Several initiatives undertaken by the Government of
The industry has grown rapidly since the past 10 years and various drivers have contributed to the rapid growth of the sector. Major drivers of this robust growth are initiatives undertaken by the government, increased usage of IT, improved service offerings and organised nature of retail and manufacturing sectors, among others. Role of government The Government of India (GoI) has played a significant role in providing the right impetus to this sector by implementing various laws and taxes. Some of the measures undertaken by the government include: · Increase in private participation of rail freight · Setting up of special economic zones (SEZs) resulting in increased trade · Privatisation of inland container depot (ICD) for sea freight · Airport expansion with dedicated cargo terminals · Improved road infrastructure with better connectivity · Foreign direct investments (FDI) in the commercial vehicle segment leading to usage of better quality vehicles · Revision of import duty for fast moving consumer goods (FMCG) · Bilateral agreements to promote export-import (EXIM) trade IT penetration IT is the other major growth driver of this sector. Currently, IT solutions are being used for all supply chain management functions. Most of the ports use electronic data interchange (EDI) facility for electronic transmission of data. This has lead to reduced emphasis on manpower, thereby further optimising operational costs. Innovative logistics solutions have enabled conventional forwarders to use newer and improved methods of transportation for their services resulting in customer retention as well as customer acquisition. The growth of IT hardware, FMCG and automotive sectors has a direct relationship with the success of the logistics business. These sectors constitute the major market for logistics service providers generating business opportunities worldwide. Impact of 3PLs Third party logistics (3PL) providers constitute a major chunk of the country’s logistics sector and play an important role in spurring the growth of the sector. They offer tailor-made and innovative services for specific product categories as per customer requirements. Since timely delivery of goods is very vital in the logistics business, service providers make use of highly modernised technologies. Consolidation of the fragmented services is another area in which 3PL providers have excelled, thereby adding value to customer solutions. 3PL providers have been able to tackle challenges and overcome the same by catering to customer demands, by delivering right products at the right time to the right place at the right cost. All the aforementioned factors have in one way or the other contributed to the rising growth of the country’s logistics sector, which is set to scale greater highs in the near future as the industry still has immense potential that is lying untapped. Ajaz Mohammed, director of East West Freight Carriers Private Limited, a mid-sized logistics solution company in Mumbai |
