Key Market Trends in India’s Logistics Industry

June 14, 2023by Noah Imson

As per World Bank's latest Logistics Performance Index (LPI) 2023 rankings, India's logistics sector has significantly improved as its position climbed six, placing 38th out of 139 countries. The LPI index evaluates performance based on criteria analyzing six key areas:  infrastructure, customs efficiency, service quality, international shipping arrangement, frequency of on-time delivery, and parcel tracking– all areas in which India has shown marked improvement.

To capitalize on the recent growth and further sustain market development, parties interested in the Indian logistics industry should familiarize themselves with emerging trends.

Technology-driven Logistics Solutions in India

The growth achieved can be attributed largely to the rapid adoption of recent technological advancements, like artificial intelligence and robotics, to name a few. The rise of these innovations has (1) reshaped consumer demand and expectations and (2) improved the performance of businesses in India's logistics industry. 

Several technological innovations are expected to greatly enhance India's logistics sector's performance and facilitate the emergence of new investment opportunities. Here are a few tech advancements that are currently advancing logistics in India:

  • Artificial Intelligence (AI) and Machine Learning (ML) – Once logistics firms in India become more familiar with AI and ML, models can be specifically trained to meet the needs of logistical operations. This includes but is not limited to route optimization software, tracking systems, warehouse management systems, etc. 

  • Robotics and Automation – The rise of automation technologies will significantly transform how workers function and logistics management. Specifically, warehouse operations and last-mile delivery processes will be streamlined, increasing productivity and reducing costs.

  • Advanced Data Analysis – Like other industries across the globe, logistics firms in India are trending towards data-driven decision-making as the technology available enables data processing and provides actionable insight. AI and ML models can be trained to provide businesses with predictive analysis, given that there is access to historical and real-time data. The ability to do so will help enterprises to understand their consumers better and improve end-to-end management of logistical processes.

Overall, these innovations serve to benefit Indian logistics businesses and consumers alike. Integrating such technology will help modernize the industry, making it more competitive against the global market in the digital age. Start-ups and companies specializing in such technology should capitalize, offer their services, and partner with logistics firms looking to transform digitally.

E-commerce Logistics Growth in India

The adoption of innovative tech and the digital transformation of logistics in India will also further establish the rise of a digital ecosystem within the industry. This is especially beneficial when considering industries like e-commerce, wherein rising consumer demand will translate into business opportunities for logistics players.

As consumer demand increases in e-commerce, opportunities to establish partnerships between e-commerce and logistics entities will emerge. Specifically, third-party logistics (3PL) can offer their services to e-commerce companies and be their logistical providers, handling everything from warehousing and inventory to transportation and delivery. 

The emergence of cross-border e-commerce is another possible entry avenue for the logistics industry. Aside from fulfilling the same logistical needs that domestic e-commerce companies require, international counterparts will need logistics players who specialize in customs and are familiar with laws surrounding the entry of products. Logistics firms that have built a vast network with reliable contacts will likely benefit the most from cross-border e-commerce, as such connections will be more attractive to international parties.

Moving forward, players in India's logistics market can also explore similar entries and partnerships in other industries with high demand for logistical services, such as construction, pharmaceuticals, or manufacturing, to name a few. Given that the operational strategy will vary per industry, logistics players should focus on leveraging innovative technologies as such tools provide flexibility in their application. Interested parties should expect trends like smart technology and cross-industry partnerships to continue beyond 2023.