In an interaction with Industry Outlook, Manish Patel, VP-Operations at DHL Express India, discusses India's express logistics growth, fueled by digitalization, government policies like Gati Shakti and the National Logistics Policy, and sustainability. With over two decades of experience in HR and organization development, Patel has led strategic roles across India, Sri Lanka, and Singapore, enhancing revenue, digital initiatives, and operational efficiency.
Could you give us an overview of India's current landscape in the express logistics industry? How are digitalization and technological integration shaping the country’s global trade ambitions?
The overall logistics market size in India grew at a compound annual growth rate (CAGR) of 11% from FY19 to FY24, and as per our estimate, express logistics grew even faster, spurred by the various geopolitical and economic trends during this period. Express logistics enables our nation's infrastructure and industry and will play a vital role in helping us achieve our goal of becoming a $5 trillion economy by 2027. The industry is experiencing notable growth driven by economic expansion, increasing consumer demand, globalization, and the surge in e-commerce. Today, green logistics has been given the importance it was due and stands as one of the most crucial priorities within the logistics industry. While the expenditure on logistics as a percentage of GDP is currently at 13%, efforts to improve connectivity and increase efficiency through the formalization of the economy are expected to bring it down to a single digit. Digitalization and automation, as well as effective government policy, play an incredibly crucial role in propelling growth and reducing logistics costs.
Digitalization has created exciting and endless possibilities, and coupled with automation, we are witnessing a rapid transformation in express logistics to set us up for the next decade, enabling growth across the world, especially for India for our large MSME market. Digitalization and automation solutions have helped supply chains to become more streamlined and ensured durable sustainability for businesses even when faced with interruptions. The operations playbook in express logistics is now enriched with rapidly evolving technologies such as blockchain for secure transactions and across-the-supply-chain visibility, the Internet of Things for real-time visibility, and Artificial Intelligence/Machine Learning to minimize manual intervention and leverage our skilled labor for more strategic tasks.
At DHL Express, digitalization was the key driver of our Strategy 2025 – Delivering Excellence in a Digital World. With the announcement of our strategy for the next five years, Strategy 2030 – “Accelerating Sustainable Growth”, digitalization continues to take priority alongside global trade, climate change, e-commerce, and our evolving workforce.
In India, we focus on automatic sorting and other robotic process automation (RPAs) to reduce manual and repetitive tasks so that our people can take on more strategic tasks. Tools like ESS (Electronic Shipping Solutions) support mandatory data elements for GST and E-waybill compliance and enhance customer experience. 'Clear-in-air' enables customs clearance of shipments during transit, reducing delivery time. DIET (DHL Import Easy Tool 2.0) allows businesses to download pre-alert and post-shipment documents, enhancing coordination with the clearance team for faster processing.
Digitalization will remain key for driving our country’s global trade ambitions and DHL will continue to lead the industry by investing in digital and automated solutions to increase the efficiency of our services and continue to remain a provider of choice for our customers.
To what extent does infrastructure development, such as road, rail, and air connectivity, contribute to improving the performance of India's express logistics sector? How do recent government initiatives like the National Logistics Policy and the Gati Shakti program influence the express logistics sector in India?
Express logistics is about transporting and delivering goods in a time-definite manner which can only happen if there is strong infrastructure development of road, rail, and air connectivity. This is where the importance of government policy comes into play.
Launched in 2021 by the Government of India, the PM Gati Shakti masterplan provides crucial guidance for reducing logistics costs and transit times and increasing the logistics industry's overall efficiency. It does so by bringing together 16 Ministries, including railways and roadways, on a digital platform for integrated planning and coordinated implementation of infrastructure connectivity projects. Execution of this program will enable faster movement of goods and people, enhance access to markets, hubs, and opportunities, and reduce logistics costs. A great initiative under the PM Gati Shakti Masterplan is UDAN (UdeDeshKaAamNagrik). UDAN focuses on developing regional connectivity by connecting smaller airports, enhancing not only the movement of people across the country but also adding new routes for air cargo movement across the country. This significant push in policy plays an important role in bridging the gap for handling high and distributed volumes that will continue to come into play in the future.
The National Logistics Policy (NLP) was created to complement the Gati Shakti master plan by driving the country's economic growth and business competitiveness. The NLP has introduced a framework that emphasizes technology adoption, digitalization of supply chain processes, development of logistics parks, and the promotion of sustainable practices, including a focus on green logistics. It has been a game changer for the industry, leading to better coordination between stakeholders, improving the ease of doing business, and attracting domestic and foreign investment. Its primary objective is to reduce logistics costs, make Indian goods more competitive, and promote economic growth. The NLP also aims to leverage emerging digital technologies to enhance logistics-related activities, including tracking, customs, and compliance. This integration of digital technologies helps streamline processes and improve overall efficiency in the sector.
Furthermore, the NLP complements the proposed India-Middle East-Europe Economic Corridor (IMEEC) project, which was announced at the G20 leaders' summit in September 2023. The IMEEC project aims to enhance global supply chains connecting Europe and Southeast Asia, thereby boosting India's international trade. The NLP aligns with this project, allowing India to attract multinational corporations with manufacturing bases in China looking to diversify their supply chain components through the Plus One strategy.
In fact, it is not only the Gati Shakti master plan and the NLP that are boosting the logistics industry forward but also the Amrit Kaal vision and the recently announced budget. The Amrit Kaal vision aims to set a roadmap for India's growth and development to mark 100 years as an independent nation by focusing on sustainability, efficiency, and innovation. An investment of INR80 lakh crore, for instance, has been earmarked for over 300 initiatives to transform the country’s logistics, infrastructure, and shipping sectors by 2047. This maintains continuity of policy focus, such as express railway services and the National Industrial Corridor Development, and the recent increase in capital allocated to logistics infrastructure projects marks a sustained commitment.
What strategies is the express logistics industry employing to tackle challenges like regulatory compliance, customs procedures, and cross-border logistics, thereby facilitating smoother international trade?
Yes, while we are making large strides in terms of government policy, we also witness an intent to bridge some obvious gaps or hurdles created due to mandatory compliance requirements. Some of these requirements are mandated and continually updated by governments around the world. This creates an impression that the customs clearance process is often complex and time-consuming, leading to delays, increased costs for businesses, and even increased transit times. The only solution is to ensure that public and private players work hand in hand to create a trust-based environment by reducing redundancies and complexities of various processes and using available technological solutions to improve the ease of doing business.
An express logistics provider can do a few things to ensure customers have a seamless experience through customs. An important aspect is leveraging advanced technologies like AI, machine learning, and data analytics to automate processes, streamline documentation, and improve accuracy in regulatory compliance and customs procedures. This reduces manual errors, enhances efficiency, and ensures adherence to regulatory requirements. MyGTS is the best example of leveraging technology to simply international shipping.
Express logistics providers maintain strong partnerships with customs authorities, regulatory bodies, and industry associations to foster dialogue, share best practices, and stay updated with the latest regulatory changes. This collaboration helps in understanding and complying with customs procedures and trade regulations more effectively. At DHL Express, our connection with the industry ensures that we remain updated about upcoming advancements/changes in the system as well as voice our needs to ensure that the government is aware of the requests from industry players.
Looking ahead, what do you see as the prospects and potential growth areas for India's express logistics industry in supporting the nation’s long-term global trade ambitions?
Looking ahead, India's express logistics industry is poised for substantial growth as it needs to roll up its sleeves and get ready to support the nation's projected economic expansion to a $26 trillion economy by FY48. Our economic growth will be powered by digital business, with statistics showing that 22.6 percent of retail sales will be online in 2027. This shift towards e-commerce will drive significant demand for efficient logistics solutions.
Next-generation logistics management solutions will make the express logistics industry more customer-centric, technologically forward, and sustainable. Emerging growth areas set to disrupt the logistics industry in a big way over the next few years include:
Globalization: Globalization will remain a key overall trend, and logistics is its key enabler. As reported in the DHL Global Connectedness Report 2024, global connectedness reached a record high in 2022 and remained close to that level in 2023. The resilience and growth of international trade flows, capital, information, and people in the face of recent crises strongly rebuts the notion that globalization has gone into reverse. The report also stated that India is experiencing the highest GDP growth among the major logistics markets. In response to the country's rapid economic expansion and the anticipated increase in its connectedness in the coming years, DHL Express aims to invest over Rs 1,600 crore in India over the next five years until 2029.
Green Logistics: Environmental sustainability is at the top of everyone's agenda. The emerging trends carry a significant impact on decarbonization, alternative energy solutions, circularity, and environmental stewardship. Sustainable aviation fuels (SAF) are becoming a priority in the express logistics industry to promote the global harmonization of sustainability. The express industry will also see a rise in investments in e-cargo planes. At DHL Express, green logistics is a key priority in our operations. We have been investing heavily in offering green solutions and working towards our goal of net-zero greenhouse gas emissions by 2050. GoGreen Plus is a solution that uses SAF to reduce Scope 3 emissions. We are also increasing the number of pick-up and delivery electric vehicles to account for 60% of our fleet by 2030 (currently stands at 36,000 e-vehicles globally). Additionally, our LEED-certified infrastructure is another example of how we integrate green logistics systems into every aspect of our operations.
Digitalization: I have already detailed the importance of technology and digitalization and I cannot stress enough its importance, especially in increasing the efficiency of the logistics industry. At DHL Express, digitalization has driven our Strategy 2025 - Delivering Excellence in a Digital World. As we move forward with our Strategy 2030 - Accelerating Sustainable Growth, digitalization remains a top priority as we integrate cloud solutions, AI/ML, automation, and numerous other technologies into our operations.
E-commerce: E-commerce is a huge driver of parcel volumes and new last-mile services that better serve customer demands. According to the DHL eCommerce online shopper survey, 77% of social media shoppers globally say it is important to know who the delivery provider is before purchasing a product. Closer home, Indian consumers score highest worldwide for wanting faster deliveries. E-commerce represents one of the chief opportunities for logistics companies.
Supply chain diversification: Diversification will significantly impact globalized supply chain networks in the next five to ten years. As the Global Connectedness Report stated, prospects for future trade growth are surprisingly upbeat despite the recent shockwaves caused by a global pandemic, geopolitical crises, natural disasters, and patterns of protectionism. These events have put pressure on the business world to reimagine supply chains – to take a new path of resilience rather than receding from the global stage.
