INDIAN LOGISTICS

INDUSTRY
 INTRODUCTION
 Logistics management is that part of the
supply chain that plans, implement, and
controls the efficient, effective, forward
and backward flow and storage of goods,
service, and information between the
point of origin and the point of
consumption to meet customer’s
requirements rather to the customer’s DEFINITION
The American Council of Logistics
delight. A professional working in the Management defines logistics as “The
field of logistics management is called a process of planning to implement and to
logistician. control the efficient and effective flow and
storage of goods, services, and related
information from the point of origin to the
point of consumption conforming
requirement”.
 SCOPE OF THE STUDY
 Logistics is one of the most important basic industries for any economic growth.
Today each and every organization stands at the forefront because of its effective
& efficient supply chain network. It includes the management of the flow of
products from the place of origin to the place of consumption.

 TO UNDERSTAND THE PERFORMANCE OF THE INDIAN LOGISTICS INDUSTRY

WITH OTHER COUNTRIES.
 TO UNDERSTAND THE IMPACT OF THE LOGISTICS INDUSTRY ON DIFFERENT
INDUSTRIES.
 TO UNDERSTAND THE COST ASSOCIATED WITH THE DIFFERENT MODES OF
TRANSPORTATION.
 TO UNDERSTAND THE CURRENT AND THE GLOBAL SCENARIO OF LOGISTICS.
INDUSTRY
 TO UNDERSTAND THE IMPACT OF COVID-19 ON THE LOGISTICS INDUSTRY.
 LITERATURE REVIEW
 The Council of Logistics Management defines Logistics as follows: “Logistics is part of the
supply chain process that plans, implements, and controls the efficient, effective flow and
storage of goods, services, and related information from the point of origin to the point of
consumption in order to meet customers’ requirements”
 Simchi-Levi, Kaminski, and Simchi-Levi (2000) gave the following definition: “Supply
Chain Management is a set of approaches utilized to efficiently integrated suppliers,
manufactures, warehouses, and stores so that merchandise is produced and distributed at the
right quantities, to the right locations, and at the right time, in order to minimize system-wide
costs while satisfying service level requirements.
 Johnson et al. (1999) maintained that “Logistics define the entire process of materials and
products moving into, through, and out of a firm.
 Muller-Jentsch (2000) “Transport logistics is concerned with the management and
optimization of transport flows
 Baumgarten (2008) “The author argues that transport logistics in a narrow sense deals with
physical transport of goods (in the hard, liquid or gassy state) among different locations in
logistics networks."
 OBJECTIVES
 TO STUDY THE PERFORMANCE OF THE INDIAN LOGISTICS INDUSTRY
WITH OTHER COUNTRIES AND THE COST ASSOCIATED WITH IT. 
 TO STUDY THE IMPACT OF THE LOGISTICS INDUSTRY ON THE
PERFORMANCE OF OTHER INDUSTRIES. 
 TO STUDY THE LOGISTICS COST ASSOCIATED WITH OTHER INDUSTRIES. 
 TO STUDY THE TRANSPORTATION COST ASSOCIATED WITH DIFFERENT
MODES AND THEIR CHOICE TO CHOOSE MODE.
 TO STUDY THE ROLE OF GLOBAL 3PL SERVICE PROVIDERS IN INDIA.
 TO STUDY THE CURRENT SCENARIO OF THE INDIAN LOGISTICS
INDUSTRY IN INDIA.
 TO STUDY THE ECONOMIC ZONE DEVELOPMENT FOR THE LOGISTICS
INDUSTRY.
 RESEARCH METHODOLOGY
The objectives of the present study can be accomplished by conducting systematic market research.
Market research is the systematic design and collection. Analysis and reporting of data and findings
that are relevant to different marketing situations facing the company. The marketing research
process that is adopted in the present study consist of the following stages:

 Defining the problem and the research objectives:

The research objectives state what information is needed to solve the problem. The rese objectives
are to study the Indian logistics industry growth drivers and its comparison with the other countries. 

 Developing the research plan:

Once the problem is identified, the next step is to prepare a plan for getting the information needed
for the research. The present study adopted the descriptive approach wherein there was a need to
gather a large amount of information before concluding 
 Collection and source of data:
Marketing research requires two kinds of data, i.e., primary data and secondary data. Secondary data
was collected from various books and websites. Secondary data is used to complete this project report
from various sources like World bank, CII, and other consultant firms.  

 Analyze the collected information:

 This involves converting raw data into useful information. It involves tabulation of data, using
statistical measures.
Statistical tools:
 Percentage analysis
 Bar diagram
 Column diagram
 
 Report research findings:
This phase marks the culmination of the marketing research effort. The report with the research
findings is a formal written document.
 DATA ANALYSIS AND INTERPRETATION
 1. Logistics performance of Index of India with other COUNTRY LPI SCORE
countries:
USA 3.85
Interpretation: The Logistics Performance Index (LPI) and its indicators UK 3.84
provide the first in-depth cross-country assessment of the logistics gap among SINGAPORE 4.19
countries. As the above graph shows the LPI score of the USA, UK, Singapore,
India, and Mexico, indicates the performance of logistics in global transport INDIA 3.07
and logistics hubs. Also as the performance of developed countries in logistics CHINA 3.64
is high as compared to the developing nation. Singapore has high performance MEXICO 2.64
in global logistics as compared to other countries also gain rank 1” among all
by World Bank USA, UK, Mexico, and China are ranked in logistics
performance in global market at 9, 14th, 56 and 30% respectively. India is
ranked 39 in the Global market show a high logistics performance than the COUNTRY LPI SCORE
global market. INDIA 3.07

2. LPI top 10 countries of low-income group: VIETNAM 2.89

SAO TOME AND 2.87
Interpretation: This graph shows that India had performed well PRINCEPE
among all the low-income countries India has scored a 3.07 LPI score
and ranked 1st among all other low-income countries. This shows that GUINEA 2.71
among the low-income countries India's performance in global SUDAN 2.71
transportation and logistics hubs is better.
 3. Logistics costs contributed to GDP in different countries: COUNTRY LOGISTICS
COST/GDP
Interpretation: Above graph show that in India logistics costs high than
in developed countries and the contribution to GDP is 13 %. High
INDIA 13%
logistics cost is due to the incomplete and underdeveloped U.S 9.9%
infrastructure, non-conductive policy, environment, indirect tax regime, EUROPE 10%
and extensive industry fragmentation. JAPAN 11.4%

4. Share of 3PL in the overall industry: COUNTRY SHARE OF 3PL IN

OVERALL
Interpretation: Above graph shows that in Japan share of 3PL in the LOGISTICS
INDIA 10%
overall industry is high as comparing other developed countries is 80%
U.S. 57%
In India share of 3PL is 10 % showing that in India 3PL service
EUROPE 30%
providers are fewer.
JAPAN 80%

COUNTRY % AGE OF
5. Logistics Activity by organized sector: LOGISTICS
ACTIVITY BY
Interpretation: The above graph shows that the cost of logistics ORGANIZED

including the inventory holding, transportation, warehousing, SECTOR

USA 57%
packaging, losses, and related administration is high in India as JAPAN 80%
compared to the China Europe, USA, and Japan EUROPE 40%
INDIA 6%
CHINA 10%
6. Major sector investment in India’s logistics industry: SECTOR INVESTMENT IN
CR.
AVIATION 20,890
Interpretation: Above graph shows that as different sectors invest in the
Logistics industry there are major sectors that invest are Aviation, Metal METAL& MINING 8500
& Mining and Consumer Durable, Aviation sector investment is highest
CONSUMER 6000
than the Metal & Mining and Consumer Durable. DURABLE

7. Global 3PL services providers invest in India:

FIRMS INVESTMENT
Interpretation: Global 3PL providers investment in India by four major DETAILS/PLANS
IN $MN
players are DHL, TNT, Gati, and Shreyas Shipping & Logistics. Among DHL 250
all these SS & Logistics invests more as compared to the other three. TNT 115
GATI 200
SHREYAS 350
SHIPPING AND
LOGISTICS

YEAR REVENUE $MN

8. Revenue generated from 3PL:
2005 890
Interpretation: The above graph shows that 3pl share in the logistics
2008 1622
industry increased with the increase in revenue of the 3PL in the logistics
industry in India. 2012 3556
 YEAR REVE PERC
9. Impact of logistics industry on growth with the performance of NUE ENTA
other industries: GE
GRO
WTH
Interpretation: The above graph shows that in the Indian logistics 2002 65  
industry the revenue increased by 8-10% annually from 2002 to 2007. The 2003 70.2 8%
2004 76.3 8.7%
maximum growth in the revenue in the year 2005 and minimum in 2003. 2005 84 10.1%
2006 91.72 9.2%
2007 100 9.1%

NAME OF PERCENTAGE
10. Share of logistics cost in total sales for various industries: INDUSTRY SHARE OF
LOGISTICS COST
IN TOTAL SALE
Interpretation: Above graph shows that logistics cost contributes to sale
CEMENT 15%
of different industries. Maximum share in Cement industry (15%) and STEEL 6%
Steel industry (6%) sale as compared to the other industries like Food & F&B 5%
FMCG 4%
Beverage, FMCG, Consumer Durable, Apparel, and Auto. DURABLE 4%
APPAREL 3%
11. Transportation growth with different modes in India (in mn): AUTO 3%

Year Road Railwa Sea Air

Interpretation: Above graph shows that logistics cost contributes to the y
sale of different industries. Maximum share in Cement industry (15%) and 2002 1075 0.9 364 478
Steel industry (6%) sale as compared to the other industries like Food &
Beverage, FMCG, Consumer Durable, Apparel, and Auto. 2006 1560 1.4 578 667
12. Road freight in India (INR billion):
Year Road

Interpretation: The graph shows that the movement of goods is 1995 610
continuously increased due to the improvement of infrastructure and more 2000 840
area coverage. The road freight is increased continuously by 6-8% 2005 1430
annually.

13. Rail freight in India: Year Rail freight (mn)

2002 493
Interpretation: The table shows that the movement of goods is 2003 519
continuously increased due to the improvement of infrastructure and more 2004 557
area coverage. The road freight is increased continuously by 6-8% 2005 602
annually. 2006 667

Year Sea freight (mn)

14. Sea freight in India: 2003 422

2004 464
Interpretation: Above table shows the movement of goods by the sea.
This tells that the movement of the goods by sea is increased as the 2005 519
increase in the international market. 2006 578
 Year Domestic International
15. Air freight in India:
2002 300 575
Interpretation: The above graph shows that the movement of goods by air
2003 340 650
is increased continuously due to it being the fast and safe way. Also, the air
mode of transportation is preferred better for the international market as 2004 375 700

compared to the domestic market. 2005 480 810

2006 510 900

16. Preferred mode of cargo movement:

Mode of Percentage of total
Interpretation: The Table shows that the preferred mode of the cargo Transportation cargo movement
movement in India is Road as compared to Rail, Air, and Sea. Because
roads are almost covered all the areas in India as compared to the other Air 2.5%
mode of transportation. Due to underdeveloped infrastructure and another
service to choose the best mode of transportation is the road. As road covers Sea 20%

almost all the rural, urban and hilly areas as compared to railway In India Railway 23%
cargo movement by air is least among the other three modes this due to high
Road 54.5%
cost involved in this mode of transportation.
17. Growth of container volume in India (mnTEM): Year Container volume
(mnTEU)

Interpretation: The above graph shows that container volume grows 2002 2.9
continuously with the increase in export and import in India. The
2003 3.4
maximum growth in the container volume in the years 2004 and 2006 as
2004 4
compared to other years.
2005 4.5

2006 5.1

18. Economic zonal attractiveness for logistics:

Zone SEZ’s Retail Wareho Logistic
Develop use s parks
Interpretation: The above graph shows zonal attractiveness in India. Out ment capacit
of the four zones, the West zone is better developed as compared to the y
other zones and the least develop zone in the East zone. South and North
are shows the 2 and 3 positions for the development of the zone
South 40% 20% 20% 30%
respectively.
West 55% 50% 60% 50%

North 5% 20% 15% 10%

East 0 10% 5% 10%

 FINDINGS
 The logistics performance index shows the performance of the country in the global logistics
industry, customs, trade-related infrastructure, inland transit, logistics services, information systems,
and port efficiency are all critical to whether countries can trade goods and services on time and at
low cost. Here India’s LPI score is 3.07 and secured 39 positions in the global logistics industry. As
the share of the Indian Logistics Industry is more than that of Mexico and less than the USA, the UK,
and Singapore witness that the Indian Logistics industry is one of the growth drivers for the Indian
economy.
 Logistics industry also improves the performance of other industries in India as these are auto, IT,
and pharmaceutical industries that show high growth rate Logistics grow with an 8-10% rate
between 2002- 2007 implies that improvement in the supply chain of the other industries in India.
  In the global logistics sector, India is at the top position among all the low-income group countries,
which shows that Indian Logistics sectors perform better among all the low-income countries or
developing countries.
 Logistics cost contribution of India in GDP is 13% which shows the high logistics cost of the Indian
Logistics industry and also higher than the developed countries Due to the poor infrastructure and
other logistics service is not better than the developed countries like USA and Japan.
 3PL service providers’ share is less in the overall industry of India as compared to Japan, USA, and
Europe. The third-party logistics (3PL) market in India is still in a relatively nascent stage. While
multinational companies in all industries have been predominant users of these services but the Indian
companies are not. Also, significant cost reduction and several other benefits are provided by these
companies. This is also one of the reasons for the high costs in India.

  Organized sector includes the cost of inventory holding, transportation, and warehousing. Packaging
losses and related administration which show the high logistics cost in India due to less organized
sectors but organized sectors are well established in Japan, the USA, and Europe also one of the
reasons for low logistics cost.

  Now 3PL service providers are starting to invest in India to reduce the logistics cost which included
both domestic and international companies Shreyas Shipping and Logistics is investing high as
compared to the DHL, TNT, and Gait. This shows that trend of 3PL providers is increased in India.
 Revenue generated from 3PL providers increase the Indian economy and also the percentage growth
of the revenue increased continuously from 2005 to 2008. According to Planning Commission India,
this is growth continuous and it reached $3556 million in 2012 is estimated.
 Logistics industry also improves the performance of other industries in India as these are auto, IT,
and pharmaceutical industries that show high growth rate Logistics grows with an 8-10% rate
between 2002- 2007 implies that improvement in the supply chain of the other industries in India.
 CONCLUSION
The Indian logistics industry is continuously improving its performance in the global logistics industry
by improvement of customs, trade-related infrastructure, inland transit, logistics service, information
system, and port efficiency help to provide trade goods and services on time and at a low cost. The
World Bank’s 2018 Global logistics report ranks 42nd amongst 167 countries in terms of logistics
performance index during the year as well as its future potential and ranks 2 nd in Agility Emerging
Logistics Index 2022.

The Indian logistics industry has low performance than developed countries like the USA, UK, and
EUROPE, in global logistics sectors due to inefficiency in logistics service and highest among the low-
income group countries. India spends on logistics activities equivalent to 13% of its GDP is higher than
that of developed countries. The key reason is the relatively high level of inefficiency in the system with
lower average trucking speeds, higher turnaround time at ports, and high cost of administrative delays.

3PL service provider share is less in the logistics sector in India as compared to developed countries and
is still at the nascent stage. Multinational companies in all industries have been predominant users of this
service as one of the reasons for the lesser share of 3PL in India. Also, in India organized sector is not
well established as compared developed nations this contains the cost of inventory holding,
transportation, warehousing, packaging, loss, and related administration is higher.
In the Indian logistics sector, major sector investors are Aviation Metal & Mining and Consumer
Durable. Also, the logistics industry in India improves the performance of other industries year to year
and the share of logistics cost in the sale also important which is maximum in the cement sector
Transportation modes grow with of domestic and international market, and in India roads better mode of
transportation because of the good infrastructure of roads in India as compared to another mode like
water, rail and sea Road freight in India grows with the increase of domestic and international trade also
large area coverage. Railway freight also increases due to low freight as compared to the road but covers
some of the areas and is better for long-distance movement of goods Sea freight also increase better for
overseas movement of goods at low cost as compared to air but consume more time as compare to Air
mode of transportation is also helps in both domestic and international movement of goods but for
international movement is more as compare to the domestic due to the higher cost, safe and faster way as
compare to others modes.