7/19/23, 3:40 PM Logistics in India- A complete Report and Latest Updates 2023 - Axestrack

Logistics In India- A Complete

Report And Latest Updates 2023
Editor April 26, 2023

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Table of Contents
Logistics, the process of managing the flow of goods and services from
manufacturers to consumers, is a crucial component of the modern
Logistics in India- economy. In India, the logistics industry is experiencing significant

Where are we at?
growth due to the expanding e-commerce sector.
Rise of Ecommerce
 and Logistics However, this growth has brought with it a range of challenges,
Industry including last-mile delivery, warehouse management, workforce
 Last-Mile Delivery training, and a lack of standardization. In this article, we will explore the

Warehouse strategies implemented by logistics companies in India to address
Management these challenges and assess their effectiveness. Live Chat
Privacy - Terms

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Workforce

Training
Technologies and
Logistics in India- Where are we at?
innovations in Logistics in India is an integral part of any economy as it helps in the

Indian Logistics
effective movement of goods and services from one place to another. In
Industry
India, the logistics sector has played a crucial role in the growth and
Internet of Things

(IoT) development of the country’s economy. The logistics sector in India has
grown rapidly in the last decade, and it is estimated to be worth $215
Robotics and

Automation billion by 2020.
Artificial The contribution of the logistics sector to India’s GDP has been
Intelligence (AI)
 significant in recent years. In 2019, the logistics sector contributed 13.5%
and Machine
Learning (ML) to India’s GDP, which is expected to grow to 15% by 2025.
 Blockchain The logistics sector is also a major contributor to foreign trade as it
Government enables the smooth movement of goods across borders. India’s
Initiatives for Indian
logistics sector is responsible for handling around 95% of India’s total


Logistics Industry
trade by volume and 70% by value.
India Logistics

Policy Updates The logistics sector is also a significant employment generator in India.
Impact of the It employs around 22 million people, which is expected to grow to 40
COVID-19 pandemic million by 2030. The logistics sector is not only creating direct job
 on the overall
logistics industry in
opportunities but also providing indirect employment opportunities,
India particularly in the transport and warehousing sectors.
Start-ups in
Logistics Sector in
Rise of Ecommerce and Logistics Industry


India
Public-Private
Strategies for Addressing Challenges in the Context of E-commerce
Partnerships in the

Logistics Sector in Growth
India
Challenges and

Road Ahead
Last-Mile Delivery
Last-mile delivery refers to the final leg of the delivery process, where
goods are transported from transportation hubs to the end consumer.
In India, last-mile delivery presents a significant challenge due to a lack
of proper infrastructure and congested roads.

To address this issue, logistics companies have implemented a range of

strategies, including the use of technology such as GPS tracking,
drones, and on-demand delivery apps. These technologies enable
logistics companies to optimize delivery routes, reduce delivery times,
and improve customer satisfaction.

Warehouse Management
Warehouse management is another critical aspect of logistics in India.
Due to the diverse nature of products and the size of the country, it is
essential to have efficient warehouse management systems to ensure
smooth operations. The use of advanced technology, such as RFID tags
and automated inventory management systems, has significantly
improved warehouse management in India.
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These systems help logistics companies to track inventory, ensure

timely delivery of products, and reduce wastage. However, there is still a
need for further investment in warehouse infrastructure to ensure that
the logistics industry can keep pace with the growth of e-commerce in
India.

Workforce Training
The logistics industry is heavily dependent on skilled workers who are
knowledgeable about the processes and technologies used in the
sector. In India, the logistics industry faces a shortage of skilled labor.

Technologies and innovations in Indian

Logistics Industry

Internet of Things (IoT)

IoT is being used in India’s logistics industry to track shipments and
monitor cargo temperature and humidity. The technology is also
enabling real-time monitoring of vehicle performance, which is helping
to reduce maintenance costs and increase efficiency.

Robotics and Automation

Robotics and automation are being used in India’s logistics industry to
speed up warehouse operations and improve accuracy. Automated
storage and retrieval systems (ASRS), for example, are helping to reduce
the time taken to locate products in large warehouses.

Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are being used to optimize logistics operations in India.
Predictive analytics, for example, is being used to forecast demand and
optimize routing and scheduling, reducing costs and improving
delivery times.

Blockchain
Blockchain technology is being used to increase the transparency and
security of supply chains in India. By creating a tamper-proof record of
all transactions, blockchain technology is helping to improve trust
between parties and reduce the risk of fraud.

Government Initiatives for Indian Logistics

Industry

Live Chat
Impact of Government Investment in Infrastructure:

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The Indian government has invested heavily in infrastructure in recent

years, with a focus on improving the efficiency of the logistics sector.
The government’s investment in infrastructure has led to the
development of new roads, airports, and ports, which have significantly
improved the connectivity of the logistics network in India.

The development of infrastructure has led to the reduction of logistics

costs, which has made the Indian logistics sector more competitive.

Effectiveness of Dedicated Freight Corridors (DFCs)

DFCs are a crucial part of the government’s investment in
infrastructure to improve the logistics sector in India. These corridors
are designed to provide a dedicated path for freight movement, which
reduces congestion and improves the efficiency of freight movements.
The primary objective of the DFCs is to reduce logistics costs and make
the Indian logistics sector more competitive.

The two primary DFCs in India are the Western DFC and the Eastern
DFC. The Western DFC connects Delhi and Mumbai, while the Eastern
DFC connects Ludhiana in Punjab and Dankuni in West Bengal. The
DFCs are being developed by the Indian Railways and are expected to
be completed by 2022.

The Dedicated Freight Corridor (DFC) project and the Logistics Data
Bank (LDB) are two significant initiatives in the Indian logistics sector.
However, there have been several challenges faced during their
implementation, which need to be addressed for successful execution.

One of the primary challenges faced during the implementation of the

DFC project was land acquisition. The project required land acquisition
from various parties, including farmers, which caused delays and
protests. However, the government has taken several measures to
address these challenges, such as offering higher compensation and
providing alternate livelihood options.

Another significant challenge faced during the implementation of the

DFC project was the construction of infrastructure, including bridges,
tunnels, and tracks. Due to the complex nature of the project, there
have been delays in the construction, which have led to cost overruns.

The Logistics Data Bank (LDB) initiative is aimed at reducing the

turnaround time of trucks at ports by providing information on cargo
movement. However, one of the primary challenges faced during the
implementation of LDB was the reluctance of stakeholders to share
data due to concerns of confidentiality and security.

To address these concerns, the government has implemented strict

data protection measures and established a secure platform for data
sharing.

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India Logistics Policy Updates

Another initiative taken by the Indian government is policy reforms. The
introduction of the Goods and Services Tax (GST) has significantly
simplified the tax structure and reduced logistics costs. The
government has also introduced the National Logistics Policy (NLP) in
2019, which aims to create a single-window e-marketplace for logistics
services, reduce compliance costs, and establish a regulatory
framework for the sector.

Skill development programs have also been promoted to address the

shortage of skilled workers in the logistics sector. The government has
launched various training programs in collaboration with industry
players to improve the skill sets of logistics professionals, including
drivers, warehouse workers, and freight forwarders.

The effectiveness of these initiatives in improving the overall logistics

ecosystem in India has been significant. The development of
infrastructure has improved connectivity and reduced transportation
costs, making logistics operations more efficient. The introduction of
policy reforms has simplified the tax structure and reduced compliance
costs, making the logistics sector more attractive to investors.

To ensure the successful implementation of similar initiatives in other

areas of the logistics sector in India, the government needs to take
several steps.

First, the government needs to address the challenges faced during

the implementation of DFC and LDB initiatives to learn from those
experiences.

Second, there needs to be an increased focus on public-private

partnerships to leverage each sector’s strengths.

Thirdly, there needs to be a significant investment in technology and

infrastructure to facilitate the efficient movement of goods.

Lastly, there needs to be a transparent and predictable policy

framework that provides certainty to investors.

Impact of the COVID-19 pandemic on the

overall logistics industry in India
Firstly, the COVID-19 pandemic has had a significant impact on the
logistics industry in India. With the outbreak of the pandemic, the
demand for logistics services has significantly increased, primarily due
to the rise of e-commerce and online shopping as people remain
indoors.

According to data by BCG, the Indian logistics sector’s estimated

market size has reached over $200 billion and is expected to grow at a
CAGR of 10.5% from 2021 to 2025. Live Chat

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However, the pandemic has also led to supply chain disruptions, with
several disruptions in transportation, production, and manufacturing
activities. Various lockdowns and shutdowns have resulted in a halt in
business operations, affecting the transportation of goods and causing
delays in deliveries.

These disruptions have led to additional costs for logistics service

providers, including the additional expenses involved in ensuring safety
measures, such as sanitization and employee safety.

The pandemic has also had a significant effect on the workforce in the
logistics industry. Several employees have been infected or isolated due
to COVID-19, leading to a shortage of labor. This has resulted in an
increase in employee wages and benefits by logistics firms to ensure
employee safety and retain workers.

In response to the pandemic, the industry has taken several measures

to maintain the supply chain and keep operations running smoothly.
Several logistics firms have adopted digital technology to streamline
operations and reduce human contact.

For instance, contactless deliveries and payments, online tracking of

goods, and automation in warehouse operations. Additionally, the
government has also taken steps to ensure the smooth functioning of
the supply chains, such as easing restrictions on the movement of
essential goods and services.

Measures taken by logistics firms in India to adopt digital technology in

response to the COVID-19 pandemic, including contactless deliveries
and payments, online tracking of goods, and automation in warehouse
operations.

It is evident that many companies have adopted digital technology in

response to the COVID-19 pandemic. Measures taken include
contactless deliveries and payments, online tracking of goods, and
automation in warehouse operations. These measures have been
effective in maintaining the supply chain and reducing human contact.

One example of a logistics firm in India that has adopted such

measures is new age logistics startups. New startups implemented
contactless deliveries and payments early on in the pandemic to ensure
the safety of both their customers and employees.

They also implemented online tracking of goods to keep clients

updated on the status of their shipments. Moreover, companies have
recently automated its warehouse operations, which has streamlined
its processes, increased efficiency, and reduced the need for human
contact.

Example is Blue Dart, which implemented digital technology to ensure

safe and secure deliveries during the pandemic. They introduced zero-
contact delivery, which allows customers to receive their packages
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without any physical contact with the delivery person. Blue Dart also
implemented online tracking and SMS/Email alerts to keep their
customers updated on their shipments’ status.

Logistics firms in India have taken significant measures to adopt digital

technology in response to the COVID-19 pandemic. These measures
have been effective in maintaining the supply chain, ensuring safe and
secure deliveries, and reducing human contact. It is evident that digital
technology will continue to play a crucial role in the logistics industry
even after the pandemic subsides.

Start-ups in Logistics Sector in India

Role played by startups in driving innovation in India’s logistics
industry

The rise of logistics startups in India has disrupted the traditional

logistics industry. These startups have introduced innovative solutions
such as last-mile delivery, real-time tracking, and warehouse
management systems, which have significantly improved the overall
logistics ecosystem.

The logistics startups have also played a significant role in reducing

logistics costs, which has been a significant challenge for the industry.
With their adoption of technology, their operating costs are lower than
traditional logistics companies, which makes their services more
affordable.

Logistics startups have also created employment opportunities,

especially for unskilled workers. Many startups offer employment
opportunities in areas such as delivery, warehouse management, and
transportation. According to a report by KPMG, logistics startups in
India have the potential to create up to 1.45 million jobs by 2022.

However, logistics startups face several challenges in India. The biggest

challenge faced by these startups is inadequate infrastructure. India’s
logistics infrastructure is still underdeveloped and lacks proper storage
facilities, distribution networks, and transportation systems, which
slows down the delivery process. Additionally, these startups face
regulatory challenges such as obtaining permits and licenses, which
can be time-consuming and expensive.

To overcome these challenges, logistics startups need to collaborate

with government and industry stakeholders to improve infrastructure.
They can also leverage emerging technologies such as artificial
intelligence, blockchain, and the Internet of Things to streamline
logistics processes, reduce costs, and improve efficiency. Additionally,
logistics startups can work together to create a shared logistics
infrastructure, which can help address storage and transportation
challenges.

Other challenges are also there, such as a lack of access to funding,

regulatory hurdles, and the need for a robust supply chain Live Chat
infrastructure. The government is taking several initiatives to support
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these startups, such as the ‘Startup India’ program, which offers

financial incentives and other support to promote entrepreneurship in
the country.

One of the prominent players in the logistics startup space in India is

Delhivery, which offers logistics services across various sectors such as
e-commerce, healthcare, and automobile.

Another logistics startup, Rivigo, has completely transformed the

traditional trucking industry with its innovative technology and
business model.

Apart from these giants, there are many other startups such as
Axestrack, Blackbuck, Locus, and ElasticRun, which are leaving their
mark on the logistics industry in India. These startups are developing
and implementing cutting-edge technologies such as artificial
intelligence and machine learning to optimize and streamline logistics
operations.

Public-Private Partnerships in the Logistics

Sector in India
Current state of public-private partnerships in the logistics sector in
India, including an analysis of successful collaborations and factors
that hinder such partnerships. This should include an evaluation of the
impact of public-private partnerships on the overall logistics
ecosystem in India and recommendations on how to increase their
effectiveness.

It is evident that public-private partnerships (PPPs) have played a

critical role in the growth of the logistics sector in India. The
Government of India has recognized the importance of PPPs and has
taken several measures to encourage collaboration between the public
and private sector.

Successful collaborations between the public and private sector in the

logistics sector in India have been observed in various areas such as
infrastructure development, technology adoption, and skill
development.

For instance, the Dedicated Freight Corridor (DFC) project is one of the
most significant PPPs in the logistics sector in India, which aims to
create a high-capacity freight transportation network.

Similarly, initiatives such as the Logistics Data Bank (LDB) and the
Goods and Services Tax (GST) have also been successful in enhancing
the efficiency of logistics operations in the country.

However, factors such as bureaucratic hurdles, delays in project

implementation, and lack of transparency have hindered the effective
implementation of PPPs in the logistics sector in India. Moreover, issues
related to land acquisition, financing, and regulatory frameworks have
also acted as barriers to the success of PPPs in the sector. Live Chat

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To increase the effectiveness of PPPs in the logistics sector in India,

several recommendations can be made.
1. Firstly, there is a need to simplify the regulatory environment and make it more

conducive to PPPs.
2. Secondly, there is a need to establish a transparent and efficient system for project

implementation and monitoring.

3. Thirdly, there is a need to encourage greater private sector participation by providing

more incentives and reducing risks associated with PPPs.

Challenges and Road Ahead

One of the biggest challenges faced by logistics companies operating

in India is the lack of proper infrastructure. Inadequate roads, railways,
and ports make it difficult for companies to transport goods efficiently,
causing delays and increasing costs. Additionally, bureaucratic red tape
and complex regulations make it difficult for companies to operate
smoothly.

However, there are also several opportunities in the Indian logistics

industry. With the rise of e-commerce, there is a growing demand for
efficient and effective logistics services to deliver goods across the
country.

In addition, the government of India has implemented several

initiatives to improve infrastructure, such as the Bharatmala project,
which aims to develop and upgrade national highways.

Moreover, advancements in technology such as GPS tracking and

warehouse management systems have allowed logistics companies to
streamline their operations and improve efficiency. With the adoption
of technology, logistics companies can track shipments in real-time
and optimize their delivery routes.

One of the primary challenges faced by logistics companies in India is

the lack of adequate infrastructure, which results in poor transportation
networks, inefficient supply chain management, and high logistics
costs. However, the proliferation of technology solutions such as fleet
management software, warehouse management systems, and
transportation management systems have gone a long way in
addressing these challenges.

Fleet management software, for instance, helps companies to manage

their transportation fleets effectively, optimizing routes, reducing fuel
consumption, and improving operational efficiency. In addition,
warehouse management systems enable companies to manage their
inventory levels and track the movement of goods, reducing the risk of
delivery delays and enhancing customer satisfaction.

Furthermore, technology solutions like real-time tracking and tracing of

shipments have also improved the overall transparency and visibility in
Live Chat
the logistics sector. By leveraging technologies such as the Internet of

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Things (IoT), logistics companies can track shipments in real-time,

monitor temperature, humidity, and other environmental parameters,
and ensure that goods are delivered in optimal conditions.

In conclusion, the adoption of the latest technologies has enabled

logistics companies in India to overcome the challenges they face,
resulting in improved operational efficiency, reduced logistics costs,
and enhanced customer satisfaction. As the logistics sector continues
to grow in the country, technology is expected to play an even more
critical role in driving its transformation.

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