INDIAN LOGISTICS

By: Anshuman SinghSalman Shiras

Sayeka MehjabinAsha Chauhan

INTRODUCTION Logistics took way in 1980 with door to door

activities. Need of products and services across the

globe. In 2014, US $ 98.10 Bn with 4.9% growth

from last year. It grows around 2 times of GDP.

Logistics Industry Structure

Logistics Industry Structure

Indian Logistics Market

Container Logistics

Liquid Logistics

Express logistics

Road Freight

Inland Container Depot(ICD) and

Container Freight Station

Container Haulage

Multimodal Transport

Operator(MTO)

3PL (Third Party Logistics) services can be a combination ofallthese activities provided by the logistics supplier

NATURE OF INDUSTRY Cyclical Dependent upon spending from different

business. Grows as economy grows.

MARKET SHARE

Source: Frost & Sullivan Research

Key Players in Logistic Industry

END USERS Business

Government

E-commerce Companies

Individual Customers

Farmers

INDIAN LOGISTICS INDUSTRY PORTER’S FIVE FORCES MODEL

Forces Impacting Logistics Industry

threatof Substitutes

The industry is highly customer oriented with multiple vendor options available to customers

bargainingpower of SuppliersGovernment influence on fuel prices makes it difficult for players to predict, control and pass through fuel costs to customers

rivalryamong competitors

Lack of differentiation in services leads to commoditization and further price erosion

bargainingpower of consumers

A few large users of the industry and companies (e.g. the automobileindustry ) are able to significantlysqueeze transporters

threatof new entrants

No entry barrier in terms of requirement for licensing needs and industry is vulnerable to easy scale –up and intense competition

PEST ANALYSIS

PoliticalSEZNational HighwaysInfrastructure Spending

EconomicVATGSTGDP GrowthImport and Exports

TechnologicalInventory ManagementBar Code SystemRadio Frequency Web Enabled System

SocialE-Waste SolutionInnovation

IMPACT OF GST Good and Service Tax (GST) simplified and

uniform tax system. Easy Inter-State Movement. Optimization of cost.Challenges: High Investment. Realignment of Routes and Volumes.

LAND ACQUISITION IMPACT Investment in Rural areas. Highways, Corridor and etc. New Projects can take place. No Delay.

INDIAN LOGISTICS INDUSTRY GROWTH DRIVERS

GrowthDrivers

Streamlining of Indirect Tax

Structure

Investment in Transportation Infrastructure

Infusion of Qualified Work

Force

Globalization of Manufacturing

Sectors

Recognition of logistics

management as a strategic tool

Increased Demand of 3 PL

services

CHALLENGES

Source: KPMG, McKinsey, MOSL

SUPPLIERS Fuel Containers Warehouses Package Trucks Ports Apm Maersk, Mediterranean Shg Co, Cma

cgm group, Evergreen Line, Hapag Lloyd, etc.

EXPECTED GROWTH FACTORS CAGR of 6-7% till 2020 reaching revenues US

$150-$160 Bn. E-tailing expected to grow at 60% for next

few years which logistics contribution is around 10%.

Infrastructure spending. GST and Land Acquisition. 100% FDI.

REVENUE FORECAST

Source: Frost & Sullivan Research

BROKERAGE REPORTS1. Changing demographics

• 60 % of Indian population to be in 20-25 clusters by 2030.2. Evolving trade requirements

• Growth in domestic manufacturing and retail sector• Make in India• Booming e-commerce sector• Growth of niche industries – cold chain warehousing• Integration of IT and technology

3. Increasingly skewed modal mix• Lack of infrastructure• Misuse of modes of transportation• Overutilization of roadways• Underutilization of waterways and railways• Need for world class facilities like Logistics parks, Free trade and

warehousing zones, Containerization, Multi modal freight corridors, Hub-and-spoke model of freight movement etc.

4. Developments in each mode of transports Air

Emergence of new cargo centers – tier I and tier II cities Air freight stations

Ports Mega ports Development of non major ports Containerization

Rail Direct freight corridors Container train operators Assembly and light manufacturing services Rail side warehousing

Warehousing GST

THE FUTURE

Logistics Market in India is expected to be worth US$ 301.89 billion by 2020

India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries.

Indian logistics market is expected to grow at a CAGR of 12.17% by 2020 driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors.

3PL logistics market in India is expected to be worth US$ 301.89 billion by 2020.

Indian freight transport market is expected to grow at a CAGR of 13.35% by 2020.

The road freight movement is expected to increase at a CAGR of 15%. The rail freight movement will grow at a rate of around 10% CAGR over

the next 5 years.  Indian sea freight market will grow at a CAGR of 12% in the next 5

years.

Warehouse market in India is expected to grow at a CAGR of 10%.

Indian cold storage market is expected to grow at a CAGR of 16.09% by 2020 driven by the growth in the organized retail, Indian fast food market, food processing industry and e-commerce sectors.

Cold storage market in India is expected to be worth US$ 8.57 billion by 2020.

Goods and services Act

Increasing trade with South east Asia & Asia.

REFERENCE LIST Mehatha, A et al (n.d.) “A Macro-environment

analysis of reverse logistics practices in India”.

Frost & Sullivan (2015) “Mega Trend in Indian Logistics Sector for 2015-16”, CII.

Borawake, H (2015) “Transformational Times”, Motilal Oswal.

Dinodia Capital Advisors (2012) “Indian Logistics Industry”.

KPMG (2013) “Logistics Game Changer- Transforming Logistics”, CII.

Religare (2012) “Indian Logistics”.