B2B focused shipping world-Logistics Index India world bank

POSITIVES:

Setting up of Multi-Modal Logistics Parks (MMLPs) part of transport ministry’s Logistics

Efficiency Enhancement Program (LEEP) are aimed to improve the country’s logistics sector by

lowering overall freight costs, reducing vehicular pollution and congestion, and cutting

warehousing costs. This concept is relatively new in India and its potential can be tapped.

The multi modal logistics parks represent a road and rail based intermodal cargo handling facility

which would be a complete space comprising of cargo terminals, cold chain, banking and office

spaces to handle freight traffic. There is also a huge scope for intelligent transport systems (ITS)

that would provide real time monitoring of trucks and trains through GPS and integrate the same

in one system. This would lead to a safe, coordinated and smarter multimodal transport network.

Electronic tolling centres are being developed over time, the ‘green channel’ concept is being

accepted, and inter-state check posts are becoming automated. Other examples of key

progressive measures include the development of the Indian Road Transportation Exchange

(IRTEX), gradual fleet modernization and consolidation of the trucking community.

The National Highways Authority of India (NHAI) is collaborating with ISRO to use spatial

technology to monitor traffic of national highways. In terms of policy, the rollout of the GST can

act as a major integrator for smooth transition of goods, as it would reduce the multiplicity of

taxes across state borders and hence be a major time saving measure too.

Further the privatization of container operations by the Indian Railways is a positive node.

Systems such as the Elevated Transfer Vehicle (ETV) or the Automatic Storage and retrieval

system (ASRS) if employed at the terminals will lead to improved operations. Further the
incorporation of the ITS will also lead to a complete node to node tracking as well as help in

removing inefficiencies and find the best path for the particular cargo.

Source: India logistics: clear road ahead, Edelweiss

National logistics portal :
Challenges :

GLOBAL CHALLENGES:

The biggest change has come from the e-commerce revolution, which started as a
consumer phenomenon, but is changing the needs and behaviors of all our customers.
Without a doubt, this is the biggest growth opportunity in the logistics business and it
comes with its own dynamics:

 E-commerce requires UPS to scale and flex for volume swings on a day-to-day
basis.
 It conditions consumers to expect faster deliveries.
 And it creates more single-package delivery stops.
E-commerce volume growth is not the issue -- profitable growth is: Moreover, so-called
last-mile B2C deliveries to residential addresses are also seen as a low-margin endeavor.

UPS of dealing with margin pressure from e-commerce growth -- online deliveries
can involve bulky and/or inefficiently packaged items, and business-to-consumer
(B2C) deliveries to residential addresses are seen as a relatively low-margin activity.

The cost of logistics for India is about 14 per cent of its GDP and it is higher than in
other countries.

According to a World Bank report the logistics cost in India is one of the highest in the world.
According to this study the logistics costs are around 6%-8% of the total value of the goods in
most developing countries. But in India the total cost is about 14% of the total value of goods in
comparison to 10% in China.

France 5.5 cents/km Japan 3.7 cents/km Canada 2.0 cents/km India 7.0 cents/km
(Source: G.Vaidyanathan, Current Status of Logistics in India, Pianc Magazine)

Secondly the logistics sector is also constrained by the lack of proper infrastructure. In a report
by Standard & Poor the losses due to poor infrastructure account for about 4.3% of the total
GDP and this cost may rise up to 5% of the GDP by 2020 quotes McKinsey and Company
Further the constraints in the logistics sector are also due to the misuse of the modes used to
transport different types of commodities and the limitations posed by certain modes to
transport others.
Hence we can see that to achieve the optimal movement of freight the logistics mode should be
matched with the cargo being shipped. Currently road transport is given preference due to the
inadequacies of the rail transport but this adds to increased turnaround times and costs. Hence
coming out with the best mode of transport for a particular cargo can lead to reduced
congestion and facilitate its easy movement.
Further the large number of unorganized players in the road logistics sector has made it a
fragmented industry and there are no stringent rules and regulations and it also leads to
increased competition.
If we look at road freight the key challenges faced are the poor quality of roads and network
connectivity. Further the check posts are a cause of delay
The rail freight costs are among the highest in the world. Further there is no common system in
place so it lacks reliability and traceability. Hence the operations are deficient in terms of
quality, speed and return over investments.
With regard to the port freight there are inefficiencies in the loading, unloading and berthing
which leads to high turnaround time for vessels. Further is a lack of hinterland connectivity and
poor port and land infrastructure that leads to inefficient operations.

Rail is less than in China and USA where is 50%.

Roadways Roads continue to be the majorly favoured form of transportation in the logistics
industry, accounting for over 60% of total freight movement and nearly 85% of the passenger
movement in the country, as it has the distinct advantage of last mile reach, over railways.

Amazon and Flipkart have made the delivery of goods predictable. Customers
know exactly when it is dispatched and when it could be delivered through text
messages. Even the B2B channel now expects a similar level of predictability,
from pick to dispatch to delivery. Third party logistics companies, such as
Mahindra Logistics, have therefore invested in warehouse management
systems and transport management systems that provide visibility of goods
shipped and its lifecycle, from FMCG companies to distributors. "The use of
fleet management software (provides live tracking of goods), RFID systems for
inventory identification and automated pallet storage is growing quickly, as is
the number of start-ups aimed at bridging the technology gap,"

Ecommerce? Tremendous opportunity in B2B for small and medium-sized businesses UPS Solutions
provide retailers control and convenience Strong growth potential in cross-border e-commerce Drive
further efficiency through synthetic density

 Promotion of Fleet Exchanges: Fleet owners can use real time data of their vehicles and hence
an efficient marketplace model can be developed wherein the transport customers and
transport vendors can be brought together like the stock exchange model. This will enable an
effective vehicle mix availability for pooled resource saving. Field support can be taken from the
road transport officers. Executing in a Dynamic Environment • Agile global network helps
counterbalance the effects of trade uncertainty. • Ability to help customers adapt to changing
conditions. • Strong cost management from asset-light services.
Uberization of the trucking industry. "This is when companies pay for just one
side of the transport costs. Earlier, people used to book a cab for the whole day
and the vehicle would be idle for many hours.

Improve upon last mile delivery? HUL/ITC/Nodes- The UPS Store/ UPS lockers and drop boxes
/UPS Access Point ®: There are 750 identified roads of around 100 km of stretches which
connect key production, consumption and transit points such as ports, mines and industry
clusters which have created a bottleneck in the delivery system and hence the infrastructure for
these roads need to be developed at the earliest.

End to ends services?

Warehouse space under management? - multi-client warehouses
Small and medium-sized businesses? Ware2Go?Speed to delivery-2 day
delivery- lack of transparency in pricing and operations in the
warehousing industry
https://www.thedollarbusiness.com/magazine/warehousing-in-india---changing-gears-to-meet-future-
challenges/31043

The warehousing industry is highly fragmented and there is no

standardisation of costs. This means that businesses end up paying
more than what they would in a perfectly organised and data-driven
market. On the flip side, warehouse owners who have built capacity in
the anticipation of demand are unable to get occupancy.
Ware solves the problem of managing inventory and supply chain for
businesses. The company aims to 'virtualise' warehouse space so that

1. businesses can dynamically customise their space requirements in

line with their fluctuating needs and
2. pay for only the space that they utilise as against being tied up with
long-term, inflexible contracts.

Ware has a dual revenue model:

1. Supply side - Revenue sharing model with the existing warehouses

to monetise their unused space.
2. Demand side - With the provided flexibility in the duration of
occupancy on the demand side — which guarantees savings vis-a-
vis fixed warehousing contacts — there exists the opportunity to
leverage the cost arbitrage that exists due to the fragmented
nature of the industry.

Warehousing forms a crucial link in the overall logistics value chain. It

accounts for five percent of the Indian logistics market (excluding
inventory carrying costs, which amount to another 30 percent). The total
market size of the warehousing industry, as of 2017, is pegged at Rs
750 billion.

The warehousing industry in India is highly unorganised and follows a

free market system, which sometimes leads to price exploitation. There
is no standardisation of experience across different warehouses. The
industry has not witnessed any significant incursion of the developing
technology. With GST, the warehousing industry is undergoing a shift
with a possible consolidation of the warehouse space, in terms of
location, size, operations, and services.

The existing online players are exploring the space with different sets of
value propositions and service offerings which presently cater to
business-to-customer (B2C) market that has consumers who require
space for household items. Some of them are renting warehouses and
further subletting spaces on per unit basis, while others like Ware are
relying on asset-light business model.
 recruits warehouses in strategic locations, creating a network of fulfillment partners. New
fulfillment options : This is really a technology and platform company – more than a
services business – with merchants on one side, looking for order fulfillment
capabilities, warehouses looking to fill space appropriately. We wanted to build
that using the best of both worlds. Customers make an account on Ware2Go’s
website as either a merchant, warehouse, or both, and then answer questions on
their business or warehouse needs. Once merchants provide details about their
products, orders, space requirements, and regional delivery needs, Ware2Go will
then allow merchants to manage their inventory and orders across the
companies’ cloud-based network. Customers make an account on Ware2Go’s website
as either a merchant, warehouse, or both, and then answer questions on their business
or warehouses’ needs. shared warehouse, if you have low volumes, uncertain demand or
seasonal operational fluctuations, operating in a shared warehousing allows you to enjoy
the benefits of all inputs at significantly low cost. Unlike most 3pl logistics companies,

BoxMySpace/Storespace believes in Pay-as-you-go for the warehouse space used which can be
scaled as your requirement increases. Multi-User & Shared Warehousing Facility

High security warehouse on rent in Mumbai with integrated logistics operations such as
Transporting the Goods from Source to our Warehouse, Inwarding the Goods, Quality
Check, Storage, Dispatch, Reporting, Secondary Distribution and Transportation.

With our In-House WMS and Process Management, we provide our Clients Real-Time
Data of their Inventory across all locations and Daily MIS Reports of each and every
Operational Activity. - services such as Kiting, Packing, Transportation Logistics and
other customized operations

Cold storage, agri storage, and container storage form rest of the pie.

https://www.businesstoday.in/magazine/cover-story/modern-warehouse-high-value-shipments-
india-stores-logistics-companies-godowns/story/278867.html

Some benefits are:

 Shared Manpower
 Infrastructure including MHE’s etc… available for just a part of the total cost of operation
 Spikes can be handled seam lessly because of huge manpower and infra base
 State of the art security systems as a part of package
 Flexibility to increase and decrease footprint according to business needs and seasonal
demands.
 Short and long term storage options.
 Professional team through strategic planning decides which businesses would group well
to share a facility together based on size, type and style of operations and processes.

BoxMySpace?

According to IBIS, the outsourced warehousing market is expected to grow to

$26 billion by 2023 based on current growth rates. On demand warehousing
market is expected to hit $25 billion, as well.

Due to varying CST levy and state entry taxes across states, we were
maintaining multiples warehouses, most of which were adding to operational
inefficiencies as they were not being fully utilised. These warehouses were
strategically located to minimise delivery cost for both the company and the
consumers. After GST, the company started a process of consolidation and has
thus far shut down about five of its warehouses and will close down another
two this year.

Shipping integration solutions Shopify Checkout App Ware2Go One-stop tech platform UPS
Access Point network The UPS Store consolidated returns program Connected commerce Deliv

B2B? Healthcare- $85B outsourced healthcare logistics market - climbing to $105B by 2021
UPS Healthcare holds double-digit share of U.S. market Personalized medicine and digital
services driving home health care opportunities Vast residential network, special packaging,
enhanced tracking/visibility and time-definite delivery solutions Regulatory compliance Leader
in global inbound clinical trials Hybrid shipping solution Direct-to-patient and direct-from-
patient

MLL’s scale enables it to provide business assurance, process, and technology to its business
partners ▪ MLL’s business partner development and loyalty program
It would be naïve to assume that Amazon — who has been piggybacking for
years on its “delivery partners” UPS and FedEx while building its own
delivery infrastructure under their nose, will ever think twice when it is
finally ready to transition from a “partner” to a disruptor.
Amazon cost of capital?
density is defined as the number of delivery stops that a driver can achieve in a given
hour. A UPS driver, for example, would hit on average 9.2 stops per hour, and in some
cities up to 15–20. A postman would stop at every single address on his route to deliver
mail. In these high-density models, the delivery cost spreads over a large number of
packages, which results in a relatively low cost per package. surging their delivery fees
during hours of low density. Had it done so, most customers would have likely opted for
the cheaper delivery windows, which, in turn, would have further increased the density
for these routes and reduce the cost for every delivery.

In yesterday’s logistics world, he who owned the physical assets owned the market. That
has always been UPS’s philosophy; in tomorrow’s world, he who owns the software
infrastructure owns the market. That, in essence, is Amazon’s philosophy. And That is
exactly why Amazon is on its way to becoming the world’s most dominant logistics
company of the future.

• UPS Worldwide Express – Guaranteed time definite door-to-door air express delivery of
urgent international documents and packages. The service is available to and from 200
countries and territories serviced by UPS
• UPS Worldwide Express Plus - guaranteed next day, early morning delivery service.
• UPS 10 Kg Box and 25 Kg Box - provides the convenience of two easy-to-use packaging
options for urgent shipments.
• UPS Worldwide Expedited - time definite doorto-door service for less urgent shipments that
does not require express service.
• UPS World Ease - it is a fully automated solution that allows customers to group shipments
destined for a single country into one consolidation that moves and clears customs as one
transaction, and then is split and delivered to multiple consignee locations. It is a contractual
service available to, from and among more than 60 countries.
• UPS Exchange Collect – offers an electronic payments option where UPS acts as a trusted
third party to collect the funds from the importer prior to shipment delivery and pays the
exporter only upon delivery. It provides customers with full visibility of goods, funds during
each step of the transaction enabling sellers to quickly recover payment for their goods. UPS
Exchange Collect is offered on a contractual basis and is available for UPS Worldwide Express
and UPS Worldwide Expedited services
IT
DIAD (Delivery Information Acquisition Device) II - The device uploads package level details to
the customers as well as enables signature tracking. The information is available on the Internet
instantaneously once the package has been delivered; there is also proof of delivery as well as
the digital signature. This enables UPS to provide package tracking services to the customers.
• UPS SMS Tracking - Tracking information like package status, location, date and time, and
confirmation of the receiver’s name are available over SMS to customers in Singapore,
Malaysia, Hong Kong, Taiwan, Philippines, Thailand, China and India.
• UPS Online WorldShip – saves valuable time and money, this free software prints shipping
labels and commercial invoices; it eliminates repetitive typing or handwriting by saving
customer address and product information into the built-in database. It also tracks information
of packages, manages shipping information and provides notification to customers on shipment
status.
• UPS CampusShip – It is a web-based, full-featured shipping solution, designed for companies
whose employees handle their own shipments. Yet, with just a few steps, it allows custom set-
up for optimising shipping throughout the organisation. Using an Internet connection,
employees can ship their own packages and letters from any desktop, while management
maintains overall control of shipping activities

1/2/3/ ROAD EXPRESS/ third-party logistics (3PL)/ AIR EXPRESS / Spoton competes
with deep-pocketed logistics startups such as Delhivery and Rivigo, apart from the likes
of Gati, TCI, Safexpress, DHL, Bluedart and Fedex.

The insights extracted from that data help inform UPS on how to load delivery vehicles,
make more targeted operations adjustments, and minimize forecast uncertainty

 Rolling out the next phase of Orion

 Building new facilities and retrofitting existing ones to promote greater growth and
efficiency
  Re-engineering our processes to create greater synthetic density????
 Adding the most efficient air network assets

HUL/kiosk/Groceries-

It’ll require integration, starting with order intake at the customer to the multi-modal
shipment transfers through our hubs, freight warehouses and package centers – and all
the way to the final mile, whether that’s a loading dock or a doorstep. ORION, our
existing hub modernization projects, and the new facilities we’re building. So far, we’ve
reduced the number of miles we need to run our routes by more than 210 million,
which helped us increase the average stops per mile by 9 percent.

Now let’s turn to facility automation. Our automation initiative is dramatically improving
the efficiency and connectedness of our hubs, package centers and transportation
network. . Retrofitting a hub does improve direct labor efficiency by 20 to 25 percent,
and we have learned there are additional benefits beyond direct labor savings as we
complete these retrofits and create a more integrated network. We’re also building new
facilities to augment the network using operations technologies that enable us to
achieve the most-efficient results possible. The all-new facilities enable us to boost our
productivity savings even higher, since new buildings generate about 10 percent higher
productivity than retrofits. These will employ the very latest in automated sortation and
other technologies. The power of having a fully integrated network means that as we
add more automation to handle this tremendous growth opportunity, we create
capabilities that benefit every one of our B-to-C and B-to-B (business-to-business)
customers.

Synchronized Delivery Solutions – or SDS, for short – we’re using enhanced data
analytics to create more “synthetic” package density across multiple product categories.
We initially introduced lower-cost delivery options and improved margins through
SurePost, and then SurePost Redirect. SurePost “Hold and Redirect” two-day option,
which adds more opportunity for a match – not just to a single address but to
surrounding areas, as well our broad customer base. This gives us a big advantage as
we match up more packages with different delivery commitments from different
geographies.

With ORION-like algorithms, we can determine in real time whether we can optimize
delivery locations and service commitments. Combining these “synthetic density”
initiatives with advance delivery notifications using UPS My Choice and Follow My
Delivery, plus alternative delivery locations with Access Points, will make the delivery
experience even more satisfying for consignees.

Failed deliveries, delays, e-kart,

?build a fully integrated delivery network to “supplement our existing partners”. Amazon
Prime Same Day and Amazon Prime Now — its two hour and one-hour delivery service.
drivers deliver packages for Amazon’s sellers, but up until now this service has been
provided only to sellers who ship from Amazon’s fulfillment centers. Under Project Seller
Flex, Amazon would now oversee pickup of packages directly from the seller’s
warehouses, and determine how these packages would be delivered — a task that was
previously left to the seller, who often contracted with FedEx and UPS.

? XPO Logistics — a $15 billion trucking company that specializes in LTL logistics (Less
Than Truckload) and in last mile delivery of bulky items such as furniture.

? poor communications with end-customers (have you ever received the ‘sorry we missed
you note’?); lack of price transparency; frequent rate increases; poor digital user
interfaces and frequent delivery delays especially during the holiday season — are all
prime contributors to this negative brand perception.

?Bankers guarantee?

?Autonomous
The drones launched from the roof of delivery trucks after the trucks' drivers loaded
packages on to them and confirmed the aircrafts' flight paths. UPS stated that, if drones
cut just one mile per day from each of its drivers' delivery routes, it would result in $50
million per year in fuel savings.

??Storage
After having purchased Kiva Systems, Amazon leveraged the former’s robotic and
distribution systems to improve efficiency within their warehouses. Products at Amazon
are not shelved in any particular order, nor are they continually displaced and
reorganized like books in a library. Instead, products are stored where they fit and
robots and human pickers fetch the products for packaging.

?Pricing : expanded the usage of dimensional-weight pricing, whereby packages are

priced by dimensions as well as weight, therefore encouraging more efficient packaging.

?1/2/3 tier -? Rivigo and blackbuck and blowhorn and porter

?OIt launched Amazon Flex — an Uber-like crowdsourced delivery service, now available
in more than 50 US markets, which utilizes approximately 100,000(!) drivers

O: While crowdsourcing is often associated with on-demand or point-to-point

deliveries, the model can also be applied to scheduled, high-volume
distribution. carriers will not only need to handle record-peak volumes, but also master
same day, on-demand, and night-time delivery. How can delivery companies best
capitalize on these trends while protecting their market shares from disruptive new
entrants? We believe the answer lies in crowdsourcing.

First, that crowdsourcing is more cost-effective than traditional distribution models since
market rates for crowdsourced drivers are lower than those of professional drivers; and
second, that crowdsourcing is disruptive to traditional delivery companies because it
allows shippers to ‘cut the middleman’ and connect directly with the driver. In reality,
neither of these arguments is accurate. Moreover, the competition for crowdsourced
drivers – who are increasingly becoming the bottleneck for growth in the on-demand
space – has constantly been on the rise. ‘cutting the middleman’? It is true that most
crowdsourcing platforms have eliminated, at least to some extent, the role of the flesh-
and-blood operator. However, the truth is that this has nothing to do with crowdsourcing
itself, but everything to do with the automation technology that these companies have
developed. For example, by leveraging machine learning algorithms, crowdsourcing
platforms are able to automatically assign delivery tasks to drivers based on each
driver’s real time location and availability. These smart algorithms can also bundle
delivery addresses to routes, determine the fastest way to complete a route, and
provide the consignee with an accurate ETA and real-time visibility.
Leveraging a Flexible Capacity Model
If cost savings or increased productivity are not the key benefits of crowdsourcing, then
what makes it so attractive to Amazon and its retail rivals? the answer lies in the
incredibly flexible nature of the model, and its scalability potential.
Compare carriers who utilize a ‘fixed’ pool of professional full-time drivers, with Amazon
Flex who utilizes a ‘flexible’ pool of crowdsourced, part-time drives. When parcel volume
spikes – as usually occurs during the holiday season – fixed-capacity carriers must
extend their fleet and undertake the cumbersome process of recruiting and on-boarding
temporary employees or contractors, who are not easy to find. Driver shortage has in
fact become a major challenge for common carriers in recent years, not only during the
holidays, but also on a weekly basis as parcel volume and capacity needs tend to
constantly fluctuate.
The Customer Experience Advantage
Perhaps of the highest importance to Amazon, owning a flexible fleet allows the
company to offer customers a variety of delivery services that fixed-fleet carriers
traditionally found expensive to provide. Two-hour, same-day and night-time deliveries
are all made possible with crowdsourcing: Amazon can always find an available driver
at any hour of the day, and enable the customer to choose her preferred delivery
window while minimizing the likelihood (and cost) of failed delivery attempts.
To truly enable final mile crowdsourcing, delivery companies must help drivers jump
over the lengthy ‘learning curve’. Rather than give the driver a manifest and expect her
to figure out the route on her own, carriers should provide the driver with technology that
takes her step by step through the delivery process and eliminates any opportunity for
error.
Why Amazon Prime is Good News and Bad News for UPS (UPS)

The drivers will work for a new subsidiary called Shipping by Amazon that will compete
directly with UPS. Notably, Amazon is purchasing 20,000 Mercedes-Benz Sprinter vans
from Daimler AG for Shipping by Amazon, Automotive News claims.

In fact, Amazon is providing discounts on fuel, vehicles, insurance, and uniforms to

contractors in its Delivery Partner Program. The Delivery Partners will operate the vans,
hire the drivers, and deliver the goods. “vertically integrated” supply chain. e-commerce
giant has been spending heavily on airplanes (it now reportedly leases 40 of them), truck
trailers (it now owns thousands of which) self-service lockers (it now has over 6000 of
them) and fulfillment, sorting and distribution centers in every major metropolitan area

The drone, which operates autonomously, launches from the truck, delivers a package
to a home and then returns to the delivery truck while the driver continues along the
route to make a separate delivery.
In this groundbreaking test, we showcased how drones might reduce miles driven while
creating operating efficiencies. This collaboration with Workhorse is different than
anything we've ever done with drones. It has implications for future deliveries,
especially in rural locations where homes are far apart and our drivers often have to
travel long distances to make a single delivery. Imagine a triangular delivery route
where the stops are miles apart by road. Sending a drone from a package car to make
just one of those stops can reduce costly miles driven and vehicle emissions.

humanitarian relief, partnering with third-party organizations to deliver life-saving

medical supplies to hard-to-reach locations in Rwanda. Initiatives like these
demonstrate the benefits of using drones to deliver packages in areas that don't have
established transportation infrastructure.

One striking example of how Amazon leverages technology to save big bucks in the final
mile lies in the notoriously failed delivery attempts: At UPS and FedEx, it is not
uncommon for a driver to complete three failed delivery attempts before dropping the
package at some pick-up location (say, the UPS or FedEx store). This practice is mostly
common in large metropolitan areas where it is unsafe to leave a package by one’s
doorstep, and it can cost delivery companies tens of millions of dollars every year.
Amazon, on the other hand, is already testing a mobile interface that allows customers to
follow the delivery driver on a live map (similar to Uber) and leave specific drop-off
instructions; It also recently acquired startup Ring-maker of video doorbells — which
allows drivers to complete in-home deliveries even when the customer is away (more on
that later); and has been rolling-out a new service in which Amazon drivers can now
leave a package in your car’s trunk.

In other words by insourcing “pockets of density”, Amazon is effectively

taking over the more profitable home deliveries, and leaving the less
attractive ones — those in lower density areas — to UPS and FedEx. This is
another effective way to squeeze margins out of its “delivery partners.”

Once Amazon has sent out a delivery driver with its own packages, what prevents it
from allowing other sellers to add their packages to the vehicle? This is not only
attractive to Amazon as a new revenue stream, but also as a strategy to subsidize the
delivery cost of its own packages: the more packages delivered to the same building
block or neighborhood, the higher the delivery density, and the less it costs Amazon to
deliver each package.
The problem is, that these ever-shrinking transit times (especially same-day) are
extremely costly for carriers like UPS and FedEx, since their networks were not primarily
designed for home delivery of such massive volume at such a short time. These carriers,
in turn, must pass on the excess cost to their shippers (usually retailers), whose slim
margins put them in a difficult dilemma:

Amazon sees ‘delivery’ as “the new moment of truth”: the moment when
the customer “meets” Amazon in real life, interacts with its product, and
continues to develop deep customer loyalty. This completes a ‘customer
journey loop’ in which a great delivery experience reinforces the purchase
decision and leads to increased future engagement. In essence, Amazon
sees delivery as the physical extension of its online shopping experience
and treats it as such — with the utmost importance.
Delivery, in essence, is a mechanism to create network effects between
sellers and buyers on Amazon’s marketplace: the more each party engages
with it, the more everyone (and Amazon itself) benefits.

What Target and many other retailers are banking on is that e-commerce and stores can actually feed
sales to another, with physical locations potentially given stores an edge over Amazon.

Cornell told Wall Street in March that a Target customer who shops both in-stores and at target.com
shops three times more often that the average customer, generating three times more revenue and
2.5 times more profit. Why? Because the two avenues lead to cross-shopping and bolster customer
loyalty.

1) NTDPC – Vol 2, (2013). Trends in growth and development of transport 2) IBEF

reports – Road and Railways 3) McKinsey and Company report – Building India –
Transforming the nation’s logistics infrastructure 4) PHD Chamber of Commerce
and Industry – Knowledge paper – ‘Multimodal logistics in India-an assessment’
5) Indian Railways – White Paper on – ‘Indian Railways – Lifeline of the nation’.
6) World Bank Report – India Transport Sector 7) Website of Ministry of Road
Transport and Highways – www.morth.nic.in
One reason why India's logistics costs are high is its lack of standardisation.
He cites an example to illustrate his point. In a warehouse, goods are stored
and moved on a pallet. Their sizes are defined in the US and Europe. In India,
however, there is no standardisation of pallet sizes. This impacts optimisation
of space in a truck. Similarly, the industry requires standardisation in safety
standards, in racks, and rack spaces among many other things.
"Standardisation can only happen with government intervention. Once the
industry is organised and there is standardisation, we can optimise and the
cost of logistics will go down."