4 Indian logistics and supply chain trends to watch out for in 2021
As we celebrated 75 years of India’s independence, the announcement by the honourable PM about investing ?100 crore for the Gati Shakti master plan to accelerate the development of transportation and logistics infrastructure in the country, that in turn is set to help faster reach to market for the Indian manufacturing sector that is gearing up to expand, thanks to the Atmanirbhar Bharat initiative. In addition to this, the National Logistics Policy introduced by the GoI is further designed to promote seamless movement of goods through a focus on digitisation, process re-engineering, multi-modal transport, EXIM trade etc., which will further provide an impetus to trade and enhance the Logistics Performance Index for the country, writes Hector Patel.
In the backdrop of the global pandemic, the Indian logistics, and supply chain sector evolved from being a support sector to a high impact sector, growing at a rate of 10.7 percent CAGR. While the pandemic and the massive vaccination drive have already led the sector to evolve rapidly so as to meet the numerous challenges, it is now ready to take a giant leap in the coming years, driven by the following trends:
1.Digitisation and tech adoption
This is one of the most evident developments that has been accelerated largely due to the pandemic. From advancement in warehouse management systems, the use of robotics, AI, ML and IoT for inventory management, tracking and order placements, routing schedules etc., have all drastically altered the logistics and supply chain operations, across the country. The rise of third party logistic service providers have further raised the bar, with the introduction of value-driven services that are backed with strong technology-driven innovations, which are also redefining the sector. While e-commerce and online grocery shopping with contactless deliveries and cashless payments are changing the face of ‘direct to home’ and consumer-facing logistic operations, the vaccination drives and rise of e-pharmacies, are transforming the pharma and healthcare cold supply chains.
2. Rise of organised players
With the rise of value-added services, faster digital adoption, cashless and contactless deliveries, and the massive surge in online retail, there was a consolidation of the sector, driven by increased demand for integrated supply chain services. The once isolated network of transporters, freight forwarders, warehouse owners and managers and air and ocean freight carriers, now joined hands or merged with larger organised players to enhance market reach, and in turn, enjoy better returns. The sector also witnessed a steep and accelerated rise of start-up entrepreneurs who introduced tech-enabled service platforms, further aiding the consolidation of the sector.
3.Capital Influx by external investors
The growth potential of the sector and the massive cumulative impact of supportive government policies, has led to keen interest from private investors and equity funding groups. The wave of technology-based logistic start-ups, consolidation of the sector and government decision to allow FDI in the sector, has resulted in a massive influx of funds from private players, in the sector. In 2020 alone, the Indian logistics and supply chain sector witnessed total funding of USD 454.2 Million, with early-stage start-up’s claiming 45 percent of the funding. With the consistent and fast-paced growth, this investment is but the starting of a long and steady rise of the sector.
4.Greener operations
In line with national and international business protocols and rising demand for adopting greener business solutions, a lot of players in the sector are turning to eco-friendly and sustainable operations, that are also smarter, technology-driven and cost-effective. From the use of electric vehicles and building smarter warehouses with energy-efficient systems, to creating greener cold supply chains and solar-powered temperature controlled units, the logistics and supply chain sector is transforming rapidly from a high energy consumer and Co2 emitter to a more conscious and responsible sector with smart and earth-friendly operational preferences. Although not widespread yet, but an increasing number of both large and small players, are adopting greener solutions.
In line with the above mentioned key growth drivers, a major trend in the Indian logistics and supply chain sector is the strong impetus and focus on developing infrastructure for transport, such that is can offer valuable and customised support to key industries, like agriculture, pharmaceuticals, and manufacturing – sectors earmarked by the government to drive the robust growth of the Indian economy. From being the backbone of a developing economy, the sector is now a frontrunner and major driver of not just national and international trade but also the lifeline of smaller businesses, start-ups and entrepreneurs.
 | Hector Patel is the executive director and board member of the legacy logistics firm Jeena & Company and has been instrumental in driving growth and visibility in the company for three decades. |
The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of Indian Transport & Logistics News
