Road ahead for rapidly evolving logistics service providers

Logistics suddenly becoming corporate?board room discussion clearly is a pointer towards its new age relevance to shape the fortunes of indian economy .

Our country has witnessed the role of logistics service providers [LSPs] ?on unprecedented scale ?during pandemic where thousands of lives were saved due to 24 x 7x 360 days of ??operations enabling?seamless?& timely deliveries of ?medicines, immunity boosters, vaccines, sanitisers & other covid preventive products.

LSPs?are?offering huge job opportunities on pan India basis & thus are playing a very significant role in nation building & in GDP growth.

Logistics domain is a huge world with full truck loads, express cargo, courier & exports & imports easily the ?major components. This article shall restrict itself to ?LSPs playing dominant role in domestic express cargo segment only which is expected to be?3.7 bn dollars in India by 2025 growing at CAGR of ?10 to 13%.

It was Gati ?way back in 1989?had ?conceived the idea of express cargo in India ?inspired by US based UPS which was amongst ?leaders in surface operations.

Gati started the concept of door delivery & door pick up with a definite ?time ?delivery assurance ?with a committed promise of ‘On Time, Intact Else Your Money Back’ which started revolutionising the express cargo concept through hub & spoke model ?& overall market reacted in a positive fashion later. OEMS, SMEs & traders started shifting from conventional transportation to express cargo ?movement of goods & soon it had become ?an integral part of their business model as?this not only reduced transit days , it has also reduced chances of getting damaged & thus giving?them competitive edge.

Soon, Safex the other major player started investing ?heavily on infrastructure & network expansion & started getting major share. Blue dart & TCI too were not much ?behind to capitalise the concept. In fact , Blue dart soon attained the numero uno position in air cargo with product becoming synonymous with the brand with easy to believe ‘just blue dart it’.

‘Spot On’ soon moved up in the ladder with efficient key accounts management process. In the middle company like Scorpion became preferred LSP in pharma segment while RCPL became a trusted name in textiles & apparels & soon became number one in train mode. ?Om logistics was a first choice in automobile segment. V-Xpress due to its affiliations with formidable V-trans group also ?managed to create a definite mark. Lane wise expertise of VRL in southern belt made this brand very popular. ?DTDC too started doing well through its aggressive expansion on channel footprint.

Needless to add , LSPs ?had to realign with the rapidly evolving requirement & demand of customers as supply chain turned out to be one of the highly critical activities ?from raw materials supply to finished goods delivery.

?Digital transformation necessitated the?most critical aspect in order to provide real time transparency even on hourly basis & that’s ?how the new age entrants like Rivigo & DelhiVery started calling the shots. Bar coding, scanners & conveyor belt movement , online transactions & instant proof of delivery upload backed by ?GPS enabled vehicles etc to name a few have taken the front stage. Artificial intelligence, cloud computing & internet of things[IOT] are already on radar for many LSPs to have digitally connected supply chain in order to fit into customers’ scheme of things.

Drivers & booking agents rechristened as pilots & partners respectively considering their enormous contribution into whole chain system.

Delhivery?post acquisition of?Spoton is trying to reshape the industry while Safex is solidly upping its ante while Gati post acquisition by Allcargo is trying hard to retain its earstwhile leadership position. Mahindra logistics which has recently acquired ?Rivigo for B2B movement is another important development which may have positive industry repercussions. DP world is another player to watch.

E-commerce boom has further opened the doors for LSPs to invest heavily for hub modernisation?& for enhanced automation as B2B movement required massive transactions with highly effective results so as to meet out the last mile deliveries for end users through these warehouses. This also flourished the ecommerce LSPs like Ecom express & Xpressbees which are expert in small segment of ecommerce facilitating last mile deliveries.

Tech platform with multi brand collaboration with reputed LSPs is also catching the imagination of customers who have options to choose ?the best LSP lane wise or as per their product portfolio under one umbrella only ?and that’s how Shiprocket is creating new space & lets not undermine the fact that prominent ?industry veterans too with entrepreneurial skills are exploring ?it with great amount of success as customers trust them.

Though challenges like shrinking ??margins, ?difficult?tier 4 & rural penetration, higher warehousing cost, lack of skilled staff & some of the logistics service providers still?migrating at snail pace?for advanced digital transformation are there yet these issues are being addressed by LSPs which are serious in their long term plans.

Govt led initiatives like GST simplification, E way bill transition, major budget provision for i capital expenditure for infrastructure boost, Gati Shakti Master plan, National logistics policy, rolling out of strategically located logistics hubs?and Sagar Mala projects etc are some of the efficient measures which shall pave the way for good days ahead for LSPs.

Talks on investment, merger & acquisition are the defining moments for the industry & logically it can be inferred ?that ?soon 2 or 3 players with greater reach ?& with superior automation ?shall occupy the major space especially in ground operations with a pie still available for smaller but efficient LSP strong on commitment/lane wise expertise/special product handling/Efficient IT support.

No wonder days are not far when couple of LSPs shall have their presence in each and every?pocket of India & thus there shall be no non serviceable location for B2B transactions & shall be a big moment for India.

Nevertheless, LSPs with emotional connect with clients high on customer response backed by element of flexibility with touch of Indianess shall survive in this era of highly volatile, uncertain, complex & ambiguous environment and may deliver accelerated business outcomes.

Syed Sultan Musanna?????????????????????????????????????

25/02/2023

New Delhi

[Author is having?vast & varied logistics experience of 25 years. Currently serving as National Sales Head in a reputed logistics company/A silver medalist in masters from AMU having?qualified the online Proficiency Self - Assessment for Independent Director’s Data bank under the Aegis of Ministry of Corporate affairs ]