These #3 Veterans Explain Why Logistics is Perceived as Sunshine Industry

Pro-market initiatives by the government are considered to be the triggers for the sector in future

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Logistics sector of the country is increasingly gaining a lot of attention both from businesses and policy makers. From July 1, 2017, the goods and services tax (GST) has led to consolidation of warehouses. The move allows firms to redesign their supply chains and centralize hub operations to take advantage of scale economies.


Government's Pro-market Initiatives

Logistics has recently been accorded with an 'infrastructure' status. This status will enable borrowings at cheaper rates, thus providing a fillip to investments from both international funds and domestic players in logistics, industrial parks, warehouses and transportation.

Pro-market initiatives by the government, including Bharatmala, GST, Make in India, dedicated-rail-freight-corridors, massive investment foreseen in the railways etc that enable flawless connectivity, are considered to be the triggers for logistics sector in future.

Warehouses Increasing Their Efficiency

With the festive season on in full swing, the warehousing sector is witnessing a jump in volumes of more than 60%. That is, around 70 % of annual volumes happen in the period of four to five months.

Goods that witnessed increased movement during this season are white goods and electrical appliances, apparels, foot wears, garments, mobile handsets, pooja material and more. Warehouses have to double or triple their efficiency both in inbound, order management, pick- pack and delivery.

At Avvahsya CCI, a subsidiary of Allcargo Logistics, the division has a three-tier approach to cater to this spike-- resource augmentation, process automation and technology and enhancing efficiency through shifts.

"In resource augmentation, we divide work into certain core and non-core activities and during festive seasons, we hire staff to fulfil the non-core functions, which otherwise are done by the skilled workforce itself. Through process automation in a warehouse, our contract logistics team scale up and scale down activities on a need basis. During peak seasons, we also increase the number of shifts to three or four, depending on the situation," shared Deepal Shah, CEO of Customs Clearance & Freight Forwarding at Avvashya CCI.

Digitalization is the Way Ahead for the Logistics Industry

E-compliance initiatives like e-sanchet are launched by the government to increasingly move towards paperless mechanism of functioning. From a logistics standpoint, the industry is expected to work on sensor technology that measures factors like traffic flow, area-specific volume and movement of people and infrastructural strength of the area.

"An efficient transport and logistics infrastructure that is based on the elements of Big Data and IoT will help analyze data and get deeper insights into customer needs. It would be safe to say that Artificial Intelligence, Big Data and cognitive computing will be the foundation on which an efficient futuristic logistics system would be based on," stated Shah.

With GST in place, the removal of toll-nakas, e-way bills and ease of entry across states have reduced transportation delays. However, Pratish Sanghvi, Director and Co-founder of Grab (a last-mile delivery service company) believes streamlined IT systems and ready-to-use documentation at the entry points are required to facilitate better impact.

"Technological breakthroughs are changing every possible aspect of how logistics companies function. 'Digital fitness' is considered to be a precondition for success. Those who can effectively explore new technologies, from data analytics to automation and platform solutions will stay ahead," shared Sanghvi. However, he warned that with so many technologies competing for attention and investment, designing a comprehensive digital plan that can be readily integrated into business strategy will be significant.

"From the 3PL perspectives, the costs of designing a logistics network will be less complex and firms which are asset-light will be able to quickly adapt and benefit more compared to asset-heavy firms," predicted both Shah and Sanghvi.

Opportunities in this Sector are Huge

The contract logistics vertical is aggressively growing at around 30 - 35 YoY and there is a huge opportunity going forward. There are a number of tech based logistics start-ups emerging in the last five to seven years, especially in the delivery logistics space. A massive opportunity lies ahead for entrepreneurs to use technology to build efficiencies in the logistics industry which has been underleveraged in terms of automation.

Revathi Roy, CEO and Founder of Hey Deedee (an instant parcel delivery service by women) thinks there is a huge space available for the youth in the logistics field to experiment and learn about how this industry works.

Considering the fact that logistics is the next big thing, the last-mile delivery space is probably going to over ride everything else. With online shopping going to hit the roof and deliveries by robots or drones is still a long way off, the next decade is going to see a surge in having trained personnel to do deliveries right up-to your door step.

"In the space we are in, which is a platform run by women on 2 wheelers, we also have a feeder mechanism of creating trained girls to do the last-mile delivery. And since delivery agents reach your homes, women may be preferred in the long run," she opined.

"The government's clear focus on infrastructure development has a direct relationship with logistics. Young professionals are now seriously evaluating logistics and supply chain as career option. Thus, the opportunities in this sector are huge," concluded Shah.