The road transportation in India has emerged as a significant part of the transport system; it has secured an important position for itself. According to a survey, the logistics sector is growing at the rate of 10% per year. There are some aspects that are helping the logistics industry grow such as changes in the tax system, the boom in the e-commerce business, and fast growth of industries like automobile, retail etc. One of the major sectors that are investing in logistics industry are consumer durable and metal & mining. India becoming the manufacturing hub is also impacting the industry positively. We will explain the key challenges faced by the logistics sector with the help of secondary information.
This is one of the major challenges that the industry faces and it has been a major threat to its growth. Issues like poor connectivity, inefficient sea port capacities, and bad road conditions have been a continuous nuisance. Due to the infrastructural bottlenecks, charges per transaction is quite high compared to those in the developed nations. Lack of skilled labors and manpower is also one of the major challenges that the industry need to overcome.
India deals with different challenges compare to developed nations. We still have a long way to go in terms of finest practices.
The growth of the Indian logistics industry is hampered by poor technology adoption and skills. With the help of IT, the logistics industry can grow at a faster pace. In addition to the technology related challenges the skill levels of the workers need to be enhanced as soon as possible. The logistics industry is also not the first choice of young graduates thereby making the hiring of qualified professionals challenging.
The other challenge which exists in an enormous country like India is the diverse customer base which is distributed. This means, the actual type of growth will happen in the rural India. Logistics companies will need to have perfect end-to-end supply chain strategies, a proper and sufficient workforce, and infrastructure to win over the vast market.
Impacts of Challenges
The challenges the logistics sector is dealing with lead to high logistics costs. This is despite the fact that labour cost, which is the major contributor to logistics costs in developed countries, is cheaper in India. The logistic cost in India is approx. 4-5 times that in developed countries. This is the case when the quality of services is not that great.