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Logistics Cost More Expensive in India than USA: Expert

Logistics in India is costlier than USA

Logistics cost in India is more expensive than the United States, which needs to be minimised using the country’s railways and waterways, said an expert on Wednesday at the Global Exhibition of Services (GES).

“Logistics in India costs 13 to 14 per cent of the GDP while in the US it is only nine per cent,” said Armes Maini Storage Systems chief executive and Confederation of Indian Industry’s (CII) shipping and logistics committee national member S.A. Mohan.

Mohan said India’s transportation model is skewed, with 60 per cent encompassing road transport, 20 to 25 per cent rail transport and the balance 10 to 15 per cent via waterways.

Appreciating the national logistics policy as a step in the right direction, Mohan highlighted that first and last mile connectivity to micro small and medium enterprises (MSME) should be guaranteed as they operate on a very small budgets.

Bereft of standardisation, too many players lack coordination in Indian logistics, he said at the transport & logistics session titled Emerging Trends in Logistics: The India Opportunity.

GDP logistics
Logistics in India costs 13 to 14 per cent of the GDP while in the US it is only nine per cent. Pixabay

Shivayogi C. Kalasad, managing director, Karnataka State Road Transport Corporation (KSRTC) said technology has the potential to transform logistics and enable savings, incorporating artificial intelligence and big data.

Taking the case of the state road transport corporation, Kalasad said digitisation had greatly helped KSRTC to improve the quality of service.

He said KSRTC has introduced wearable technology to monitor and track the bus drivers and also keep them awake from dozing away.

Kalasad said data driven decision making will play a key role in logistics in the future.

Gateway Rail Freight director and chief executive Sachin Bhanushali said Indian logistics sector is plagued by the major issue of parcel size.

“India is a trucking nation, we operate on small parcel size and lose out on the cost advantage of scale,” said Bhanushali emphasising on the loss of economies of scale benefit.

Many times in India, transporters also have to bear the cost of return haul as well, said Kalasad highlighting the unorganised nature of logistics sector.

Similarly, multiple handlers pilfer and damage consignments, he said.

“These issues could be easily fixed by utilizing the vast rail network in the country more effectively, completing the transport cycle through last mile connectivity and intermodal transportation,” added Bhanushali.

Logistics improvement
Data driven decision making plays a key role in logistics in the future. Pixabay

However, conferring the status of infrastructure on logistics sector mobilised investment, leading to high quality warehousing in the country, said commercial real estate services and investment firm CBRE senior director Karunakaran.

“Over the last three quarters, 70 to 80 million square foot space has been absorbed by the logistic sector and this is not just in major cities but in tier 2 and 3 cities as well,” said Karunakaran.

Also Read- Usage of Unaccounted Cash Still Prevalent in Market: Report

Scheduled from November 26 to 28, GES is aimed at engaging industry and governments to promote greater exchange of trade in services, organised by Ministry of Commerce and Industry, Government of India, Services Export Promotion Council (SEPC) and industry association Confederation of Indian Industry (CII). (IANS)

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