Logistics Sector & its prospects

16 November 2022, Mumbai:

Thanks to new-age tech-enabled players who have entered India’s logistics arena, it is now easier for small- and medium-sized businesses to transport goods, and there is a drastic increase in the speed and efficiency with which parcels are delivered.

Rise of E-Commerce

India’s e-logistics sector has a compound annual growth rate of 35 percent. It is one of the largest and fastest-growing logistics markets globally. The number of e-commerce logistics shipments is expected to grow by four times in the next five years.

Shopping needs can frequently be driven more by convenience than brand loyalty. The overall online GMV is expected to increase 37 percent over last year to touch $49-52 billion. Growth will be mostly driven by the accelerated online adoption which has been witnessed as an effect of COVID. Secondly, Tier-II-plus cities and towns will continue to drive growth as they are 55-60 percent of the total shopper base this year, similar to or higher than 57 percent in 2020 festive days.

The e-commerce logistics sphere has contributed to the overall growth of India’s logistics sector and enabled the e-retail boom in India. The proliferation of smartphones and localization of the internet in non-English languages is drawing in new consumers from non-metro locations into the internet economy and creating a new demand for online commerce, thus paving the need for disruption in logistics.

The market thrives with the launch of super apps Driven by Gen Next entrepreneurs, the current D2C market in India is thriving with the launch of super apps by big companies like the Tata group and Reliance Group.

State of affairs

In India, e-invoicing and the goods and services tax have streamlined interior logistics, while businesses in the United States are reconsidering just-in-time inventory and looking for new incentives for shippers, truckers, and port workers to ensure the labour is available when it's needed. What in the World Is Going On with Global Logistics in Cotton?

Geopolitical tensions spur; No sector of the cotton & textile supply chain went through more chaos over the past two years than shipping and logistics, which continue to be plagued by a host of issues.

Though the situation on the ground is undergoing sea-change recently given the TOI report having culled data from Container xChange (An online container logistics platform of repute), comes as a big revelation that through the previous six months or so, trade has started to see the relief on the back of persistent downward trend in the containers prices as reported by country's key ports like Mundra and Nhava Sheva.
The report reflects on average Indian container prices witnessed a solid drop of 16% thereabouts in October YoY basis to $3,363, whilst more importantly, the drop experienced for the period January-October 2022 is still more encouraging for the businesses being in excess of say 22% to make businesses more competitive on this given count.

Governments all over the world are reviewing their countries' maritime shipping and logistics systems to remove bottlenecks and increase technology adoption.

Digital adoption

One point which is really under-discussed today is multiple payment options such as UPI, no-cost EMI, BNPL (buy now, pay later), etc. are further driving the adoption of digital commerce by more consumers, thereby creating a need for e-commerce logistics.

National Logistics Policy 2022 - Outlines

According to the commerce ministry communiqué," The National Logistics Policy formulated recently will improve India's trade competitiveness". The underlying objective of this policy intervention document/cost economization architecture is to fundamentally check & control the logistics cost making Indian businesses uncompetitive as an average cost business enterprise presently bearing 14% of GDP or thereabouts to bring it down to less than 10% in the coming 4-5 years which is already the case with competing rival nations.

Logi-Tech

According to one of McKinsey’s reports on this sector," On the back of the sudden rise of e-commerce as a fundamental tailwind of the pandemic which registered a growth upwards of 25 percent or so investors in the logistics industry have become more aware of the challenges, and the corresponding opportunities for growth, and are investing in new ventures with larger funding rounds".

Use cases; Multiple segments in the Indian logistics market are addressed by full-stack-tech-enabled logistics service providers. There is headroom for growth as tech-enabled logistics players venture into adjacent segments such as hyperlocal delivery, express delivery, trucking, and more.

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