India’s logistics revolution: 4 key trends that will reshape the industry inside-out

Growing appetite for e-commerce and rising demand for faster delivery will fuel growth, but a digital DNA will be essential to scale efficiently amidst existing infrastructural and operational challenges underpinning logistics in the country.

India's logistics sector is witnessing rapid growth, and the growing volume of e-commerce and GDP growth has accelerated. Sub-sectors like third-party logistics (TPL) are growing at 10%+ annually¹, and India's ascension on the World Bank's Logistics Performance Index (LPI) shows that this growth coincides with a rising degree of freight efficiency.²

Moreover, government policies aim to improve logistics infrastructure through multiple tactics, encouraging businesses to adopt digital technologies to enhance their operating models rapidly. While the freight movement split across transport modes remains uneven³ , the development of industrial and freight corridors will lower transit times and inter-state compliance burdens. This will be accompanied by the adoption of digital technologies by government bodies and faster infrastructural growth induced by FDI-friendly policies.⁴

In this fast-changing landscape, how should logistics businesses play their strategic cards? Look at these four key trends reshaping India's logistics sector for a digital-first future.

Improvement of last-mile delivery (LMD) experience with better customer communication

LMD accounts for nearly 40% of the overall logistics costs in India.⁵ While transport infrastructure, road conditions, and traffic contribute to high costs, there are other factors that logistics players can control.

For instance, failed or unsuccessful deliveries on the first attempt increase LMD costs, negatively impacting the customer experience. This, however, can be mitigated if the customers and delivery agents can effectively communicate with each other. This enables rescheduling and lets customers provide delivery instructions to agents as and when required. For this, masking customer contact details is essential to preserve their privacy.

As such, IVR systems that use knowledge-based authentication are becoming crucial to success. Large players like Amazon already integrate these strategies into their last-mile infrastructure, enabling customers and agents to communicate with IVRs that accept PINs to authenticate users. Such strategies are a viable way to mitigate LMD inefficiencies and improve end-user experience.

Cloud-based communication suites to facilitate connected operations

The logistics industry facilitates the movement of goods across intricate transit networks. However, these networks are only as effective as the weakest links in the chain. For instance, if a hub cannot reach a distribution center or a warehouse, shippers' orders will likely be delayed, and the business will lose customers.

A lack of connectivity and collaboration can significantly harm import-export and freight-forwarding companies. Such organizations deal with multiple transit modes and juggle numerous customs documents, delivery challans, and insurance documents.

To support such organizations features like cloud telephony are becoming quintessential for supporting end-to-end workflows which involve numerous roles and functions. Cloud communication suites can help these organizations build a connected operating model, where documents can be shared seamlessly, and each role within every department is one click away. They help speed workflows and ultimately improve the productivity and logistics performance of the organization.

Attaining granular visibility into shipments with real-time alerts and tracking

The imperative for gaining shipment-level visibility is driven by rising customer expectations across both B2B and B2C scenarios. In B2B, shipment delays can prove expensive to enterprises, and knowing precise ETAs is crucial for effective planning. On the other hand, buyers in B2C scenarios expect proactive delivery estimate communication from shippers and logistics service providers.

Shipment level visibility is also important for logistics players because it enables them to prevent revenue leakage from freight loss. This shipment-level visibility must be complemented by fleet-level visibility, which is key to gaining real-time updates on evolving conditions affecting delivery ETAs.

With real-time tracking capabilities, logistics players can actively communicate shipments' whereabouts to shippers and end customers. These capabilities are now the baseline of customer expectations in the industry. As a result, even mid-market businesses are now investing in them.

Enhancing logistics performance across Tier-2 and Tier-3 towns with reliable internet connectivity

In the previous decade, logistics organizations handled more freight volumes along corridors connecting Tier-1 cities. With the rapid uptake of e-commerce, this has changed over the last few years. Tier-2 and Tier-3 towns are now seeing higher shipment traffic, and by 2030, buyers from these towns will account for 88% of e-commerce shoppers.⁶ Therefore, logistics players seek to enhance operational performance to win the competition.

The number of warehouses in these areas has been growing steadily as a result⁷ , along with the opening of new distribution centers. But these investments alone will not do. Logistics businesses must invest in effective communication technologies to ensure these new sites don't become satellite locations disconnected from the larger organization.

This will require investments in building reliable internet connectivity and keeping these sites connected in an agile fashion. It will enable visibility into operation KPIs across tier-1 and tier-2 sites, enabling the organization to maintain consistent service levels across their areas of operation.

Future of Indian Logistics Industry is Bright

India's logistics sector is continuously seeing bright forecasts from analysts. It is already valued at $200bn and expected to increase at a CAGR of 8% over the coming years. Growing e-commerce volume, adoption of direct-to-consumer (D2C) strategies, and logistics demands of asset-intensive enterprises will unarguably contribute to accelerated growth.

However, the industry dynamics are changing fast – traffic composition is evolving, especially in land freight, and customer expectations are rising. While infrastructural enhancements are underway, logistics businesses must invest in communication technologies to thrive in this market. Cloud communication suites, internet telephony, and IVR capabilities will be the starting point for most to evolve into an organized logistics business ready to compete in this fast-growing market.