Media Releases

Blooming Indian Logistics and Shipping Industry

Looking into the economy of India, logistics and shipping industry has evolved as one of the fastest growing industry. These services provides variety of trade benefits like material processing, product handling, transportation, inventory management, warehousing, providing inputs of production, etc. With growing domestic and international trade, demand for logistics and shipping services is thriving tremendously in past few years. Firms which earlier used to perform these activities by themselves are now outsourcing for which many IT firms, new startups and business ventures, cargo firms, freight carrier firms, etc. are introduced in Indian economy every single day making shipping and logistics industry a billion dollar industry in India.

Major Transportation Mode Used

Indian government is focused on infrastructure development to make logistics and shipping industry a facilitator of growth. Government is focusing on development of roads since a large chunk of freight interchange in India takes plays through roadways via trucks. Thus, to facilitate easy transportation and creation of north-south corridors, east-west corridors, Central Road Fund has been undertaken. Further, railways are extensively used as an inexpensive mode of transportation of bulky consignments. Government is aiming at development of railways for smooth and easy freight transportation. Further, many projects for development of seaports and airports has also been undertaken to facilitate growth in logistics and trade industry.

Key Drivers of Growth

Major factors that have led to mind boggling growth in the industry are given below:

• Now companies are appreciating the crucial role played by sophisticated logistics and shipping services in minimizing costs and escalating saving. Demand for advanced and expert logistics and shipping services is increasing with rising complications of supply management, rising competition, greater interlinkages between economies, explosion in product diversity, reduction of life span of the product.
• Due to sky high demand from consumers and cost tension, firms are becoming extremely competitive and rivalrous. Thus to dominate the market and distinguish themselves from others firms, companies are using better logistics and shipping services for timely delivery, return pickups, improved inventory organization, etc. in order to ensure maximum consumer satisfaction and revenue.
• With greater globalization and rising interlinkages between economies, demand for logistics and shipping services is also rising which ensures timely delivery, proper market penetration, well-organized supply chain management laden to efficient global trading.
• Evolving online trading and e-commerce industry has provided a boost to logistics and shipping industry. Many Indian online retail websites like Jabong, Flipkart, Amazon, etc. is making optimum use of the services for efficient trade and fast delivery.
• Government is also playing an important role in promoting the industry. Relaxation in trade laws, greater amount of public investment in building infrastructure, permitting privatization of infrastructure industry are contributing significantly in enlargement of logistics and shipping industry.

Fast paced growth has been witnessed in the logistics and shipping industry and is expected to grow even more in future. However, the industry still lacks maturity and sophisticationdue to absence of proper infrastructure.

To know more on coverage, click on the link below:

https://www.kenresearch.com/automotive-transportation-and-warehousing/logistics-and-shipping/SC-100-45.html

Contact:

Ken Research

Ankur Gupta, Head Marketing & Communications

query@kenresearch.com

+91-124-4230204

Logistics refer to the commercial activity of transporting goods or proving required services to customers at their choice of place, at the right time and also in the right condition. Logistics have become a very vital part of the businesses around the world and hence, the global economic system which in turn is causing a significant growth in the global logistics industry. Logistic activities accelerate economic growth and productivity growth. Efficiency of the economy’s logistic sector is a major indicator of its level of competitiveness and is an important determinant of its source of employment. 

There are many factors on which companies base their decision of outsourcing logistics such as company size, complication of logistics and relative economic benefits of outsourcing. Particularly the e business web portals have to resort to outsourcing logistics due to their need for on- clock dispatch and delivery. Outsourcing of logistics enable companies to specialize in their areas of operation and focus on their competencies. However, there also some drawbacks associated with this market such as vendor reliability issues.

North America and Southeast Asia are the world’s most lucrative logistics outsourcing market while the rest of the world is showing growth in inter regional logistics. A large number of factors are contributing to the increasing popularity of logistics outsourcing such as globalization, time scarce economy, development of e commerce, improved customer awareness, strategic concerns to achieve more flexibility and better IT infrastructural support. At the same time loss of logistics, poor transportation, local protection regulations and lack of post-outsourcing measurements are some of the factors hampering growth of this market.

Fedex Corp and DHL International were the major two players in the logistics outsourcing market accounting for 50% of the business globally followed by XPO Logistics, Inc. and United Parcel Service, Inc. with a narrower reach as compared to the former two. The global ecommerce logistics market will witness the rise of many new companies. Gati Limited and Clipper Logistics are some other companies which are worth a watch. The global logistics market is expected to achieve a CAGR of 20.6% between 2016 and 2024.

Although the growing emergence of ecommerce in developing countries like that of India and Brazil is boosting the demand for e commerce logistics, there are problems associated with the same such as problems of reverse logistics and problems of infrastructure in developing economies. Reverse logistics refers to the problem of returning the ecommerce goods particularly in the case of free delivery which burdens the reverse logistics chain and cause a hike in the cost incurred by ecommerce logistics companies. These factors are expected to restrain the growth of the global ecommerce logistics market.

On the basis of the type of service, the logistics market is divided into warehousing, transportation, and others of which transportation segment is the largest, accounting for a dominant 51.6% of the market. The major reason for the dominance of this segment is the role of transportation in supply chain. The growing emphasis on last-mile connectivity will give this segment a further boost. The warehousing segment is further split into hubs/delivery centers, mega centers, and returns processing centers. Similarly, the transportation segment is divided into freight/rail, maritime, air/express delivery, and trucking/over road.

Source: https://www.kenresearch.com/tag/automotive-transportation-and-warehousing/warehousing/338.html

UAE has been able to establish itself as a top-notch logistics hub owing to its prime location on the global landscape over the period 2009-2014. Additionally it is the primary entry point for goods in the GCC market. It borders Oman to the East and Saudi Arabia to the South. UAE also shares sea borders with Qatar and Iran. It is the gateway that connects the western hemisphere with the eastern hemisphere.

 Trade activities in the UAE have amplified over the past five years owing to increasing globalization. Logistic services in the country have been successful in connecting different export and import markets of various countries across the world.

UAE has been taking advantage of economic activity among the world’s fastest growing and developing economies as part of the ‘South-South’ trade trajectory.

Furthermore, over the past five years, billions of dollars have been invested by UAE’s government towards development of logistics infrastructure. UAE has been the foremost nation in the Middle East to focus on logistics.

Foundation was laid with the establishment of Jebel Ali Harbor in 1979. Since then Jebel Ali has become the largest container harbor between Rotterdam and Singapore. Numerous new ports and free zones were built while further emphasis was put on construction of new airports and roads. In addition, Port Rashid, Khorfakkan and Al Hamriyah port have been economic powerhouses in the country during the review period.

UAE Logistics Market has amplified at a CAGR of ~%. This growth has registered the revenues of the logistics market at USD ~ Million in 2014.

Figure: UAE Logistics Market Segmentation by Service Mix on the Basis of contribution to the overall revenue in USD Million, 2009-2014

The UAE logistics market can be segmented on the basis of services offered as part of the total logistics industry. There are 3 broad services conducted under the entire logistics package namely transportation, freight forwarding, warehousing and value added services (VALS) including 3PL. All the services conducted in the logistics industry right from sourcing of goods to final delivery come under these three broad services.

Freight has been the biggest segment among all the services in the UAE logistics sector over the past five years. Its share in the total service mix has enhanced from ~% in 2009 to ~% in 2014. Such dominance of freight forwarding market and its increase in share has mainly been attributed to country’s prime location on the global map. Sea has been the most dominant mode of transportation in the freight forwarding market over the past five years. The sea route has been connecting Asia-South East Asia to Europe and North America very efficiently for several years now. Further, low fuel charges in UAE have also been major growth driver of the freight forwarding market over the period 2009-2014.

Warehousing has been the second biggest segment in the services mix of UAE logistics market over the period 2009-2014. The share of warehousing in the overall service mix has increased from ~.0% in 2009 to ~% in 2014. Continual investment by the government in development of logistics infrastructure including completion of Dubai Maritime City in 2012 supported by entry of several global players in the market have been the main reasons behind the increase in the share of the warehousing segment over the past five years. Logistic hubs such as Kizad Logistics Park, Dubai Logistics City and others have attracted investments from several global and domestic players. Numerous companies including Aramex, Agility, Keuhne+Nagel and many others have opened their warehouses in these locations over the period 2009-2014. On the other hand, value added services such as packaging, sorting and others have accounted for a minute share of ~% of the UAE logistics market in 2014. Small and low cost nature of these services has justified its minimal share in the overall logistics market over the period 2009-2014.