Logistics - The Backbone of any E-Commerce Business Today

With a boom in the e-Commerce market, the logistics industry is poised for steady growth. How do you assess the current growth of this segment?

Like most other industries, transportation and logistics is currently confronting immense change; and like all change, this brings both risk and opportunity. New technology, new market entrants, new customer expectations, and new business models – there are many ways the sector could develop to meet these challenges, some evolutionary, others more revolutionary.

Growth in this industry is dependent on several factors. Firstly, higher growth in GDP which goes with a recovery entails higher movement of goods across the country. Secondly, warehousing today is an integral part of the e-Commerce industry which is fast expanding. Furthermore, the growth of the food processing industry in particular will lead to growth in private demand for warehousing space. Above all, growing exports will increase demand for efficient logistics services to cut costs and become more competitive.

The factors, such as growing e-Commerce industry coupled with rise in reverse logistics operations and rise in trade related agreements fuel the market growth. In addition, rise of tech-driven logistics services and growing adoption of IoT-enabled connected devices are also expected to drive the market growth. However, lack of control of manufacturers on logistics service, poor infrastructure, and higher logistics costs hinder the market growth. Further, emergence of last mile deliveries, logistics automation, and cost cutting & lead time reduction due to adoption of multimodal system are some of the factors that are anticipated to foster the market growth.

One of the major problems with the logistics industry is the lack of infrastructure to deal with a sudden surge in order in particular time period. How can the ephemeral shift in demand be handled?

Infrastructure readiness and technology are expected to be the key drivers of growth for the Indian logistics industry. A number of trends will drive this growth, and all will involve the adoption of technology for tactical & operational decision making, routing, fleet optimization, data analysis, or strategic. Moving forward, Internet of Things (IoT), Automation Technology, Blockchain, Cloud Computing, Advanced/Big Data Analysis, Artificial Intelligence (AI) and Robotics are expected to be leveraged by market leaders in this domain to provide end-to-end lean and smart logistics solutions, thus enhancing quality, reducing cost and minimizing human intervention. Another important area for infrastructure is development of gateway infrastructure like warehousing with Grade-A facility and multimodal parks in designated locations, which will decongest city entry and exit points. With upgradation and privatization of airports and sea ports, infrastructure will get facelift to handle more with volume and avoid congestion in future.

In the remote places, logistics partners frequently fail to deliver quality service. This restricts the e-Commerce businesses from reaching new potential customers. How do you propose to solve this problem?

Logistics is at the heart of the e-Commerce industry, and every stage in the e-Commerce supply chain involves logistics in some form or another. With digitization, live track and trace taking hold in today’s business environment, companies expect faster time-to-market, as they need to drive greater efficiency and visibility while simplifying complex operations in remote locations. E-Commerce & Logistics companies are driving with AI, Data Analytics with geofencing and mapping customers based on pin code, thus building a supply chain & logistics reaching remote locations. The growth would come from remote locations.

When dealing with e-Commerce shipments, the ETA becomes critical. Clients of an e-Commerce company expect their packages to arrive as soon as possible. However, most of the time, logistics solution providers are unable to meet this demand. How do you see this situation and how do you think it can be solved?

E-Commerce companies face several challenges with supply chain management and unnecessarily lose money due to poorly timed deliveries. Even though companies cannot control what happens on a large scale and might have to succumb to delays and increased rates, at a company level, they can optimize the supply chain and bring-down the ETA of deliveries and enhance customer experience through smart supply change optimization, warehouse optimization, execution of supply chain management software, and growth of the companies. With AI and Data Analytics e-Commerce companies are working both internally and externally to mitigate the delivery schedules and meet customers’ requirements.

In comparison to developed nations such as Japan and US, India's logistics partners’ technology is antiquated and in need of upgrading to keep-up with the increase in consignments. However, deploying new technology comes at a considerable cost and causes significant disruption in the ongoing process. How can small logistics companies who work with ecommerce businesses solve this problem?

Smaller companies need to be associated with large players and IT solution providers on pay & use model and they will allow small players to use their technology & infrastructure to handle the operations. Future would be how the smaller companies integrate through EDI to give a real-time solution to customers.

How do you anticipate the future of the logistics industry as far as e-Commerce is concerned?

Logistics companies are facing an era of unprecedented change, and as digitization takes precedence, customer consumption and demand expectations evolve. New technologies are enabling greater efficiency and more collaborative operating models. They’re also re-shaping the marketplace in ways that are only just beginning to become apparent. New entrants, whether they be startups or the industry’s own customers and suppliers, are also shaking-up the sector. Technology is changing every aspect of how logistics companies operate. ‘Digital fitness’ will be a prerequisite for success: the winners will be those who understand how to understand a whole range of change, develop sustainable solutions, new technologies from data analytics to automation and platform solutions.