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Sustainable Logistics Sector In India: Investment In Technology Is Crucial
The industry is now realizing the need to invest in technologies such as robotics, automation, AI, IoT, blockchain and big data analytics in the transportation sector.
India has one of the largest logistics sectors in the world, amounting to almost $215 billion and growing at a CAGR of 10.5%. However, despite the massive size, and the sector’s contribution to national development, the domestic supply chains lack in sustainability and optimization due to high indirect costs, poor infrastructure quality, lack of interconnectivity between different components and poor technology integration.
This is where the recent pandemic disruption has come as a sobering lesson. The industry is now realizing the need to invest in technologies such as robotics, automation, AI, IoT, blockchain and big data analytics in the transportation sector. There is also a growing need for holistic logistics solutions such as platforms that offer single-window access to the entire supply chain operation including fleet tracking and visibility, digital truck sourcing online and through apps, digital paperwork, online payments and digital proof of delivery, etc.
In recent times, visibility and control over operations have become a necessity and we are witnessing some digital platforms build large-scale networks connecting commercial transporters and other ecosystem stakeholders to make it happen. Cloud and mobile computing-based platforms that enable technology adoption for the transporters are bringing these logistics players together with the shippers digitally.
Another key area of operations that warrants a digital and sustainable technology-driven makeover is the lack of human resources. The pandemic has reduced access to labour as well as skilled workforce. Cloud-computing based logistics software help in automating major chunks of the operations and reduce the inefficiencies caused by lack of labour access for the Indian companies.
Top logistics platforms use advanced AI and GPS based tools to provide data-based route maps and make real-time adjustments based on road closures, weather changes or traffic congestions. For the logistics companies, having vehicles stuck on roads for even an hour extra each day can add significantly to the operational costs and put additional burden on the drivers to make up for the lost time. The turnaround time is becoming increasingly shorter and there is a tremendous need for technology in every aspect of operations starting from sorting to packaging, to shipping and delivering.
This is where the adoption of technology and platform services which offer seamless onboarding, easy management of fleets, real-time visibility, scalability of operations and easy access to consumers come into play. The cost of logistics in the Indian supply chain is nearly $400 billion which is close to 14% of the GDP. Comparatively, logistics costs vary from 8%-10% in the US to 9% in China. The overall global average is 8% and when we take that into account, there is a gap of nearly $180 billion for India.
There is no doubt that technology has to be adopted on a large scale in the sector to plug this gap and make it competitive. But the challenge at present is the lack of consolidation among players and advanced technology being unaffordable or hard to access for most operators.
This is where there is a clear need for platform services that redefine the logistics sector in India.
The emergence of such connected platforms that bring to fore all the advanced tools such as AI, data analytics, IoT, GPS, payment integration and mobile app access is going to digitalize the Indian trucking sector and ensure that providing and obtaining logistics services becomes extremely seamless. The National Logistics Policy, and the ongoing pace of infrastructure development will also lead to a significant capacity expansion for the industry.
Instead of searching for loads, transporters will be able to go online and find them on such platforms easily. On the other hand, the shippers will no longer need to sweat about finding reliable service providers as there are going to be verified truckers available at all times, on digital apps and web platforms.
What is needed is to shun the closed box approach wherein localized networks of people do business between each other and rely on a limited market access for operations. The pandemic disrupted such setups and exposed the lack of sustainability and scalability that they suffer from. The time has come where technology startups and logistics operators need to come together on collaborative logistics platforms to help each other benefit mutually. This is what will help India grow in the long run and help us realize the Atmanirbhar Bharat dream!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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