Logistics Industry in India | Indian logistics market

The Size of Logistics Industry in India is $215-billion. The logistics industry in India is highly fragmented with a large number of unorganized players. Only 10-15 per cent of the $215-billion Indian logistics market is owned by organised players.

Now take a look at Global Logistics Industry and then Move on to Logistics Industry in India.

Top 10 Logistics Companies in India 2022

GLOBAL LOGISTICS INDUSTRY

Logistics industry majors across the value chain are expected to prioritize operational efficiencies, with investments in technology adoption. Slowdown in world trade is expected to hit the air cargo market’s volume growth and yield performance, as freight capacity
growth is expected to outstrip demand due to weakened consumer confidence.

Post COVID-19, the global logistics market size is projected to grow from USD 2,734 billion in 2020 to USD 3,215 billion by 2021, at a Y-O-Y of 17.6%.

The major drivers of this market are increasing their focus on the continued supply of essential commodities, creation of a supply chain stabilization task force to fight COVID-19, as well as on the growing demand and distribution of personal protective equipment. The factors that restrain the market are labour shortage and a shortage of COVID-19 testing kits. The projection for 2021 is estimated to be down by over 10-15% as compared to the pre COVID-19 estimation.
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FMCG and healthcare are among the major industries facing prominent logistics challenges. Most consumers are experiencing the fear of limited availability of fast-moving consumer goods as well as healthcare goods such as disinfectants.

Most countries are experiencing supply pressure due to panic buying by consumers due to COVID-19 impact. As a result, FMCG companies are continuously tracking the current situation and are coming up with new strategies to ensure continued supply.

The agriculture sector has been exempted from the restrictions laid down by nations. This has ensured sufficient supplies of food and other daily needs products. E-groceries continue to meet the increasing demand for daily supplies required by consumers.

Roadways are relatively less affected by the COVID-19’s impact on the logistics sector when compared with airways and waterways. Trucking is seen as a critical mode of transport amid the pandemic. However, the primary concern faced by the road transport segment is driver shortage and ensuring the health and safety of the available drivers as well as their infrastructure. Being the preferred mode of transport for essential goods, road transport is relied upon heavily for the continued supply of food, medicine, and other essential products.

Asia Pacific is expected to have the largest market size for the logistics industry as the region has taken stringent and early measures to contain the pandemic outbreak. China has started to recover from the COVID-19 pandemic faster than any other country. Only some provinces of the entire country are in lockdown after the second wave of COVID-19. The World Health Organization has also appreciated India’s control over the spread of the pandemic.

This has allowed the logistics and supply chain companies to meet consumer demands during the pandemic situation.

LOGISTICS INDUSTRY IN INDIA

The logistics industry in India is highly fragmented with a large number of unorganized players. While there is a need for the highly fragmented Indian logistics market to get more organised, there is also a need to reduce logistics cost to 10 per cent by 2022 from about 14 per cent now. Only 10-15 per cent of the $215-billion Indian logistics market is owned by organised players.
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Blue Dart operates in the express logistics industry which, caters to multiple sectors as well as individual customers by providing time definite services. Express delivery services are used for various products such as securitised documents, electronic products, automotive components, temperature controlled shipments, trade samples, lifesaving drugs, mobile phones, etc.

The Indian logistics industry has been gaining traction in the last few years and plays a very important role in facilitating trade and thereby propelling the growth of the Indian economy.

Several factors such as – improving infrastructure nationwide, opportunities in emerging markets and channel alliances, urbanisation, faster adoption of newer technologies and digitalization, increased consumer preference for the reduced delivery time, and deployment of innovative techniques for a fast delivery of products are all playing the role of a catalyst in fuelling the growth of the logistics industry in India.

The logistics industry in india, considered to be the lifeline of the country, holds unprecedented importance as it connects various markets, suppliers and customers dotted across the country, and has now been firmly embedded as an integral part of the national GDP value chain.

The deeper penetration into Bharat (Tier II, III & IV towns), economy enhancing initiatives, GST implementation and other initiatives such as Make in India, Digital India and soon to be released National Logistics Policy, all hold a promise for an efficient and integrated logistics industry in the days ahead.

Despite the enhancement in the logistics performance index from the 54th Rank in 2016 to th 35th rank in 2018, India has substantial potential for improvement. The Indian logistics sector provides livelihood to more than 22 million people and improving the sector will facilitate 10 % decrease in indirect logistics cost leading to the growth of 5 to 8% in exports.

The growth in logistics sector is expected to be driven by increasing penetration of products into more cities and towns, as well as the growth of economic activity and manufacturing moving to these towns. In addition, the demand for value-added services from consumers provides opportunities for the industry players to elevate themselves from an operational role to a more strategic one.

The logistics industry is highly fragmented and consists of over 1,000 active players which include large scale domestic players, leading entities of global players, the express arm of the government postal service and emerging start-ups specialising in e-commerce deliveries. Infrastructure readiness and technology are expected to be the key drivers of growth for the Indian logistics industry.

However, a significant economic fallout due to the novel coronavirus will result in slowing down the growth across the country’s highly fragmented and unorganised logistics landscape.

GOVERNMENT POLICY in Logistic Industry

The Ministry of Commerce & Industry, estimates that presently the country spends about 14% of its GDP on logistics which is much higher than Japan (11%) and the USA (9-10%).

During the Union Budget 2020-21, the Government of India announced that a National Logistics Policy will be released soon clarifying the roles of the Union Government, State Governments and key regulators. Policy also talks about reduction in the logistics cost to less than 10% of GDP by 2022.

With the implementation of GST, the Indian logistics market is expected to reach about USD 215 billion in 2020, growing at a CAGR of 10.5 per cent.