The logistics industry is one of the most integral components of the Indian economy. This is because all other industries are highly dependent on transportation, materials and goods for their very functioning—an efficient flow of which is what the logistics sector is essentially tasked with. Supplemented by globalization, logistics has been projected to play a progressively significant role in driving the Indian economy further. Indian logistics sector has received great boost through policy level changes and transforming business environment in the past few years. The implementation of GST in 2017, logistics sector being accorded infrastructure status, key government initiatives towards development of the infrastructure, and private investments have together contributed to the robust growth of the sector.

However, the biggest driver of long-term change in the sector has been the intervention of technology. A conventionally run, extremely fragmented industry till now, logistics is gradually warming up to the participation of tech-based solutions and the operational optimization achieved from them. Leading this transformation is the express segment of logistics industry, which has been actively leveraging technology to provide comprehensive end-to-end solutions for all services, from warehousing automation to even customer relationship management. Brands in the Indian express logistics scenario are playing an active role in driving this transformation by being one of the earliest adopters of tech-focused solutions to streamline operations and provide timely logistical services.

However, a few challenges still remain, especially in changing the mindset of traditional players of the logistics industry.  Apprehension towards tech-focused solutions, infrastructural inefficiency to meet the growing demand, regulatory failures and increased competition are posing as roadblocks for the sector to achieve its potential. To counter this, both established as well as emerging Indian logistics players, especially in the express segment, are equipping themselves with an array of operational and product solutions to tackle these hindrances. And all this is being achieved through the steady adoption of technology, albeit with a few obstacles. 

Slow adoption of technologies: A major constraint

In spite of all the key developments witnessed in the last two years, India’s rank in The World Bank Logistics Performance Index disappointingly dropped from the 35th position in 2016 to the 44th position in 2018.  This is majorly due to a lack of awareness about the various benefits of digital technology, leading to operational inadequacies and poor exploitation of assets within the logistics ecosystem. Inadequate technological infrastructure has further led to suboptimal performance, undependable hardware and software, slower network speeds and higher costs. 

In fact, India performed poorly in all the seven parameters that define a country’s score on the index. The major reasons behind this subpar performance also included inadequate infrastructure, regulatory hurdles, lack of skilled manpower and proper training, and lower performance standards. This was a shock for industry players and experts as India had previously catapulted from the 54th position in 2014 to the 35th position in 2016, thereby showing remarkable growth potential.

The express segment of the logistics industry in India has emerged as a ray of hope in an otherwise unfavorable scenario. Even though it comprises a small share of 2% in the global express market, the country’s express industry has been touted as one of the fastest-growing markets on a global level. One of the major reasons behind its exponential growth is its rapid adoption of technology which, supplemented by growth of e-commerce, implementation of favourable government policies and a significant demand from MSMEs. According to a report by Deloitte titled ‘Indian Express Industry 2018’, the express sector is predicted to reach a market value of INR 48,000 crores, growing at a remarkable CAGR of 17% by 2022. Further, it has been estimated that the employment base of the express industry will grow by a remarkable 1 million. Therefore, through this example, it is evident that an efficient use of new-age technological practices can help the Indian logistics industry become a key driver of the Indian economy by facilitating growth and creating employment opportunities.

Indian express logistics brands: transforming from ‘service providers’ to ‘solution providers’

From well-established companies and MNCs to emerging startups and small service providers, there is a wide spectrum of players in the Indian express logistics scenario. These industry players are constantly expending efforts to bridge the need-gap and increase efficiency of and reliability on modern-day technological solutions. These companies have begun to evolve from being ‘logistics service providers’ to provide integrated digitized end-to-end solutions, thereby emerging as ‘logistics solution providers’. Instead of just selling their own services, these brands are now leveraging modern technologies to provide the most efficient and customized solutions, no matter what the trader’s consignment size be. Therefore, this is helping traders with smaller consignment sizes substantially as the benefit derived from a positive customer experience ensured through tech-driven processes compensates for the lack of revenue margin. Also, due to changing customer preferences and an increasing need for tech-focused solutions, express logistic players have come to assume a more strategic role in the journey of an enterprise than just an operational one.

Further, contribution of new-age startups in the logistics scenario cannot be undermined. Their technological agility gives them an edge over their contemporaries, as they efficiently incorporate technological tools to simplify logistics processes while guaranteeing timely services. There are several promising startups in the scenario now that are creating ripples in the industry by creating technological platforms for transporters and fleet owners, enabling freight exchange and transactions, establishing automated warehouses, and devising disruptive operational models for delivery of supply chain services to customers, etc. As seasoned players tightened their foothold over in-house logistics services, these emerging brands have begun tapping the express segment and exploring opportunities in other industries and verticals to fill gaps and pursue active consolidation to cut competition and strengthen the fragmented logistics framework.

Leveraging new-age technological tools

In the present era of technological transformation, the world has entered what is now termed as the ‘fourth industrial revolution’. Digital tools like Internet of Things, Big Data Analytics, Automation Technology, Artificial Intelligence, Cloud Computing, Machine Learning, and Blockchain Technology etc. are reshaping every industry across every vertical. In the express logistics space, these tools are helping drive the future through an effective monitoring of performance, predictive analysis, cost-saving, reduction of manual labour, optimization of asset utilization, better visibility and better data accessibility. Creation of a common digital platform, for instance, can facilitate a seamless flow of information across various modes of transport, service providers and stakeholders through an integration of all documentation, track-and-trace visibility, and linking of the value chain to payment points. Moreover, the state needs to get actively involved in the entire digitalization process, not just by being a facilitator but also by addressing stakeholders’ issues and raising awareness among them. 

With rising consumer demands for personalized, time-bound, comprehensive and flexible logistical services, a fast transition towards digitized purchase trends and centralized efforts to boost the logistics industry, a seamless integration of the entire logistical flowchart is imminent. By aligning technological innovations and strategies into operational models and earning the trust of e-commerce powerhouses through swift digitization, these express logistics brands can benefit not just themselves but also the consumer, the logistics industry, and the Indian economy on a whole.