By Rahul Mehra, Co-Founder, Roadcast
The logistics industry in India is flourishing due to technological advancement and it is predicted to account for 14.4% of the GDP of the country. The industry has progressed from a transportation and storage-focused sector to a specialized services sector that now includes predictive planning, end-to-end management and solutions, analytics, and value-added services for last-mile delivery, among other things. The government is actively working towards reducing the logistics and supply chain costs in India from 13–14% to 10% of the GDP as per industry standards.
(source: https://www.ibef.org/blogs/warehousing-and-logistics-sector-in-india).
The Indian logistics industry employs around 22 million people and serves as the backbone for various businesses. It is the backbone of our economy and was valued at US$250 billion in 2021, with the market forecast to grow to US$380 billion by 2025. The integration of technology has emerged as a pivotal driver of efficiency and growth.
Therefore, it is crucial for the logistics industry to adopt technology and grow even more efficiently.
However, despite the accelerated adoption, there still remains a significant gap between the potential of technology adoption and its actual implementation across the sector. This tech gap presents both challenges and opportunities.
In India, ports, freight corridors, better roadways, etc. are bringing in a massive shift that is helping align the logistics sector with the evolving business landscape. Increased digitization is a key contributor to driving this shift as the country sets its eyes on becoming a US$26 trillion economy by FY48. However, there is a definitive technological gap in the adoption of digitization. Issues like the absence of a database to map goods moved make it difficult to have data-based policymaking; many existing digital solutions are yet to offer end-to-end visibility. In addition to this, poor adoption of digital technology in the logistics sector in the varied topographies of India results in inefficient route selection, manual processes, and uninformed decisions, which increase costs (source: https://www.ey.com/en_in/consulting/transforming-the-future-of-the-indian-logistics-sector).
Besides this, another primary reason for this tech gap is the apprehension towards change and the perceived complexity associated with implementing new technologies. Many logistics firms, especially small and medium-sized enterprises (SMEs), face barriers such as cost constraints and a lack of awareness about the benefits of technology adoption.
However, amidst these challenges lies a vast opportunity to bridge the gap through concerted efforts from stakeholders across the industry. The industry and the government of India are working on increasing tech adoption to streamline operations, optimize routes, and enhance overall efficiency in the logistics ecosystem. For instance, the implementation of Internet of Things (IoT) devices, real-time tracking systems, and automated warehouses can significantly reduce transportation costs and improve delivery timelines.
To facilitate this transition, government initiatives such as the National Logistics Policy, Digital India, Bharat Net, etc. are playing a crucial role in providing the necessary framework and support for technology adoption in logistics. These initiatives are creating a conducive environment for innovation and digitization, thereby empowering logistics companies to harness the full potential of technology.
In addition to this, partnerships between technology providers like SaaS-based companies and logistics firms are driving widespread adoption. Collaborative efforts are helping to create tailored solutions like fuel sensors, face recognition software, etc. that address the specific needs and challenges faced by different segments of the industry. By fostering a culture of innovation and knowledge-sharing, these partnerships can accelerate the pace of technology adoption and drive sustainable growth.
Education and skill development are also emerging as key components in bridging the technology adoption gap. We are living in the future. These are the solutions of tomorrow, and we need a workforce that is comfortable with the innovative solutions. Training programs and workshops focused on digital literacy and technology utilization can empower logistics professionals with the knowledge and skills required to leverage technology effectively. By investing in human capital development, companies can overcome resistance to change and foster a culture of continuous improvement and innovation.
The Indian freight and logistics market is estimated to reach 545.6 billion USD by 2030.
growing at a CAGR of 9.46% during the forecast period (2024-2030).
Bridging the gap in logistics technology adoption is imperative for India to achieve the aforementioned goal. By building a robust tech bridge, India can revolutionize its logistics landscape, driving efficiency, competitiveness, and sustainable growth for years to come.
