Logistics infrastructure is key to trade success

13. Logistics infrastructure is key to trade success The 10 Most Influential CEOs Making a Difference 2022

Efficient logistics are commonly associated with better trade all over the world. The efficiency of the country’s trade determines the ability to grow and compete in the global economy. Logistics services establish various links within the local economy. It also ties the domestic and international economies together. The domestic economy’s connection is supported by efficient transportation and logistics networks, which connect numerous interdependent production sectors (agricultural, manufacturing, agri-food, tourism, and so on).

The scenario in India

Over the last two decades, academics, professionals, and practitioners have been interested in logistics management as a research topic. Efficient logistics management and online transport services can result in lower operational costs, improved delivery performance, and higher customer satisfaction levels, allowing a company to compete on quality, pricing, flexibility, and delivery. Efficient logistics is a necessity for the success of India’s “Make in India” strategy, allowing small-scale producers to access new markets and farmers to benefit from the timely uptake of perishable produce. India has already made significant progress in this direction. The goods and services tax (GST), when fully implemented, will assist to unify this huge and diversified country, transforming it into a single market, eliminating inefficient taxation, and helping the industrial sector. 

Indian logistics

In India, air transportation contributes nearly 0.2% of the GDP. Air Cargo is supposed to grow at a CAGR of 11.5% in the coming years. Marine transport also contributes 0.2% to GDP. Indian railways plan to develop logistic parks to optimize the supply chain and cost reduction for goods supply. The establishment of Special Economic Zones (SEZs) has resulted in an increase in logistics activity in the surrounding area. Because of their great port, rail, and road connectivity, several logistics parks have sprouted in cities like Mumbai, Kolkata, Chennai, and Hyderabad, which are seeing major infrastructure investments.

Challenges in India

There are some challenges to the logistic industry in India. Some of those are as follows:

  • National, regional, and municipal authorities implement various laws and regulations. 
  • The logistics industry’s key issues included a lack of integration in transportation networks, inefficient warehousing and distribution facilities, and information technology.
  • The logistics industry requires trained labour, and there is a scarcity of training institutes, it producing problems among employees and logistics managers.
  • Poor management and storage facilities are to blame for significant material loss, damage, and deterioration, particularly in the perishables industry. Refrigerated storage and containers, as well as maintenance, are required.
  • Enhancement of infrastructure development, managing the needs of diverse divisional supply chains, modifying industrial regulations to facilitate efficient production and transportation of commodities, and implementing effective managerial practices and technology to improve competitiveness are problems.

Previous Data & Estimations

  • As of 2016, the logistics sector employed 21.24 million. Out of 21.24 million, 54% were employed in the roadways passenger segment, 35% in road freight and the rest distributed in railway passenger, freight forwarding, warehousing, packaging & other services.
  • Mumbai, Kolkata, Hyderabad and Ahmedabad districts were mainly the distribution centers of employees. Bangalore, Surat and Indore are the emerging clusters for the logistics industry.
  • It is assumed that India will increase its logistics workforce number from 210 million (i.e. 2.1 crores) to over 31 million (i.e. 3.1 crores) by the end of the year 2022. This estimation includes all the modes – railway, ports, roads and aviation. 

Promoting the logistics industry

The government has already initiated training facilities for unskilled labours & youth for upcoming opportunities. 

Thrust on infrastructure projects has intensified, dedicated to addressing the loopholes such as unskilled workforce, logistics inter-connectivity, new ports, railway & roads. Sagarmala project & Bharatmala project are connecting water trade routes across the big rivers & creeks that will help connect seaports & reduce the overall trade expenses.

Conclusion

Logistic services are the strong support system of the trade. An overview of Indian logistics is mentioned in the article. It is critical to the continued growth of global trade. Despite logistics’ critical role in supporting commercial activity, trade practitioners have traditionally placed a low priority on analysis and trade policy research.

Varada Ukidave & Parag Ahire

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