Factors Impacting the Logistics Industry

Factors Impacting the Logistics Industry

Factors Impacting the Logistics Industry

The logistics industry in India, is in its emerging stages where it is sure to face big challenges on its way ahead. The logistics sector in India is not very planned and there is a tough competition, in the big cities, where there are several unorganised small truck owners and service providers providing tough competition for small margins. Both within-the-industry and externally exists factors that the 3PL firms will have to be a part to promote the industry as well as individual businesses. The factors effecting the logistics sector are:

EXTERNAL FACTORS: Logistics is a dependent industry. The demand for logistics services varies a lot due to the changes in economic activity. There are several external factors effecting the industry.

POLICY FACTORS: The government of India is looking to stimulate and promote businesses; both domestic and international businesses have been called upon to expand their businesses. Last year From April to September almost $25 billion has already come in as foreign direct investment (FDI) into India which is 17% more than last year for the same period. – There is a new minimum wage law, which will be affecting the logistics industry. It will be against the law to pay workers at warehouses and truck drivers lesser than the minimum wage requirement. The tax reform that dissolved the state borders within India will definitely encourage the logistics industry. Ease of doing business is another factor. The Indian government is looking at various measures of increasing the business in India, thus further liberalisation of regulations with respect to construction permits, getting electricity and access to licenses and permits is also expected. A significant public investment within the logistics sector have been organised in the form of multi-modal logistics parks in 35 clusters around India at an investment of $61 billion. The government is also looking to improve the infrastructure in the country. In November 2017, the government announced a billion dollar project to construct highways across the country.

ECONOMIC FACTORS: According to the logistics industry, the share of logistics cost in GDP is set to come down by a minimum of 1–1.5% in the near future. This would lead to savings of an estimated $45 billion. Skilled labour in logistics is a major issue in India. Players in the logistics sector have not been capable of investing in manpower development due to the fragmented nature of the industry, and the government has also not focused sufficiently on the same. The Foreign investments in the logistics sector and other related sectors is increasing at a rapid speed. Many logistics companies have invested heavily in India and have plans to invest further. Many 3PL-using businesses also have plans to expand their business and build new operating units.

SOCIAL FACTORS: Land acquisition – Acquiring land is a major problem among the social issues related to environment, displacement of people and government bureaucracy. Providing jobs to locals residing there is a major reason. Displacing people from their agrarian occupations, most land acquirers have to promise employment to the local population. In the future, with automation, job losses would lead to further issue . Red Tapism is very common even in social circles, mainly in rural areas, where the Sarpanch presides over the decision making processes.

TECHNOLOGICAL FACTORS: Automation-driven technology for the logistics industry is emerging as a fully automated system. From the management of inventory in the warehouse through WMS to drone delivery, most processes in the logistics courses in kochi services can be done unmanned. • Data Analytics – With which data is being used for new identification


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