Logistics: Growth 'Drivers' of the Indian Economy, By CEO, LetsTransport

Pushkar Singh is CEO of LetsTransport, a path-breaking StartUp in the logistics sector. "The logistics sector is more than just transportation. It not only helps e-commerce companies win more customers through reliable deliveries but has also become an important component of the Gross Domestic Product (GDP)," argues Singh. Here he described the role of logistics could play in strenghtening the overall economy.

What was the last thing you purchased? Where did you buy it from? If the names of global e-commerce biggies just ran through your mind, then you can understand how popular they have become.

In fact you’re one of the many reasons behind their popularity! This boom can be attributed to the growing ubiquity of mobile phones. Consumers can now browse, research and purchase products on the go. Furthermore, retail and FMCG companies have optimized on the omnipresent nature of social media platforms like Instagram and Youtube, and have started selling through them. Their browsing data enables companies to personalize the shopping experience with targeted cart recommendations. But it would be remiss if we stake the growth curve of the e-commerce economy on social media and mobile accessibility. Especially when their growth rests on the shoulders of the logistics industry. 

Logistics- an enabler of e-commerce growth

For digital commerce and omni channel fulfillment, words like “ late delivery”, “misrouted” and “return” are akin to blasphemy! In their business, on-time delivery is a primary growth driver. In the age of instant gratification, if their customer’s expectations aren’t met, they won’t be on the radar for long. Proper co-ordination of deliveries and management of goods can help companies edge out their competitors. Hence, good logistics can actually make or break a company! But the industry needs to surmount two major hurdles in order to sustain its role as an enabler.

Improving the existing transport infrastructure 

The growing economy has been accompanied by a rise in demand for transport infrastructure and services. The transport industry, however, hasn't been able to keep pace with this. Problems like lack of all weather roads, congested ports and low connectivity between the urban and rural areas have stoppered their growth.

Nitin Gadkari, Union Minister for Road Transport and Highways of India, claims that, “ building transport infrastructure that is indigenous and cost-effective, linking the remotest corners of the country has been one of the foremost priorities of our government.” The government has initiated programmes like Bharatmala and Sagarmala, to develop Indian road and sea networks. These aim to provide seamless and efficient transportation of goods both within the country and to our neighbouring countries. These initiatives have not only helped connect places of production with more markets, they’ve ushered economic growth by reducing logistics costs. Furthermore, innovative solutions like seaplanes, ropeways, aeroboats and double-decker buses have been rolled out to bring down traffic and congestion on roads, reducing instances of inefficient routing and delays during product delivery.

Making Supply Chain Management more efficient

The logistics sector is more than just transportation. It encompasses fleet control, warehousing, material and inventory management and order fulfillment. As online retail grows global and routes to market increase, the underlying supply chain must adapt. They have to tackle challenges posed by diversified products, short order cycle times, shipping in small quantities, fragmented warehousing, global clientele and rapid inventory turnover.

Last mile delivery- the game changer in customer retention

Detlev Mohr, senior partner at McKinsey and Company maintains that, “Ecommerce is all about the last mile- where a significant part of the total cost sits and also where customer experience makes all the difference.” Last mile delivery refers to the last leg of the supply chain i.e. the movement of goods and material from the distribution center/warehouse to its final destination. This leg is plagued by customer related nuances like incorrect addresses, remote and cramped locations, customers who aren’t available to receive their packages, and whimsical cancellation/return of orders. Furthermore, 30% of the entire cost in terms of fuel and time depends on last mile delivery. Volatility within the supply chain doesn’t just create problems at a specific point but impact the multiple players involved. This has pushed the logistics industry to adopt the motto of “People, Process and Technology”

Technology turns messiah for the logistics industry

Third party tech enabled logistics companies have emerged as saviours for consumer brands that are competing for the best product price. They help reduce cost by controlling operation overheads and minimising losses, by using new age technology such as IoT, barcodes, RFIDs, data analytics, digital sensors, and GPS real time tracking.

These technologies have made logistics services more predictable and help reduce inefficiency and unplanned downtime. They improve visibility and by extension productivity across the supply chain. Technology leverages data to accurately anticipate and comprehend demand, optimize sourcing, production and manufacturing.

By connecting all devices to a centralized cloud network, IoT renders greater operational efficiency. Digital sensors also act as anti-theft measures by sensing and reporting about temperature, movement, vibration, tampering, speed, and location. This aids in reducing costs of fuel via route optimization and fuel pilferage reduction mechanisms. Going ahead, early adopters of Virtual Transportation Networks, Cross-docking systems, 3D packing and Grade A warehouses will edge out their competition.

What’s the big picture?

The logistics industry not only helps e-commerce companies win more customers through reliable deliveries but has also become an important component of the Gross Domestic Product (GDP). It  affects interest rates, the rate of inflation, energy costs and its availability. Lower costs in logistics positively affect production, distribution and trade of the country, by enabling companies serve a wider market, and scale to global capacity. Apart from increasing trade, better performance in this sector augments initiatives like Make in India. Furthermore, it enables India to become an important player in the global supply chain by increasing exports by  5-8 %.

Yet, to sustain this growth, the Indian logistics sector must weather the slowdown in industries that work in tandem with them, such as the automobile sector. Unfortunately, overall demand for freight have also fallen with the consumption slowdown . This has embroiled transporters and truck drivers across India in financial stagnation. Furthermore, smaller unorganised players still dominate the logistics segment. They set a lower standard for operations, and aren’t robust enough to scale without integrating technology in their processes. They continue to wield power in the industry by influencing pricing. As a rapidly evolving industry, the future of this industry is in the hands of those first to evolve and tackle these challenges effectively.

 

NOTE: Pushkar Singh is CEO of LetsTransport, India. 

(Disclaimer: The opinions expressed are the personal views of the author. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)