The logistics sector in India plays a pivotal role in driving the country’s economic expansion and progress. As the GDP growth rate is anticipated to experience a significant upswing in the near future, there will be a substantial surge in the need for dependable and efficient logistics solutions. The bedrock of any economy lies in its logistics services, which facilitate the seamless movement of products from producers to end-users. In a vast and diverse country like India, with its rapidly growing economy and diverse geographic landscape, the logistics sector is pivotal in connecting businesses to consumers.
India’s logistics sector is a vital component of its economy, responsible for connecting various sectors and enabling the movement of goods across the country. The industry has been steadily growing, driven by factors such as increasing international trade, e-commerce proliferation, infrastructure development, and government initiatives like ‘Make in India‘ and ‘Digital India.’
According to the India Infrastructure Report from September 2022, the Indian logistics industry has experienced a positive trend in growth over the past few years. Despite the pandemic, the sector has demonstrated resilience and continues to thrive. In fact, it is projected that the logistics market will achieve a Compound Annual Growth Rate (CAGR) of 14.8%, resulting in a market size of $400 billion by Fiscal Year 2026 – a significant increase from the $230 billion recorded in Fiscal Year 2022. Additionally, an Ey report highlights the firm reliance of the Indian logistics sector on road transportation, which contributes 66% of cargo (in ton-km), followed by rail (31%), shipping (3%), and air (1%).
However, it’s important to note that the Indian logistics industry also faces several challenges, including inadequate infrastructure, high logistics costs, complex regulatory frameworks, and fragmented supply chains. Despite these challenges, the sector continues to innovate and diversify to cater to the needs of a rapidly changing business environment.
The Indian logistics landscape comprises a wide array of services that cater to different aspects of the supply chain. Here are some key types of logistics services each serving a unique purpose in the supply chain.
Transportation is the cornerstone of logistics, facilitating the movement of goods across the country. In India, transportation services are categorized into various modes:
With an extensive road network, road transport remains the most widely used mode for moving goods within the country. From small trucks to large carriers, road transport offers flexibility and connectivity even to remote areas.
Railways are a cost-effective mode for long-distance movement of bulk goods. The Dedicated Freight Corridor (DFC) project in India aims to enhance the efficiency of rail freight transportation.
Air freight is essential for transporting time-sensitive goods and high-value products. India’s major airports serve as key hubs for domestic and international air cargo operations.
With a vast coastline, maritime transport is crucial for international trade. Major ports like Mumbai, Chennai, and Kolkata facilitate the movement of goods to and from India.
Warehousing and Distribution:
Efficient warehousing and distribution are vital for maintaining the smooth flow of goods. Various types of warehouses cater to different storage needs:
Located near urban centers, these warehouses store goods temporarily before they’re dispatched to retailers or consumers.
Cold Storage Warehouses:
These are equipped to store perishable items such as fruits, vegetables, and pharmaceuticals at controlled temperatures, preserving their quality.
Often situated near ports and airports, these warehouses hold imported goods before they undergo customs clearance.
The boom in online shopping has led to the development of specialized fulfilment centres that cater to the needs of e-commerce companies. These centres optimize order processing and ensure timely deliveries.
Container Freight Stations (CFS):
These specialized warehouses facilitate the stuffing and de-stuffing of containers for easier transport and storage.
Warehousing and storage facilities in India have evolved to meet the changing demands of various industries. From traditional godowns to state-of-the-art automated warehouses, the country now offers a wide range of options for businesses. These facilities are strategically located near major transportation hubs, enabling efficient distribution and reducing lead times. It also offers value-added services like packaging, labeling, and inventory management.
Freight forwarding involves the coordination and management of shipments on behalf of shippers. Freight forwarders play a crucial role in selecting the best transportation routes, arranging documentation, and ensuring the timely movement of goods.
International Freight Forwarding:
As India’s trade expands globally, international freight forwarding services are essential for coordinating shipments between countries, dealing with customs regulations, and managing cross-border logistics.
Third-Party Logistics (3PL) and Fourth-Party Logistics (4PL):
3PL and 4PL providers offer comprehensive logistics solutions to businesses, allowing them to outsource various aspects of their supply chain management:
These companies offer services like transportation, warehousing, distribution, and inventory management. By outsourcing these services, businesses can focus on their core operations.
Going a step further, 4PL providers not only offer logistics services but also manage and optimize the entire supply chain, including selecting other logistics service providers. This strategic approach enhances efficiency and cost-effectiveness.
Reverse logistics involves managing the return and disposal of goods, a critical aspect for industries like e-commerce, electronics, and pharmaceuticals. This process includes handling product recalls, returns due to defects, and recycling or proper disposal of products.
Technology-driven Logistics Solutions:
In recent years, technology has been a game-changer in the logistics industry. Various technology-driven solutions have emerged to streamline operations and enhance visibility across the supply chain:
Fleet Management Software:
These tools help in tracking and managing fleets, optimizing routes, and improving fuel efficiency.
These systems automate warehouse processes, from inventory management to order picking, ensuring accuracy and speed.
Supply Chain Visibility Platforms:
These platforms provide real-time tracking and visibility of shipments, helping businesses make informed decisions and anticipate potential disruptions.
With the rapid growth of online shopping, e-commerce logistics have gained prominence. These services encompass order processing, picking, packing, and last-mile delivery. Companies in this space optimize their processes to meet the demands of quick and efficient deliveries, often leveraging technology like route optimization algorithms and real-time tracking.
The last-mile delivery is the final step in the supply chain, where goods are delivered to the end consumers. With the rise of e-commerce, the efficiency of last-mile delivery has become crucial for customer satisfaction. Companies in this sector often innovate with delivery options, including same-day and even one-hour deliveries in some urban areas.
Bulk Cargo Services:
Industries dealing with bulk commodities like minerals, ores, and agricultural products require specialized logistics services. Bulk cargo services involve the efficient handling and transportation of these goods, often using dedicated vessels, trains, or trucks.
Supply chain management (SCM) is a critical component of the logistics industry in India. SCM involves the coordination and integration of various activities, including procurement, production, transportation, and distribution, to ensure the efficient flow of goods and services. It encompasses the planning, execution, and monitoring of all logistics activities to optimize productivity and reduce costs.
The logistics sector in India is a dynamic and complex ecosystem that caters to a wide range of industries and their unique needs. The diverse modes of transportation, specialized warehousing solutions, and value-added services collectively contribute to the seamless flow of goods across the country. As India continues to develop and its economy grows, the logistics industry will play an even more crucial role in connecting businesses to consumers and driving economic progress. Whether you’re a manufacturer, retailer, or consumer, understanding the various types of logistics services available in India can help businesses to make informed decisions and optimize their supply chain operations.
Many logistics companies in India now offer supply chain management services to help businesses streamline their operations and improve overall performance. But it is always advisable to identify a supply chain player that offers advanced technologies like artificial intelligence, predictive analytics, and the Internet of Things (IoT) to enhance visibility, track inventory, and forecast demand accurately ensuring businesses achieve seamless operations with maximum output and TVS supply chain solutions is a leading 3PL player providing industry-wise customization, high quality, fully integrated solutions across pan India.
TVS SCS provides Integrated end-to-end supply chain solutions to reduce customer supply chain complexity. We offer services from Sourcing and procurement, integrated transportation, Logistics Operation Centre and In Plant Logistics, Finished Goods and After Market Fulfilment, Consultancy and Professional Services, and Product Management Solutions. All are supported by our Information Systems. We use technology, data analytics, and execution experience to offer key solutions such as accurate demand forecasting, inventory planning and production, procurement management, network optimization, visibility, and supply chain agility to handle evolving needs.