The Indian transport market: increasing efficiency and lowering logistics costs

August 27, 2021 5:48 PM

The transport expenses in developed countries are lower since their operations are highly efficient and backed by technology.

India is predominantly a road transport dependent country, which necessitates green transportation, lowering of fuel consumption by integrating smarter processes and better high-capacity vehicles.India is predominantly a road transport dependent country, which necessitates green transportation, lowering of fuel consumption by integrating smarter processes and better high-capacity vehicles.

By Karan Shaha,

The Indian logistics industry is a crucial peg in the wheel of economic development. As per the available data, over 22 million people are directly employed in this industry, which contributes to about 6% of the GDP (more than $160 billion in 2018). The impact and importance of logistics for India’s development and economic growth can’t be overemphasized. This is because, the sector has been grossly under-performing. Considering the scale of requirement, there is an urgent need to reduce its enormous social, environmental, as well as economic burden. There has been rapid digitization of all industries in the wake of the pandemic. We are also witnessing a lot of technology adoption being contemplated by the government and other stakeholders in this sector as well.

The transport expenses in developed countries are lower since their operations are highly efficient and backed by technology. India is predominantly a road transport dependent country, which necessitates green transportation, lowering of fuel consumption by integrating smarter processes and better high-capacity vehicles. Currently, the majority of trucks in the country are less than 26 tons and almost half of these are less than 16 tons in capacity. The Government of India has been building high-quality roads at a great pace. With such world-class infrastructure being developed PAN-India, we need automation that ensures vehicle movement is as optimized, affordable and swift as required.

Transport operations is the major space where automation is needed today. There are several startups in the logistics sector which have introduced cutting-edge technologies such as AI, ML, Blockchain etc., and the highly successful marketplace mode of business is also rapidly gaining prevalence. Technology-driven logistics operations augur well for an opportunity-rich country like India. There is a tremendous need for efficiency, optimization of existing load carrying capacities and the ability to move different cargo types ranging from cold storage items to industrial raw materials such as steel. The Indian government is making efforts to turn the country into a global manufacturing hub and digital marketplaces will become major enablers of sustainable goods transportation pan-India. Marketplaces can transform the unorganized trucking industry by integrating various stakeholders and enabling direct and transparent interactions between the shippers and transport service providers.

The transportation costs in India are largely impacted by the under-utilization of resources and inefficiency of operations. Conventional transportation processes are time-consuming and leads to inefficiency due to long vehicle park times. There is a huge demand for shipping services round-the-clock, but agents and numerous middle-men cause price inflation and delays as they spend hours bargaining and soliciting on phone and personal meetings.

As seen in various developed countries, marketplace platforms serve as the real-time bridge between the stakeholders. As soon as a load is ready to be shipped, it can be shared online and transporters can bid for it digitally. The most suitable bid gets the load! Transporters get notified about their booking and simultaneously, shippers don’t have to chase around for finding reliable transporters. Lakhs of vehicles can therefore be assured of ready-to-carry loads, instead of remaining parked while the vehicle owners/agents wait for the right customer.

Apart from faster business generation, a good logistics marketplace platform can also offer various other support services such as marketing, brand building, online order booking, digital documentation, load allocation and consignment tracking. All these facilities can optimize operations seamlessly and with greater peace of mind for the shippers and transporters both.

With the recent digitalization of the logistics space, things have undoubtedly taken a turn for the best. It is time for all stakeholders to play their role in ensuring that the Indian logistics sector is ready to handle the Make in India and Aatmanirbhar Bharat initiatives’ expectations!

(The author is CEO and Co-Founder, Vahak. Views expressed are personal and do not reflect the official position or policy of the Financial Express Online.)

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