-free process for the import and the export as the burden of customs clearance is made easy by third-party logistics service providers. The hassle-free import/export process is creating sellers from different countries to sell their products in India. The future of the top logistics service provider in India may be challenging if they do not adapt to the latest technologies because many logistics service provider companies are emerging in the market with competitive prices.

The Indian logistics industry is in a shift of transformation due to various factors like the emergence of e-Commerce, government reforms, and shift in service sourcing strategies. Advancement in digital technology has also added benefit to the logistics companies. Digitalization is helping in the improvement of the efficiency and performance of the warehouse, freight management, and port operations. Automation of the warehouse helps in the operational efficiencies and operational cost optimization. Due to the increased investment in infrastructure by the government and the private bodies, last-mile connectivity, and emerging technologies the network of the logistics is expanding.

As per the research book Indian Logistics Industry Outlook, 2020 India's GDP is expected to reach 3.02 trillion in 2020 accounting for 4% of the world's GDP. It is identified that strong growth supported by the government reformations, development in the transportation sector, retail sales growth, and the emergence of the e-Commerce sector is likely to be the key drivers of the logistics and supply chain companies in India. Online freight platforms and aggregators are on the rise in the Indian logistics market and are attracting huge investments from all over the world. Warehousing segments have promised growth in the future due to the fact that the manufacturing sector contributes up to 25%-30% of the GDP by 2025.

The Indian logistics market is forecasted to grow at a CAGR (compound annual growth rate) of 10.5% between 2019 and 2025. It had been awarded infrastructure status and has become a major growth driver of the logistics industry because it has made it easier for investments. In the forecasted period e-Commerce is another major segment that is expected to support the growth of the logistics and supply chain industry in India. The port handling capacity is expected to grow at a CAGR of 5% to 6% by 2022 by adding a capacity of 275MT. The Indian Railways has set the goal to increase its freight traffic from 1.1 billion tons in 2017 to 3.3 billion tons in 2030 and to attain this goal a dedicated freight corridor has also built exclusively for the goods train. Compared to the roadways and railways, the Indian air cargo industry lags its global peers due to a lack of supporting infrastructure, automated material handling systems, and high manual process interferences.

The Indian Government is thriving hard to boost the economy by the grant of infrastructure status to logistics, the introduction of the E-Way Bill, and GST implementation. The other major moves include setting up a logistics division under the Department of Commerce, technology upgrades, and the development of dedicated freight corridors.

The e-Commerce industry has also revolutionized the industry, several new companies are gaining traction in the industry. The online platform has brought transparency in the selling price and have increased competition and lowered the freight costs with real-time data availability and a transparent value chain. They have also created employment, it is expected that in the next decade there will be around 25 million jobs required in India, and e-Commerce along with the medical industry can create up to 50% of job opportunities.