Digitizing India’s Logistic Industry

Published on - September 2018

Author - Sachin Mehra, Country Head- Finance,

Administration & Company Secretary and Senior Vice President,

Panalpina World Transport

What are the supply chain related challenges you see in the logistics industry in India?

Logistics industry is still largely unorganized. As a result, the economies of scale and high degree of automation have not been unleashed in the supply chain environment. Inefficiencies, low productivity, poor infrastructure and non-availability of high caliber talent are main challenges in logistics industry.

What impact can removing inefficiencies in supply chain have on India’s growth?

Supply chain/logistics industry is a barometer of country’s GDP growth. Government is working on a National Transport Master Plan to provide seamless freight movement through multi-modal transport. GST, E-way bill and investment in infrastructure will greatly contribute in removing inefficiencies and non-compliances. Removing inefficiencies in supply chain will bring down input costs of manufacturing and agri-based perishable industry, thereby boosting GDP growth.

What are the key differences you see in supply chain of Indian logistics industry as compared to other global peers’? Are there any global best practices that India could adopt?

India’s supply chain industry is very slow to adopt well established practices from other countries. For example, in air cargo industry, India is hesitating to venture into cargo villages instead of Airport Export and Import handling facilities which is an outdated, expensive and unproductive system.

Amongst road, rail, water and air, India’s modal split is heavily skewed towards road, which has a direct impact on supply chain. What scope do you see for India to develop freight, water and air as preferred modes for transportation?

Indian Government has ambitious plans to integrate road, rail, water and air transport as a comprehensive multi-modal facility to reduce logistics cost and develop freight market. Government is working on a ‘hub and spoke’ model which will include development of inland waterways and coastal shipping.

What is the financial appetite for digitization in the industry?

Digitization is the key to improve productivity and lower costs in the industry. Organized players especially MNCs have high level of digital interface and are looking to constantly improve systems for better support and delivery.

Can predictive analysis, packaging innovations and newer modes of delivery (such as drones) significantly enhance productivity and help de-bottleneck supply chain in India?

Packaging innovations and analytical tools have been in place for long. Improvements in technology will help to significantly enhance productivity in supply chain environment. New delivery systems require supportive eco-system to operate, which in my opinion will take time to materialize.