Mapping the trajectory of project logistics in India

India's project logistics industry is booming thanks to government initiatives and economic growth. However, challenges like weak infrastructure and complex regulations are roadblocks.

India's ambitious economic growth plans and massive infrastructure development initiatives have led to a surge in demand for project logistics services. The country's strategic location and growing manufacturing prowess have positioned it as a hub for handling complex and high-value project cargo movements. However, the industry faces several challenges that must be addressed to unlock its full potential.

Challenges Faced by Project Logistics Companies
One of the biggest hurdles project logistics companies face in India is the limited and often inadequate infrastructure. Navigating the complex regulatory landscape is another daunting task for project logistics providers. Obtaining permits, customs clearances, and dealing with inconsistent policies Nikhil Agarwal, President, CJ Darcl Logistics, emphasises the time-consuming nature of regulatory hurdles, particularly in obtaining permits for Over Dimensional Cargo (ODC) across different states. “Maneuvering from this complex set of rules and guidelines across states presents a complex challenge. A great focus needs to be drawn towards the inadequate infrastructure, roadways, port and railways which is leading to increased costs incurred for project logistics companies and therefore impacting the entire supply chain,” he added.

Rhenus India further shed light on the disorganised nature of the project logistics market, stating, “Companies in India face several challenges, including inadequate transportation infrastructure, varying state-level regulations for last mile deliveries including both road & inland waterways. Railways has restrictions too for handling Out of Guage (OOG) cargo, and Inland Container terminals cannot support to handle the OOG movements due to lack of connectivity to load ports (inland haulage issues), this hinders the smooth movement of goods, leading to delays and increased costs.”

“The Indian government’s focus on infrastructure development, including roads, highways, railways, ports, airports, and urban infrastructure, has led to a surge in construction and development projects across the country.”
Debajyoti Bagchi of TT Group

Harpreet Singh Malhotra, CMD, Tiger Logistics, acknowledged the industry's rapid growth but highlighted capacity issues faced by global logistics companies. He sees promise in upcoming infrastructure projects like Dedicated Freight Corridors (DFCs) to alleviate current challenges and meet future logistics needs effectively. “Overall, the industry needs to rapidly transform from a multimodality, technology, and infrastructure standpoint to meet the future needs of project logistics,” he stated.

Underscoring the fragmented nature of the supply chain in India, Debajyoti Bagchi, Vice President - Business Development, TT Group, the GSSA for Silkway West Airlines stated, “Coordinating between different stakeholders and managing multiple handovers can lead to delivery inefficiencies, coordination challenges and may lead to missing connection.”

“The industry needs to rapidly transform from a multimodality, technology, and infrastructure standpoint to meet the future needs of project logistics.”
Harpreet Singh Malhotra of Tiger Logistics

Innovative Solutions
To overcome infrastructure challenges, logistics companies are adopting multimodal transportation solutions. By combining different modes like road, rail, and coastal shipping, they can optimise efficiency and cost-effectiveness for their project cargo movements. Companies with Multimodal Logistics Park networks allow them to integrate these modes. Embracing digital technologies has become crucial for streamlining operations and ensuring real-time tracking. Advanced tracking systems and data analytics have been implemented to enhance visibility and better manage high-value cargo, helping achieve over 99% on-time deliveries for project logistics services.

With a growing emphasis on sustainability, companies are also exploring eco-friendly solutions. They are using alternative fuels like bio-CNG for their truck fleets, optimising routes to reduce empty miles by 20%, and implementing green logistics strategies to reduce their carbon footprint.

Impact of Government Initiatives
The government's "Make in India" initiative and infrastructure development projects have created a surge in demand for project logistics services. These initiatives have opened up significant business opportunities, and companies have had to scale up their operations to meet the growing demand. According to a report by McKinsey Global Institute, India's logistics market is expected to reach $320 billion by 2025. To support the "Make in India" initiative, companies are focusing on localisation efforts. They are developing specialised equipment like hydraulic axles and a skilled workforce within the country to better cater to the local market. Investments in training and infrastructure development have exceeded $50 million in the last 3 years for some companies.

“Simplifying customer procedures, limiting paperwork, integrating technology within procedures has facilitated better and faster customer clearance for project logistics companies to thrive.”
Nikhil Agarwal of CJ Darcl Logistics

“In the hue of “Make in India” policy, the government has also implemented various reforms to streamline the regulatory process aiding the foremost challenge project logistics has been facing for a long time. Simplifying customer procedures, limiting paperwork, integrating technology within procedures has facilitated better and faster customer clearance for project logistics companies to thrive,” added Agarwal shedding light on various initiatives by the government.

Bagchi emphasises the government's infrastructure focus, stating, “The Indian government’s focus on infrastructure development, including roads, highways, railways, ports, airports, and urban infrastructure, has led to a surge in construction and development projects across the country. These infrastructure projects require the transportation of heavy machinery, construction materials, and equipment to various project sites.”

Silkway West Airlines handling a charter flight IL-76 at Mumbai airport

The government's ambitious Gati Shakti National Master Plan, with an investment of $1.3 trillion, has also presented immense opportunities. These projects have unique logistics requirements, and companies have had to adapt their services to cater to their specialised needs.

The government's push towards renewable energy sources has fueled the demand for project logistics services. According to a report by Mercom India Research, India added a record 13 GW of solar energy capacity in 2022, and handling oversized components like wind turbine blades and solar panels requires specialised logistics solutions. India's massive infrastructure development projects, including highways, railways, and urban infrastructure, have also created significant opportunities.

Malhotra further highlighted the impact of renewable energy policies like Renewable Purchase Obligation (RPO), PM Har Ghar Bijli, and various fiscal and financial incentives that have created a massive scope for project logistics in the country through both trade creation and trade diversification. “We are seeing increased installation of wind capacity, solar power, and a remarkable adoption of hydropower. International wind turbine manufacturers have scaled up and modernised their Indian manufacturing footprint, and we have witnessed positive parallel growth in the solar segment as well,” he added.

Rhenus India moving around 2000 IT servers

Outlook on the Future

Looking ahead, the outlook for India's project logistics industry appears promising, driven by sustained industrialisation and infrastructure development. Government initiatives, such as the PM Gati Shakti National Master Plan, coupled with the country's growth trajectory, signal a positive future. According to a report by Frost & Sullivan, India's logistics sector will grow at a CAGR of 10.5% between 2020-2025.

Piyush Goyal, Union Minister of Commerce & Industry, envisioned the logistics sector as a cornerstone of India's ambitious growth plans. He emphasised this sentiment during the release of the Logistics Ease Across Different States (LEADS) 2023 report in New Delhi in December 2023. Bagchi echoed this sentiment, highlighting the importance of continued government support through initiatives like Make in India and Atmanirbhar Bharat. Such reforms aim to improve the ease of doing business and foster a conducive environment for project logistics growth.

As India progresses on its path of rapid economic expansion, the project logistics industry will play a vital role in facilitating the movement of oversized cargo and supporting ambitious projects. By addressing infrastructure challenges, embracing innovation, and fostering collaboration, project logistics companies can position themselves as key enablers of the nation's progress.