What’s Next for India’s Logistics sector?

Sea News File Photo

By Girish Kumar Surpur, Head – Logistics Business, NEC Corporation India

Girish Kumar Surpur

According to a recent report, India’s $215 billion logistics sector is one of the largest globally and has been growing at a CAGR of 10.5 percent. Data analyzed by the Trackr app team reveals that four leading logistics companies – UPS, DHL, USPS, and FedEx – reported over $300 billion in revenue for the financial year 2020, despite the challenging economic environment indicating growth the sector witnessed.

In 2020, even though the pandemic hampered the logistics sector’s processes in the first half of the year, the industry bounced back with a shorter lead time and better at-door experience. Today, logistics companies are implementing cargo transportation services by land, air, and water while adapting to the changing nature of the economic patterns and digitization.

For a developing country like India, its logistics performance can be a game-changer in the economy’s revival, especially in the current scenario. With initiatives like ‘Make in India’, there lies a massive opportunity to capitalize on the logistics sector by implementing technology solutions. Struggle with poor inventory management, optimal asset utilization, digitization, adopting of standards across various stakeholders, warehousing, cold chain, leveraging technology effectively and visibility across supply chain are some areas which when addressed effectively would result into bringing radical change across the sector. As compared to the developed countries, some existing challenges that the Indian logistics sector faces include higher lead times, , less transparency, and lack of centralized monitoring system to enable real time decision making.

India’s logistics system is making an effort to be more inclusive of a digitally and technologically advanced system to address India’s higher transaction cost and adopt the global best practices to become the ideal destination for manufacturing industries as well as create large scale employment opportunities.

Sea News File Photo

The new entrants in the form of startups may make a bigger impact in India’s logistics ecosystem. The most challenging task in Indian logistics is the last mile of delivery which is currently very much fragmented. With offerings like platform sharing and e-marketplace solutions, the startups such as blackbuck, Rivigo, etc., collaborate with industries and complement their service offers. The logistics startups in India are using AI/ML to solve problems such as scheduling, tracking, and fleet on-demand for the local industry segments. The collaboration between the technology driven logistics start-ups   and key industry players of shipping as well as manufacturing has gained the momentum to significantly reduce the logistics cost through digitization, optimization and transparency.

Three key focus areas for India’s logistics sector this year:

Future-ready infrastructure: The pandemic has prompted the industry to build an end-to-end technology-enabled infrastructure that can respond to any disruption more swiftly. The introduction of digital solutions, including robotics technology, video analytics, edge computing, etc., as standard processes can create a connected logistics ecosystem.

Responsive supply chain: COVID has accelerated the pre-existing trends and sifted the entire focus towards building a supply chain that prioritizes speed, cost, and efficiency. With plummeting revenues, squeezing costs, and increasing inefficiencies, technology-powered devices and applications can bring resiliency to existing supply chains. Furthermore, IoT solutions can ensure smooth, efficient, and transparent operations.

Agile demand cycle: With the changes in consumer habits, digital transformation, and pre-ordered retail mechanisms, there is a rapid shift from the traditional model. Emerging technology like Artificial Intelligence (AI) can be a tech-enabler in tackling the overall cycle and proactively deal with fluctuating demands across supply chain operations.

(Image Courtesy: NEC Corporation)

Technology is transforming the Indian logistics industry, especially with Artificial Intelligence (AI), Machine Learning (ML), cloud computing, mobile phones, big data, etc. NEC’s Logistics Databank project continued providing visibility during the Covid time helping the businesses Pan India.

The Coronavirus pandemic brought to the forefront the implication of technology innovation in streaming the logistics sector. The initial outbreak of the pandemic and the later months demonstrated a need for a resilient and flexible supply chain. As the vaccines reach the far-flung areas – in the next few months, logistics will again be at the core of the next stage of the battle against the virus in 2021.

Sea News Feature, April 20

Baibhav Mishra
Author: Baibhav Mishra

Associate Editor, Sea News