The Indian logistics market is growing at a faster speed than estimated by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) earlier this year. In end-September, the industry chamber had projected a 17% growth of Indian logistics business from US$105 billion to US$125 billion over a period of 2 years. A couple of months later, ASSOCHAM has found that the industry is growing at a faster rate then it had expected, having already touched approximately US$115 billion. Based on the latest findings, the industry chamber has now forecasted that the target of US$125 billion is likely to be reached by mid-2010.

“The rapid growth witnessed by the logistics industry does not come as a surprise. The sector had started booming about a year-and-a-half ago. However, its robust growth was dented by the global demand slump, which eroded margins of most players in the industry. Now with the demand slowly picking up, the sector is back on the growth trajectory,” says K Davda, proprietor of Babaji Shivram Clearing & Carriers, a mid-sized cargo agent in Mumbai.

Role of 3PL

 
However, ASSOCHAM has reiterated its earlier view that the third party logistics (3PL) business will play a vital role in the projected growth of the logistics industry. 3PL service entails outsourcing of logistics activities by a company to another firm offering specialised logistics services. Efficiency of the logistics service provider (LSP) helps to boost the overall efficiency level of the outsourcer.