What is logistics?

It refers to the movement of goods and information between the provider and the receiver and
also it is the management of the flow of things between the point of origin and the point of
consumption in order to meet requirements of customers or corporations. [1]
Why is it important?
Logistics has become important as it may lead to reduced operational costs, improved
delivery performance and increased customer satisfaction levels, thereby making an
organization more competitive in terms of cost, quality, delivery and flexibility. Logistics is
important as it is the management of the flow of products from the place of their origin to the
place of their consumption. (Source: Sinha, Gyanesh & Asst, Sinha & Chain,. (2016). Study
of Indian Logistics Industry in Changing Global Scenario.)
Current scenario of the Indian logistics industry:

 India's logistics sector is highly defragmented and the aim is to reduce the logistics
cost from the present 14% of GDP (Much higher than in the US or Europe, where it is
8-9% [7] to less than 10% by 2022, according to an update from the Department of
Commerce.
 India's logistics sector is very complex with more than 20 government agencies, 40
partnering government agencies (PGAs), 37 export promotion councils, 500
certifications, 10000 commodities, 160 billion market size.
 It also involves 12 million employment base, 200 shipping agencies, 36 logistic
services, 129 ICDs, 168 CFSs, 50 IT ecosystems and banks & insurance agencies.
Further, 81 authorities and 500 certificates are required for EXIM. [2]
As per the Economic Survey 2017-18, the Indian logistics sector provides livelihood to more
than 22 million people and improving the sector will facilitate 10 % decrease in indirect
logistics cost leading to the growth of 5 to 8% in exports. Further, the Survey estimates that
the worth of Indian logistics market would be around USD 215 billion in next two years
compared to about USD 160 billion currently. [3]
Growth of Logistics:
The Global Logistics Market was worth 10.32 Billion USD in 2017 and it is estimated to
grow to 12.68 Billion USD by 2023 with a CAGR of 3.49% between 2017 and 2023. [1]
The logistics sector plays a very crucial role in propelling India to become a $5 trillion
economy by increasing the ease of doing business and reducing cost of transportation with
the use of technology. Equipping the sector with the latest digital technologies and
automation in operations would lead to a 10 percent decrease in indirect logistics costs. [4]
Trends in Logistics Industry: The driving factors (globally):
 Increasing in global trade activities of the developing economies, rise in trade related
agreements and global logistics infrastructure and advancement in information
technology and transportation sector are the main factors that are responsible for the
growth of Global Logistics Market.
 The rising pollution level and high inventory cost & low warehousing space are the
reasons which restrain this market growth. [5]
Trends in INDIAN Logistics industry:

Source : CRISIL According to the real estate consultancy CBRE’s report titled ‘2018 Asia
Pacific Real Estate Market Outlook’ preference for large warehouses that allows better
automation process is growing. It further states the Indian market for warehouse automation
is estimated to grow by 10-12 per cent to US$ 3.49 billion by the year 2020. Warehousing
emerging as an attractive investment is another dominant trend in the Indian logistics sector.
Some of key investors include Morgan Stanley, and Warburg Pincus, beside others. The
investment burst in the sector is leading to development of new and better warehousing
facilities. [6]
In India the traditional growth drivers are
i) Export, Import cargo ii) Agriculture iii) Manufacturing (Mainly Textile & Automobile)
while the new growth drivers are
i) Organized retail, ii) IT & Telecommunication iii) Healthcare
The way ahead involves inclusion of technological advances and improved methodologies of
handling logistics. Some notable ones would be: increase in supply chain visibility, historical
data-based planning to shorten delivery cycles, making omnichannel supply chains the
standard, emergence of elastic logistics and openness to new technologies will increase [8]