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Thursday, August 8, 2019 12:06 PM

LOGISTICS:

START

The performance of logistics sector in the economic development of India has never been more compelling. A robust logistics s ector can go a long way in boosting India’s quest for being a
manufacturing giant given that several initiatives like ‘Make in India’ have been launched by the government.The industry has seen rapid growth in the last few years due to increased planned
outlay of the government, improved infrastructure facilities and greater access to global markets. However, our services have not adequately capitalized on the opportunity in the global market as
multiple challenges continue to mire the sector
his is further complemented by the implementation of GST, which streamlined the state-wise tax structure and ensured seamless movement of goods. According to Economic Survey 2017 -18, the
Indian logistics market is expected to reach about $215 billion in 2020, growing at a CAGR of 10.5 percent.
The growth is driven by emerging ecommerce retailers from Tier II and III markets, a corresponding increase in demand and the entry of more foreign corporates in the FMCG segment, propelled by
India’s upward movement in Ease of Doing Business Index. With a favourable regulatory environment highlighted by the grant of infrastructure status, Indian logistics enterprises can now have
easier access to funding opportunities to drive technology driven operational transformation.

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

Developing an integrated framework

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

Smaller, unorganised players still eat up a large segment of the customer base, setting a lower benchmark for operations whil e influencing pricing as well. The inefficiency of these players has even
encouraged ecommerce players such as Amazon to develop their own cutting-edge logistical fleet, equipped with drones and RFID/sensor-based technologies that optimise the entire process. Such
a trend enhances competition for the dedicated logistics players, and only those which are able to incorporate digitised proc esses driven by Artificial Intelligence (AI) will be able to thrive through
this onslaught.

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

Existing infrastructural and cost inefficiencies need to be addressed as well. This includes a fragmented warehousing and ina dequate material handling infrastructure and a still poor integration with
modern information technology. One of the main points of focus, however, is the improvement of last -mile delivery framework.

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

However, few players have managed to develop a robust last-mile delivery structure, through a strong franchise-based model that involves constant engagement with the franchise owners to offer
a unified consumer engagement experience.

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

The Indian logistics sector provides a livelihood to over 22 million people, which in the next couple of years is expected to grow significantly. Equipping the sector with the latest digital technologies
and automation in operations would lead to a 10 percent decrease in indirect logistics costs, placing India in good stead wit h countries like the US, China and Japan when it comes to both domestic
as well as international trade.
The recent opening of ports such as Chabahar further promise a growing international trade setup for India, particularly with high potential markets
such as Iran and Afghanistan and other middle-eastern countries. An integrated logistics policy that removes hierarchies and interactions with multiple
agencies, effective monitoring and a complete tech-driven approach can help India’s logistics sector leapfrog into becoming one of the most promising
sectors of the Indian economy.

The government has already formed a national committee headed by the Cabinet Secretary to reduce the logistics cost from 14 percent currently to
10 percent by 2022. Such constructive steps, if taken frequently and with solid intention, leveraging the best of technology, can surely develop a
strong, efficient logistics sector, empowering the Indian economy to achieve the goals it has set for itself.
From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

From <https://yourstory.com/2019/03/current-scene-indian-logistics-challenges-scope>

The Logistics Performance Index (LPI) [1] is an interactive benchmarking tool created by the World Bank to help countries identify the challenges and opportunities they face in their performance on
trade logistics and what they can do to improve their performance

From <https://en.wikipedia.org/wiki/Logistics_Performance_Index>

This measure indicates the relative ease and efficiency with which products can be moved into and inside a country. Germany a nd Singapore are the most efficient and highest ranked LPI countries.
The Logistics Performance Index is reported by the World Bank in every two years. The LPI is based on a worldwide survey of s takeholders on the ground providing feedback on the logistics "friendliness" of
the countries in which they operate and those with which they trade. They combine in -depth knowledge of the countries in which they operate with informed qualitative assessments of other countries
where they trade and have experience of global logistics environment.

World Bank has recently come out with the Logistics Performance Index 2018 ( released every two years). Germany again leads t he table as #1 with a LPI score of 4.20. Followed by Sweden,
Belgium, Austria and Japan in that order of top 5 Nations
India ranks at 44 in 2018 ranking.
India’s ranking jumped from 54 in 2014 to 35 in 2016 whereas its score also improved from 3.08 in 2014 to 3.42 in 2016

Understanding what comprises the World Bank, Logistics performance Index : The logistics performance (LPI) is the weighted average of the country scores on the six key dimensions: 1) Efficiency of
the clearance process (i.e; speed, simplicity and predictability of formalities) by border control agencies, including custom s. 2) Quality of trade and transport related infrastructure (e.g., ports,
railroads, roads, information technology); 3) Ease of arranging competitively priced shipments; 4) Competence and quality of logistics services (e.g., transport operators, customs brokers); 5) Ability

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railroads, roads, information technology); 3) Ease of arranging competitively priced shipments; 4) Competence and quality of logistics services (e.g., transport operators, customs brokers); 5) Ability
to track and trace consignments; 6) Timeliness of shipments in reaching destination within the scheduled or expected delivery time.

From <https://en.wikipedia.org/wiki/Logistics_Performance_Index>

The need for a National Logistics Policy in India

Transitioning towards an integrated end-to-end logistics
Adopting digital technologies in logistics chain

Development of logistics related infrastructure, like dedicated freight corridors, logistics parks, free trade warehousing zones and container freight stations, are expected to improve efficiency, a
report by CARE Ratings observed

From <https://www.business-standard.com/article/companies/india-s-logistics-industry-to-be-worth-215-bn-by-2020-21-care-ratings-118101700898_1.html>

At present, the logistics sector is dominated by transportation, which has over 85 per cent share in value terms. Its share i s set to remain high for the next few years. The remaining 15 per cent share
is accounted for by storage. The sector is employment intensive, absorbing 22 million people.

From <https://www.business-standard.com/article/companies/india-s-logistics-industry-to-be-worth-215-bn-by-2020-21-care-ratings-118101700898_1.html>

Going ahead, the logistics costs as a share of the GDP is expected to decline, led by initiatives like the implementation of goods and services tax (GST), investments in road infrastructure,
development of inland waterways and coastal shipping, and the thrust on dedicated freight corridors.

From <https://www.business-standard.com/article/companies/india-s-logistics-industry-to-be-worth-215-bn-by-2020-21-care-ratings-118101700898_1.html>

At present, the Indian logistics industry is highly fragmented and unorganised. Owing to the presence of numerous unorganised players in the industry, it remains fragm ented, with the organised
players accounting for approximately 10 per cent of the total market share. With the consumer base of the sector encompassing a wide range of industries, including retail, automobile, telecom,
pharmaceuticals and heavy industries, the logistics industry has been increasingly attracting investments in the last decade.

Further, the logistics industry faces challenges such as under-developed material handling infrastructure, fragmented warehousing, multiple regulatory and policy-making bodies, lack of seamless
movement of goods across modes, and minimal integrated IT infrastructure. In order to develop this sector, focus on new techn ology, improved investment, skilling, removing bottlenecks,
improving intermodal transportation, automation, a single-window system for giving clearances, and simplifying processes would be required.

From <https://www.business-standard.com/article/companies/india-s-logistics-industry-to-be-worth-215-bn-by-2020-21-care-ratings-118101700898_1.html>
WAYS TO IMPROVE LOGISTICS
nfrastructure enablement
The government has reiterated its steadfast commitment to modernizing the functionalities of Indian logistics with a key focus on infrastructure development. With a
view to improving supply chain efficiencies and enhancing connectivity to help logistics players tap the underleveraged markets in the country’s hinterlands, key
infrastructure development projects have been rolled out.
The ambitious Bharatmala project holds the promise of strengthening the countrywide road network and improving connectivity with the interior and backward areas of
the country. The Sagarmala initiative is a key step in doubling India’s coastal shipping share in the country’s broader modal mix and aims at formulating a
comprehensive shipping policy and optimizing the country’s maritime assets. It places heavy emphasis on improving maritime linkages and promoting port-led
industrial development by setting up industrial clusters and manufacturing hubs along coastal zones.
The high-speed, freight-only Dedicated Freight Corridor Project aims at decongesting a heavily saturated road network and reducing freight transit times from
industrial heartlands in north India to ports on the eastern and western coast of the country. Optimizing freight transport times, the dedicated corridor initiative will
promote economic growth and generate employment through the setting up of industrial corridors and logistics parks along the corridor routes.
Regulatory boost
Key reform measures and policy interventions like the unveiling of the Goods and Services Tax, (GST), relaxed FDI regulations and granting of infra status has
boosted the core competencies of the Indian logistics industry. GST was a game-changer for Indian logistics. It laid the foundation for the setting up of large format
multi-modal logistics parks along key consumption and industrial centres which can function as freight aggregation and distribution hubs.
The ongoing trade war between the US and China presents India with the key opportunity to expand its export trade and correct its trade imbalances with the Asian
economic powerhouse. The development has provided India with the advantage of gaining an upper hand in renegotiating the terms of economic engagement with its
regional neighbour. This is an opportune time for India to improve trade relations and economic cooperation with China and gain inroads into its vast consumption-led
economy.
Deeptech leverage
The emergence of new-age empowering technologies like artificial intelligence, internet of things, and machine learning will disrupt the conventional workings of the
country’s logistics sector. The impact of these technologies is anticipated to enhance productivity across the supply chain spectrum and streamline operational
processes. These technologies will largely play an enabling role in boosting efficiencies of supply networks, reduce wastages and lead to supply chain optimization.
The speed and scale with which we align our supply chain strategies to tackle the complexities of a changing global trade order will be key to determining our position
in the global logistics ranking.

From <https://www.financialexpress.com/industry/3-key-areas-that-will-drive-growth-in-indias-logistics-sector-in-2019/1441500/>

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