Growth in e-commerce a good boon for India's logistics sector

Logistics provider Blowhorn features were able to double its organization to accomplish 2 million deliveries per month, servicing more than 70 places in India amid a good surge in online buys because the pandemic hit this past year and as the logistics sector continues its procedure for going digital.

The technology-driven, Bangalore-based company connects customers to warehousing space and trucks for deliveries within cities via its website and cellular app.

Mithun Srivatsa, who co-founded Blowhorn in 2014, describes his company as “an Uber for trucking or perhaps moving goods” and “an Airbnb for warehousing”, since it owns neither the trucks or perhaps warehouses available through its network. The business has received expenditure from the Michael and Susan Dell Foundation and India's Venture Catalysts, among others

“E-commerce adoption took off through the pandemic and provides spurred progressively more people on the net,” says Mr Srivatsa, who's the company's leader. “Suddenly you had persons like my mom, who was simply 65, deciding to buy their groceries online.”

India's logistics sector was worthy of $320 billion in 2019 and makes up about 11 % of the country's GDP, according to a report by consultancy Redseer.

“Logistics possess remained a backbone for many industries and over time has enhanced it has the technology-based offerings to match various sectors and their demands,” the consultancy says.

Its data demonstrates e-commerce transportation grew 70 % year-on-12 months to 2.55 billion shipments in 2020, and it projects that increase to about 10.5bn by 2025.

“The industry overall right now is quite bullish,” says Anjani Mandal, the principle executive at Fortigo Network Logistics, a trucking platform located in India's tech hub, Bangalore. “The e-tailers experienced a rapid growth because of the lockdown.”

In March last year, India introduced among the world's strictest nationwide lockdowns in response to the pandemic, which intended that people could only go out for necessary goods or offerings. For the initial month of the lockdown, Mr Srivatsa at Blowhorn clarifies that the company did “a part of volumes we were doing before” due to the “chaos” and “mass confusion” that the constraints caused.

But as persons moved towards online orders, the service began to see a good surge popular from its e-commerce clientele and did “some of our best expansion months through the pandemic”. With this improve, the company is expecting to achieve profitability this season.

The logistics market comprises of of road transport, warehousing and other delivery networks such as for example air, sea and railways.

Road logistics, at a value of $240bn found in 2019, makes up the lion's share at 75 % of the marketplace, according to RedSeer. It says that “the road logistics market and previous mile delivery is moving in the proper direction to profitability”.

The last mile delivery segment, which may be the area Blowhorn targets, is likely to expand to become a $6bn to $7bn market by 2024, up from $800m to $900m in 2019, Redseer estimates.

There were several factors employed in the sector's favour.

“In recent years, there's been a growth in e-commerce with more fleet in location to cater to the increasing demand,” says Nakul Singh, the co-founder at ANS Commerce, an e-commerce enabler that assists brands to sell online.

It has prompted “growth in the investment in infrastructure, last-mile connectivity, and emerging technologies are streamlining the logistics landscape in India”, he says.

The warehousing sector in India, making up about 13 per cent of the logistics industry, is certainly going from strength to strength due to the e-commerce boom.

“The Covid-19 pandemic has been positive for growth in the warehousing sector,” says Niranjan Hiranandani, the co-founder and managing director of Hiranandani Group, a Mumbai-based property programmer. “An enormous quantum of Grade A warehousing places are being created.”

The founder of digital logistics platform, Zipaworld, believes that better integration of parts of the network can create more efficiency.

“The increasing logistics and offer chain cost, which is almost 14.5 % [of the price tag on goods] in India shouts out for integration and digitalisation of processes,” says Ambrish Kumar, who set up the company last year in the midst of the pandemic.

“The age-old traditional logistics sector is however to fully adjust to technological advancement”, with the e-commerce sector demanding transparent tracking of shipments and accurate delivery timeframes, he says.

Amitava Saha, the founder and leader at XpressBees, an express logistics provider found in India, says that its usage of technology is a major element in its strong overall performance during the pandemic, since it has trained with “an capability to re-route [and] in order to avoid hotspots”.

Yet although technology is proving to be a boon, there are barriers to its adoption.

“There's too little trained manpower,” says Mr Saha. “As logistics is now more tech-enabled, you will need a certain typical of people to use or grow the business, which is very dissimilar to the manpower that most traditional logistics businesses had.”

Mr Mandal at Fortigo, which connects clientele and vehicle fleet owners in the broader road logistics sector, explains that regardless of the overall bullishness, a whole lot of truck owners have been reach hard by the pandemic. This is because deliveries across claims and between cities became more challenging because of Covid-19 curbs, and truck owners struggled to repay loans on the vehicles once the Reserve Bank of India's six-month moratorium on loans finished in October.

“As a consequence, the quantity of trucks began to decline by the end of 2020 and by February 2021, the populace of trucks transpired by 20 per cent, from 5 million to just under 4 million,” he says.

For a while, business is going for a hit through the current massive second wave of Covid-19 infections, as many factories remain shut.

It has hit Fortigo's business, as the business depends on the movement of metals and materials, in addition to fast-moving consumer goods. There have been other challenges posed by the next wave for logistics organizations in India, including staff decreasing with the virus and personnel fleeing to their house towns, creating labour shortages.

On Saturday, 120,529 new situations of Covid-19 were learned and the country recorded 3,380 new deaths, based on the Ministry of Health. This brought the full total number of conditions since the pandemic started out to almost 28.7 million and the amount of deaths to 344,082.

Over time, though, the industry continues to be bullish on the transformational power of technology.

Road logistics found in India is highly unorganised, with most trucks owned by individuals or small businesses. Technology has started to bring more composition to the industry, Mr Mandal says.

“The main production that happened in the market was the role of digital logistics became dominant in the large organisations,” he says. It has resulted in rapid expansion for businesses like his recently.

Digitalisation continues to be relatively new, and there is a long quest ahead, however the sector will have no option but to adapt, XpressBees' Mr Saha says.

“I believe going ahead, tech-based logistics will grow at a good considerably faster pace and dominate a bigger talk about of the market pie in comparison to traditional logistics companies.”

Mr Srivatsa likewise expects substantial growth due to “a 100 year previous industry” goes through an interval of disruption.