LOGISTICS INDUSTRY IN INDIA

Logistics Industry Overview Logistics as a business concept evolved only in the 1950s. It contributed to solve the complexity of supplying one's business with materials, and shipping out products in an increasingly globalised supply chain. India is emerging as a one of the world's leading consumer market with the raise of middle income group, with an estimation of reaching US $991 Billion in 2020 The logistics sector plays an important role in accessing this emerging market and enabling growth. Right Item Right Quantity Right Time Right Place Right Price Right Consumer

ROAD India has the second Highest largest road network – 3.3 Million km, with National Highways constituting 2% of total road length. Road network carry 40% of the goods traffic in India. Government spends 12% of Capital and 3% of total expenditure on roads The Golden Quadrilateral is a highway network connecting India’s four largest metros: Mumbai, Delhi, Chennai, Kolkata Road transportation is currently the most dominant form of transportation with more than half of the goods in the country being moved by road, ensuring reach and easy accessibility to even small markets.

RAILWAY The Indian Railways boasts of being the world’s 2nd largest rail network spread over 81,511 km and covering 6896 stations. The freight segment accounts for roughly 2/3rd of the railway’s revenue. The ton/kilometer costs for Indian rail freight at three times that of China. Railway Rail freight traffic revenues stood at around INR 350 billion in 2006 having grown at around 8 percent in the recent past with the growth in the last couple of years being around 10 percent. Low transportation cost as compared to roads.

AIR Though the air freight segment holds a small share of India's freight market, it is growing at a fast pace. Air Cargo is a costly mode and its use is restricted to courier shipments. It is rarely used for bulk transportation. By virtue of the level of investments in assets, network and relationships required to be a player in this segment, it has traditionally been relatively more organized leading to greater regard for manpower development. 87% of total freight traffic is being handled by airports in metro cities of India. The quality of Indian airport is rated 40th among 59 countries.

SEA India, with a vast coastline of 7,517 km handles 95% of India’s foreign trade through its seaports. It has 12 major ports and 184 other (minor and intermediate) ports. These 12 major ports handle about 76% of the traffic India’s west coast ports handles almost 70% of traffic India ranks 17th in the world in shipping tonnage The largest merchant shipping fleet among the developing countries.

Challenges to Indian Logistics Industry Competition from Indian and Foreign logistics companies. Technology to keep pace with demand for real time information. Corporatization and lack of skill sets. Shedding local mind-set and move to a global mind-set. Integration of services and value added services. Funds to fuel expansion & growth. Inadequate infrastructure and complex tax laws.

Future Trends of Indian Logistics Industry India’s logistics sector attracted huge investments, leaving behind some of the major sectors including aviation, metals and consumer durables. The growths in the retail and manufacturing industry, commodity markets and development of SEZs have been key factors in the growth of Indian logistics industry. Logistics industry is expected to grow annually at the rate of 15 to 20 % The setting up Special Economic Zones (SEZs) has led to increased logistics activities around them. Several logistics parks have come up at locations like Mumbai, Kolkata, Chennai and Hyderabad because of their excellent port, rail and road connectivity and are witnessing significant investment in infrastructure. The Indian logistics sector growth depends on the growth of its soft infrastructure like education, training and policy framework as much as the hard infrastructure. The future of the industry is very bright and is sure to witness exponential growth in the coming years.

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