Industry profile

Logistics industry in India is an industry that has not achieved its much deserved attention
or recognition. It is an area that is ripe with potential and yet the resources are far from
complete utilizations. There is however a huge demand for logistic services in India
especially with the growth of the Indian economy along with the influx of new companies
in sectors that was otherwise unknown. Estimated at a value of $14 billion US dollars this
industry is slated for another 9% to 10% growth in the years to come.

Purpose of Logistics Industry

The purpose of logistics industry is to enable an effective transportation or timely
movement of goods from one place to another. This could be for the purpose of industrial
transportation or even private purposes.

Different mediums of Logistics services

There are three mediums of logistics services in India. These can be categorized in the
following way:
Air freight this is a modern and the safest mode to ensure a fast delivery of goods. A
chosen one by many because of the swiftness of the system there are many companies
that are now even providing super fats deliveries by airways even on the same day.
Land transport this is a means of logistics support that has withstood the test of time
through the extensive network of roads in India. It has been the popularly used method
and used especially in the shipments of heavy articles like machinery and vehicles. This is
also a chosen method in case of household packers and movers.
Railways this is also an age old method of shipments and transport. Though most used
in case of domestic services this is very effective in the availability of cost effective
logistics support in India.
Waterways an essential part of this industry this is also one of the oldest methods.
Shipments and transportation of goods is done on an international basis through this way.
It is apt in case of shipments of oil, highly sensitive or volatile articles like Uranium.

Top 10 Logistics Companies in India

Among the key players of the Indian logistics industry there are certain international
names along with national companies that are not only world leaders in the field but are
also part of the Indian industry for a long time now.
DHL a very commonly known name in the Indian logistics industry, DHL has been part
of the industry for a long time now. Established in San Francisco in the 1969 DHL has
grown across 220 countries with over 300,000 employees. It has built a reputation over
the years as a responsible logistics support air, ocean, express freight and overland
transport, contract logistic solutions.
TNT this is an international brand that has been a part of the Indian market also.
Established at Netherlands, TNT is a reliable name in the arena of international
transportation and distribution business. Spread across 200 countries it has an estimated
revenue turnover of $ 3,500 billion US dollars.
AFL this is one of well known international players in the logistics industry of India.
The main areas of service by the company are in the area of logistics and warehousing
along with Courier Company and custom consultant.
BLUE DART this is one of the premier companies in the field of logistics. The
company has a huge network linked with the most advanced communication systems.
Blue Dart handles large and oversized packages and stands for an overnight delivery of
such goods.
GATI one of the pioneering companies in the field of logistics. This is one the
companies that have taken several initiatives to implement modernization in the area of
logistics. With a turnover of ` 576 crores this company believes in setting new standards
of customer service.
DTDC this company spreads over 3700 locations within India and 240 international
places. The company is a leading name in low cost shipments along with timely delivery.
ASHOK LEYLAND this is an established name in the manufacture of trailer trucks
and heavy vehicles in India. It has come up with a new venture in Ashley Transport
Services Ltd. in the area of information exchanges and the business of freight contractors
along with integrated logistics services.
FIRST FLIGHT this is an Indian company that has domestic, international and many
other programs of multi tracking technologies.
AGARWAL PACKERS AND MOVERS this is a popular name in the field of
logistics companies of India. Services like shifting, transport of cars, and all other forms
of quality packing and transportation this is a name that has over the years become

synonymous with quality and assurance.

Last Updated on June 25, 2015

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Transportation:
Transportation is an essential and a major sub-function of logistics that creates time and
place utility in the supply chain management. Transportation is also the largest
component in the logistics cost. In India, about 40% of the logistics cost is due to
transportation alone. The major infrastructure required for moving goods in India involve
the active roles of roads, railways, ports and shipping, and airports all of which are either
managed or regulated by the government. The current state of the transportation sector in
India is discussed in detail in Chapter 2.
Multimodal transport is the movement of cargo from the point of origin to the final
destination using two or more modes of transport. It facilitates international trade by
ensuring the smooth flow of the containerised cargo under single contract and giving
better control over the transport chain. In India, CONCOR is the major player in the
multimodal logistics business in India. It provides logistics support for the countrys
international trade 41 by developing the necessary infrastructure such as rail and road
services and containerised cargo movement within the country. Currently CONCOR
provides the only means by which shippers may obtain containerised freight
transportation by rail in India.

Warehousing:
Warehouse management is one of the critical components of supply chain that ensures
the products are properly handled, stored and delivered.
In India, warehousing industry is mostly dominated by state warehousing corporations
and public sector undertakings such as Central Warehousing Corporation (CWC), Punjab
State Warehousing Corporations (Conware) and others. The CWC is the largest
warehouse operator in India which operates across the country through 444 warehouses
and provides storage capacity of 7.3 million tonnes for a wide range of products.
Foodgrain warehouses, custom bonded warehouses, container freight stations, inland
clearance depots and aircargo complexes are among the warehousing activities provided
by the CWC. Besides the warehousing corporations, most of the major ports of India also
provide warehousing facilities through their own warehouses and also through privatelyowned warehouses located within or outside the port area.
Material handling system is the fundamental part of warehouse management which
accounts for the major portion of the warehousing cost. In India, there is a serious lack in
this system in terms of equipment and technology, leading to improper staking and
storage. Godrej & Boyce Mfg. Co. Ltd, among the few players in India in the material
handling area offers a wide range of the equipment such as battery-powered rider,
pedestrian pallet trucks, manual and powered stackers, among others. In terms of
sophistication such as the Warehouse Management System (WMS) technology which is
used abroad, the concept is still not very prevalent in the Indian market.

However with the recent emergence of some software developers in India, such as the
Eclipse Systems, there has been continuous effort to provide cutting edge technologies
such as barcode scanning and RF technologies to automate the warehouse operations.
Such system offers accuracy, flexibility and power that warehouse management demands
by giving the customers total control of the warehouse from receiving, cross-docking,
putaway, pulling, picking, replenishment, bulk order, cycle count, validation, shipping
and customer returns. As such, the concept of WMS is gaining momentum in Indian
logistics market.

Distribution: The large distances, inhospitable terrain, poor highway infrastructure, an

over-stretched railway network and a myriad of state and central excise laws are among
the challenges faced by logistics players in India in the distribution of goods within the
country. As a result, the delivery process at times takes longer period and is expensive and
can be unreliable too. However there have been efforts in this area with some logistics
players trying to set up complex distribution models using multimodal means of
transportation to achieve which achieve right balance between cost and, efficiency and
reliability.
Freight forwarding: The freight forwarders in India are typically described as an agent
who arrange the transportation and prepare shipping documents. However, today their
role have changed and they are expanding their service port folios by offering more
services including port handling, chartering, custom broking, project management,
packing and moving, road and rail transportation, through bill of lading and air freight
import and export services. Due to their ability to manage international freight movement
through air and sea freight, there are increasing chances for freight forwarders to become
full-fledged logistics service and solution providers.
Value added services: Besides the prime logistics functions above, logistics players in
India are also providing value added services as a strategy to stay competitive in the
logistics industry. Among the value added services provided by many players today
includes kitting, packing, repacking into various sizes, labelling, light assembly,
consolidation and cross-docking, and among the value added services provided in the
overall supply chain processes are order processing, inventory management, payment
collection, insurance, tax management, reverse logistics and information management.
With the increasing trend of companies to outsource their logistics requirement
such as the above, logistics market and the 3PL industry are also growing in the country.

Major Drivers of Logistics Industry in India

The concept of logistics is continuing to gain strength in India. There are several major
drivers fuelling the growth of the industry.
1. Organizations are realizing the huge potential savings that efficient logistics can offer,
and its impact on revenue growth and improved profitability. Moreover, the increasing
complexity of supply networks, globalization of businesses, proliferation of product
variety, and shortening of product lifecycles forcing them to realize that it is better to
allow the experts to manage their logistics, and this results in acceptance of
outsourcing as a business practice.
2. The increasingly demanding customers, coupled with the increasing cost pressure and
competition, there is an urge for companies to differentiate themselves from their
competitors through value added services and competitive prices. As such, price and
time factors, for example on-time delivery, shorter lead time, improved service and
better inventory management become important criteria in selection of suppliers.
Availability of efficient logistics service providers become an important part of the
sourcing equation.

3. The globalization trend in the complex business environment worldwide also poses
great opportunities for the logistics industry in India. Worldwide companies have
started adopting global sourcing and distribution strategies and have given higher
priorities on efficient management of supply chain and logistics. Such global strategy
has significant implication on the growth of Indian logistics industry.
4. Another major driver of the logistics industry is the internet. With the emerging
ecommerce,
there is a need for e-companies to offer an efficient distribution system that
ensures fulfilment and timely delivery of goods ordered through the internet.
Companies are on lookout for the strategic logistics players who can streamline the
movement of their goods and ensure faster delivery. In addition, with EDI, bar coding
and tracking of goods in transit used widely, many companies are depending on the

logistics providers to provide the IT integration.

5. The Indian governments initiative in improving the infrastructure is a positive factor
for boosting the logistics industry. The simplification of trade rules and regulations,
allowing private sector participation in roads, seaports and airports, and the increase of
public funding in upgrading the infrastructure will further support the growth the
logistics industry in India.

Strategies

2013 Trends and Strategies in Logistics and Supply Chain Management: Embracing Global
Logistics Complexity to Drive Market Advantage
The key results of this study by BVL International on trends and strategies in logistics and supply chain
management are summarized, as follows. They are based on 1757 responses collected in an international
survey from supply chain executives (including logistics service providers (LSPs), retailers, and manufacturing
companies).

Key Trends
The general observation from both the interviews and the study results is that logistics complexity in the form of
fragmented channels, increased product variations, and consumer demands for customized solutions has
increased. Several trends demonstrate that a number of major challenges lie ahead, as the world becomes a
more complex place to operate logistically.

Customer expectations:
In essence, logistics and supply chain management should primarily enable a company to satisfy its customers
needs. Increasing customer expectations were ranked by respondents of our study as the most important trend,
and meeting customer requirements has been ranked by more than 20% of the respondents as the number-one
logistics objective. But, as customers are becoming ever more demanding and critical, traditional measures often
fail when pursuing strategies to satisfy customers.

Networked economy:
In the past, companies have typically considered themselves to be independent players in the market and, at
best, managed interfaces to direct suppliers and customers. In todays networked economies, this is just not
enough anymore. Companies are often forced to collaborate with partners both vertically and horizontally in their
extended supply chain network, and these partners expect them to integrate their processes and systems.
Companies are forced to adopt network thinking rather than company thinking.

Cost pressure:
Customers continue to expect low costs. Although other requirements such as sustainability, social issues or riskmitigation capabilities are increasingly discussed in the media, cost pressure seems to remain the ultimate
criterion for customers. Given the trend towards increased customer expectations, it has become ever more
difficult to reduce costs any further. Logistics costs are playing an important role in reducing overall costs.
Logistics costs share of overall revenue is as low as 4% and 6% in the electronics and automotive industries,
respectively. However, our results show that costs are on the rise (larger than 8% on average for manufacturing
industries). A concerning result is that as many as 14% of the respondents cannot estimate their logistics costs.

Globalization:

As global footprints expand, logistics performance as measured by delivery reliability has deteriorated, due to
increasing customer requirements, greater volatility, and problems with infrastructure. Two out of three
respondents stated that their companys logistics capability is negatively influenced by poor transportation
infrastructure, which is a problem particularly in emerging markets. In sum, globalization clearly amplifies other
trends and leads to an increase in complexity, particularly in regions of growth such as Russia, Eastern
Europe,India, and Africa.

Talent shortfalls:
Across all regions and sectors, talent shortages in logistics is considered one of the most important challenges in
the coming years. Shortages are being seen at both the operational level as well as the planning and controlling
function. In particular, about 70% of the respondents experience a shortage of skilled labor. The most important
strategies to cope with talent shortage are training and qualification programs and strategic cooperation with
universities and research institutions. In the United States and Europe, talent shortages are also a function of
demographics. In emerging nations strong competition from other fields like finance, strategy and IT contributes
to the talent shortage. Volatility: In the last years, market turbulence on the supply and demand side has
increased. This was amplified by the economic and financial crisis, which demonstrated how fluctuations in one
part of the world can build up to dramatic problems in other parts of the world. Respondents of this study believe
that volatility will continue to increase and more than 50% of them consider it to be a very important trend in five
years.

Sustainability pressure:
This trend has emerged as a very serious topic. Already more than 55% of the respondents stated that green
issues are part of their logistics strategy. Corporate social responsibility has also emerged as a highlight for
debate. However, there remains a great deal of uncertainty in the deployment of these strategies, especially
relative to measurement systems, evaluation and setting goals and strategies for logistics sustainability

Increased risk and disruption:

The majority of companies (irrespective of size, sector, country and position in the supply chain) consider the
mitigation of internal and external risks essential. Strategies for 2013 Trends and Strategies in Logistics and
Supply Chain Management 9 managing risk around demand and planning are also considered important.
Executives concur that strategic frameworks and tools are needed for engaging the entire network in the
management of risk and disruptions. Solutions focused on improving transparency of tier two suppliers, inventory
and demand impede mitigation and force companies into reactive strategies. Proactive strategies should include
research and development, procurement, production and sales.

New technology:
The majority of companies are recognizing the growing need for investments in new technology, with about 60%
of the respondents planning to invest in big data analysis tools within the next five years. Those tools seek to
develop capabilities around the comprehensive handling and intelligent connection of data to increase planning
and control outcomes. The new wave of decentralized automated network technologies are in their infancy.
Predictions from the last study concerning the use of those technologies have not yet materialized.

The success of the third-party logistics industry is evident in the generally high marks
given to 3PLs by respondents to a survey as part of the 2013 17th Annual Third Party
Logistics Study, which identifies trends and explores how both 3PLs and shippers are
using these relationships to improve and enhance their businesses and supply chains. A
substantial 2,342 industry executives provided usable responses to the survey, including
users and nonusers of 3PL services as well as 3PL providers.
Despite challenging business conditions, aggregate global revenues for the 3PL sector
continue to rise, and far more shippers (65%) are increasing their use of 3PL services than
returning to insourcing (22%) some 3PL services. Nearly three in five (58%) shippers are
reducing or consolidating the number of 3PLs they use. Shippers report spending an
average 12% of revenues on logistics, and an average 39% of that figure is spent on
outsourced logistics services. Outsourcing accounts for 54% of shippers transportation
spend and 39% of warehouse operations spend. As found in past Annual 3PL Study
surveys, transactional, operational, and repetitive activities such as transportation,
warehousing, and freight forwarding tend to be the most frequently outsourced.
Both shippers (86%) and 3PL providers (94%) largely view their relationships as
successful, with shippers posting some impressive results from outsourcing: just over half
(56%) say their use of 3PLs has led to year-overyear incremental benefits. They also
report significant savings from logistics cost reductions (15%), inventory cost reductions
(8%) and logistics fixed asset reductions (26%). Shippers are more satisfied than 3PLs
(71% to 63%) with the openness, transparency and good communication in their
relationships, and 67% of shipper respondents judge their 3PLs as sufficiently agile and
flexible.
Shippers openness to more strategic 3PL-shipper arrangements, including gainsharing
and collaboration with other companies, appears to be declining somewhat. The IT Gap
appears to have stabilized over the last few years, with 94% agreeing that IT is a
necessary element of 3PL capability but just 53% indicating they are currently satisfied
with 3PL IT capabilities. Contributors and potential solutions to this disparity are
explored in the IT Gap section.