Logistics in India: Battle of last mile connectivity

For any strong economy Logistics plays a pivotal point. It facilitates in providing
efficient and cost-effective flow of goods across the commercial sectors. India is
witnessing a rapid growth in its logistics industry. The logistic industry in India is
defined as an interplay of technology, infrastructure, and unique types of service
providers.
In the present scenario third-party logistic companies has emerged greatly in the
Logistic industry. They are facing an unprecedented changes digitisation has creeped
in and customer’s expectations has evolved. New Technologies has come to the
forefront which has triggered efficiency and other collaborative business models.
There is a promising growth opportunity lying ahead in the third-party logistics which
is expected to grow from the market size of Rs 325-335 billion in FY17 to Rs 570-
580 billion by FY20 at a CAGR of 19-20%.
The 3PL market in India is still at a developing stage and is highly fragmented.
However, as the Indian firms have started realising the benefits of logistic outsourcing
there has been an immense growth which is soon.

There is a tremendous amount of change brought in by third-party logistics by

enhancing logistics efficiency of many organisations and has rapidly gained
popularity while spreading across the country. Speaking of which the 3PL players are
pressing the need for the upgradation of technology to connect with the customers
and introduces the entry of Fourth-party logistics (4PL) which is emerging to support
the 3PL business in the country.

A larger portion of the third-party Logistic market is organised and is mostly utilised
by industrial and automobile sectors followed by pharmaceutical, consumer products
and retail. Hence the majority share of the revenue for this organised segment is
generated by the big players of the industry. This growth is expected to rise in future
due upcoming mergers and acquisitions which are anticipated to gain pace within
domestic and international third-party logistics companies.

The standard functions that these prime logistics companies provide are
transportation, warehousing and distribution, and freight forwarding. Apart from these
services the logistics players have also started other activities like inventory
management, order processing, collection of bills, sales and excise duty
documentation, among others. Typically, most of the players in this industry handle
only one or two services out of these wide range of services.
For example, Transport Corporation of India Ltd (TCI) is a classic instance of
integrated solutions. It offers services into consulting, transport management,
warehousing, and IT and MIS (Material Information Systems) services. Besides this it
also offers other valued added services such as reverse logistics, kitting services,
custom clearance, e-logistics and tax and facilitating tax management. To cater to the
rising demands of the e-commerce business, 3PL providers such as APL, Maersk
and P&O are also adopting the integrated logistics services.

Another good example is of, CONCOR which is a major player in the multimodal
logistics business in India. It caters to the country’s international trade by providing
the necessary infrastructure such as rail and road services and containerised cargo
movement within the country. At present CONCOR provides the singular means by
which shippers may obtain containerised freight transportation by rail in India.
Logistics companies in India - service wise

Services Logistics Service Providers

Transporters
Express cargo and courier
operators
Freight Forwarders
Container companies
Shipping Agents
Warehouse providers
 GATI
 TCI
 Dynamic Logistics
 Patel Roadways
 DHL
 FedEx
 Elbee
 Safe Express
 AFL
 Alpha Cargo Express Pvt Ltd
 Air & Sea Cargo Systems
 Container Carriers International Pvt Ltd
 Countrywide Express (P) Ltd
 Express Freight Forwarders
 CONCOR
 Maersk
 Indian Container Leasing Company Ltd
 Maersk
 P&O Nedlloyd
 APL
 Inter World Cargo Care Pte Ltd
 Central Warehousing Corporation
 Associated container terminals Ltd
(ACTL)
 Dynamic Logistics

3PLs  Geologistics
 Excel
 Bax Global
 Panalpina
 SembCorp

The other major MNCs in this industry are Transport Corporation of India Ltd (TCIL), GATI Ltd and Blue
Dart Express Ltd, TNT Logistics, BAX Global, Semblog, Geo Logistics, Panalpina APL, Air Freight Ltd
(AFL).
 Asia-Pacific logistics overview

Mature Unique Mid-Level Developing

•Australia •China •Indonesia •Vietnam

•New Zealand •Malaysia •Cambodia
•Korea •Thailand •Laos
•Taiwan •Philippines •Myanmar
Market

•Hong Kong •INDIA

•Singapore
•Japan

 Developed  Rapid  Developing  Poorer

 Logistics High Development  sophistication infrastructure
  Undeveloped   Lower
Characteristic

Competition Increasing
 High Service  domestic  competition competition
levels  Increasing  Increasing  Customs
 Lead time service levels service levels  Ownership
pressure  High Growth  Varied Growth Issues
 Lower Growth  High Growth

In recent times the demand for 3rd party logistics outsourcing has increased as the global
companies are unable to manage their complex supply chains. Furthermore, storage
infrastructure has emerged as an important aspect of the logistics industry supply chains
which forms a fundamental platform for the development for the development of logistic
industry for all market across the globe.

Reasons for Outsourcing Logistics Activities

The key reasons behind the growth of logistics outsourcing are the following:

 To focus on core activities,

 Improved transportation solutions
 cost savings
 customized services
 Inventory Management
 Market penetration
 Active participation in international shipping,
 Attaining sophisticated technology

Challenges and Future Outlook

The biggest challenge which the logistic industry faces today is it unstructured set-up.
The logistic sector is considered as a heavy industry, however due to this
disorganised nature, it has given an impression of an industry that has a shortfall in
skilled management and client service personnel, substandard IT technologies,
equipment and poor systems integration.

A lack of proper infrastructure hugely affects the logistics and supply chain
management for these companies. In the absence of good technical know-how inputs
for the movement of goods from one state to another also plays a vital role in holding
back the growth of the retail industry.
The insufficient integration of transport networks, information technology and
warehousing & distribution facilities is another big challenge which is hindering the
 progress of the growth in Logistic industry. Government Regulations existing at
multiple levels is imposed by national, regional and local authorities which further
impedes the growth.
Dearth of skilled Manpower is also acting as weak link in the growth of the third-party
logistics sector as well as the manufacturing and retailing sectors. Inadequate
facilities and lack of proper management have led to substantial capital loss, damage
and deterioration of stock, which is prominently seen in the perishables sector.

Solutions to some of the challenges

Constructing of roads matching to the global standard with widely connected

networks, integrated rail corridors, contemporary cargo facilities at airports and
creation of logistics parks with a status equivalent to Special Economic Zones can
helps to uplift the falling standards of this industry.
By increasing the storage capacity and the warehousing facilities can also support in
the goods management of this industry. There is a need to expedite the transportation
of the perishable products and giving importance to enhance the warehouse facilities.

Prospects

There is a visible shift of logistics firms from a traditional setup to the integration of IT
and technology to their operations to reduce the costs incurred as well as to meet the
service demands.

The India’s Logistic Sector is directly impacted by the progress made in soft
infrastructures such as education, training and policy framework as much as the hard
infrastructure.

ValuEndow Consulting

ValuEndow Consulting offers a range of services in the field of Logistics and Supply
Chain. Through our offerings we intend to establish a strategic position in the existing
competitive business environment for our clients.

We are instrumental in building, Process Frame-work & Workforce which is tailor

made to provide reliable and effective solutions to complex Supply Chain and
Logistics business requirements in an organization.