Opportunities for 3PL Players - Reliant Logistics

As the logistics industry is poised for rapid growth, opportunities arise for both local and foreign investors in the industry in India. There are basically a few broad areas of focus.

  1. 3PL investors should look into ways to create an effective and well-networked domestic transportation, warehousing and distribution systems in the country. There is a niche opportunity for service providers to offer quality standards and higher service levels which are on par with the global standards.
  2. 2. There is room for investors in offering total supply chain optimization solutions to their customers. Local service providers can form a partnership with foreign counterparts to provide value-added services supported by the streamlined IT systems. With the increasing use of RFID, GPS tracking-and-tracing and smart tags, there are vast opportunities for the service providers to invest in and provide such technological solutions. This would also aid in the development of security to protect freight and supply chain data, while still facilitating smooth trade across the country.

In terms of execution, some other major challenge faced by the players is finding reliable subcontractors and having control over their service quality. Managing client’s rigid and unrealistic expectations are another demanding issue since they are not experienced in using external logistics services. Although both the local and MNC service providers face similar challenges in practicing their logistics business in the country, the degree of these challenges may differ. For example, the main challenges for local providers are to find qualified logistics domain people who can design, implement and manage their logistics solutions. They too have problems in applying the advanced IT systems and its associated development costs. However, these are less challenging issues for the Foreign Service providers as they possess the industry expertise and experts, coupled with strong financial support from headquarters. For them, the most daunting challenge is the government restrictions on regulations and policies. The incompatible culture to which they have to adapt to is another challenge for them when practicing the logistics business at domestic level.

As India’s logistics industry is in the infancy stage, setting up nationwide distribution capabilities at the start-up stage would be difficult. Instead, logistics players should consider comprehensive coverage of one part of India or one vertical before spreading out to the rest. This is because a successful business just in one part of the country can easily become dominant and attractive to cater to both ends of supply and demand. On the other hand, the quality standards and service levels currently offered by Indian logistics players could be below expectations. With the emerging globalization and integration of the Indian market with the global market, Indian companies are increasingly demanding services on par with global standards. As such, local logistics providers have to focus on offering world-class services and solutions to enhance the satisfaction level of their customers.

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