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Logistics Challenges in India

12/01/2016
by Artzyme com
Logistics

Will Logistics be helpful in category of Arts?

Arts site Artzyme banks on Logistics for frill-free deliveries.

Logistics is the backbone of the economy, providing the efficient, cost effective flow of goods on which other commercial sectors depend. The logistics industry in India is evolving rapidly and it is the interplay of infrastructure, technology and new types of service providers that will define whether the industry is able to help its customers reduce their logistics costs and provide effective services.

Despite weak economic sentiments, the logistics & warehousing industry continued to witness growth largely due to growth in retail, e-commerce and manufacturing sectors. The Global Logistics sector is expected to grow at around 10-15% in the period 2013-14. With this forward looking attitude and a promise of growth and improvements, the service oriented logistics industry is all set to expand beyond the horizons in the latter half of this decade, utilizing this fiscal year as its launch pad.Indian logistics market is expected to grow at a CAGR of 12.17% by 2020 driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors (Artzyme.com etc.).

India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries.

3PL logistics market in India is expected to be worth US$ 301.89 billion by 2020.

NOVONOUS estimates that the warehouse market in India is expected to grow at a CAGR of 10% whereas freight forwarding market is expected to grow at a CAGR of 12% till 2020.

This growth rate is based on the expectation that the new government will soon implement the GST regime and the logistics companies can optimize their operations to reduce cost and increase their margins. With the implementation of GST, the logistics companies, which are currently forced to set up many small warehouses across multiple cities can set up just a few, big warehouses region wise and can follow the hub-and-spoke model for freight movement from the warehouses to the different manufacturing plants, wholesale outlets, retail outlets and the various POS. This growth is also backed by the boom in the e-commerce sector (Artzyme.com etc.) and expansionary policies of the FMCG firms. This has increased the service geography of the logistics firms but they also have to meet the demands of quick delivery and tight service level agreements.

The Indian logistics industry spends around 14% of the GDP on different types of cost incurred in logistics operation. The amount of cost incurred is very high in comparison to the logistics cost incurred by different nations. The logistics firms are moving from a traditional setup to the integration of IT and technology to their operations to reduce the costs incurred as well as to meet the service demands. The industry as a whole has moved from being just service provider to the positon where they provide end to end supply chain solutions to their customers.

The Ten key logistics players in Indian market namely TNT Express, DHL, All Cargo Logistics Ltd., Agarwal Packers and Movers, GATI, DTDC, BlueDart, First Flight, FedEx and Globe Express services.

{Have you visited Bazaar for Original Arts?}

Challenges:-

Poor Infrastructure -
One of the major critical challenges faced by companies today is of insufficient integration of transport networks, information technology (IT), warehousing and distribution facilities.

Trade Regulations -
Regulations exist at a number of different tiers, imposed by national, regional and local authorities. Regulations often differ from city to city, hindering the creation of national networks.

Trained Manpower -
Trained Manpower in both the third party logistics sector and the manufacturing and retailing sectors is very weak at a practical level, i.e., IT, driving and warehouse as well as at a higher strategic level.

Lack of Training Institutions -
The disorganized nature of the logistics sector in India, its perception as a manpower-heavy industry and lack of adequate training institutions has led to a shortfall in skilled management and client service personnel.

Information and Communications Technology -
There are a lack of IT standards and poor systems integration and equipment.

Poor Warehousing and Storage -
Poor facilities and management are to blame for high levels of loss, damage and deterioration of stock, especially in the perishables sector. Part of the problem is insufficient specialist equipment, i.e. proper refrigerated storage and containers, but it is also partly down to lack of training.

Lack of research and development (R&D) of the industry -
Although both the practitioners and the academicians are increasingly aware of the importance of logistics and supply chain, however the field is still under penetrated as far as research is concerned. It is important to prioritize research and development so that various weaknesses in the industry could be identified and improved.

Solutions to overcome challenges:-

Surely some serious thinking and action is happening around for the improvement of the Indian Logistics industry. Arts category should get help from logistics.

Below links state the same

http://www.transreporter.com/index.php?Page=2

http://www.cargotalk.in/pdfs/Cargo%20Jan%2015.pdf

- Himjal (founder Artzyme)

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