How data and emerging technologies can play a pivotal role in bringing down cost of logistics in India

A report by NCAER (National Council of Applied Economic Research) recently reported that logistics cost in India was between 7.8-8.9% in FY21-22. Lowering logistics costs have often been a course of discussion among the stakeholders and industry players in order to improve the sector overall.

According to Vivek Juneja, Founder and Managing Director, Varuna Group, reducing India's logistics costs requires a multifaceted approach. “First and foremost, investing in infrastructure development is crucial. Improving roads and enhancing connectivity will streamline transportation, reducing overall transit time and cost,” he said.

Apart from which he said that encouraging the adoption of a unified Goods and Services Tax (GST) system has already shown promise in simplifying tax structures, but further refinement and streamlining could minimise bureaucratic hurdles.

Here, Zaiba Sarang, Co-founder, iThink Logistics, said that simplifying documentation, reducing checkpoint wait times, and minimising bureaucratic hurdles will help in streamlining processes across the supply chain.

Talking about technology, she said “Embracing new technologies, such as Internet of Things (IoT) sensors, Artificial Intelligence (AI), and blockchain, can optimise route planning, vehicle utilisation, and inventory management.”

Adding to this, Juneja said that leveraging GPS tracking and data analytics technology can optimise route planning and inventory management, enhancing overall efficiency.

Role of data
While talking about technology, Juneja said that data and smart logistics play a pivotal role in significantly reducing logistics costs in India. “Data analytics helps in demand forecasting and inventory management, preventing overstocking or stockouts, which can result in unnecessary costs. The implementation of smart logistics solutions also facilitates warehouse automation and efficient order fulfilment, contributing to cost savings,” he said.

Most importantly, data-driven insights enable the identification of areas for process improvement and resource optimisation. The government's push towards digitisation and the adoption of technologies such as blockchain further enhance transparency and reduce inefficiencies in the logistics ecosystem, he said.

Zaiba highlighted that real-time data analytics facilitate route optimisation, curbing fuel consumption and minimising delays.

National Logistics Policy
The government released the National Logistics Policy in September 2022 with the objective to form a cost-effective, tech-enabled, sustainable, logistics ecosystem in the country.

“The policy's focus on developing logistics parks and warehouses, enhancing last-mile connectivity, and reducing dwell time at ports and checkpoints aligns with industry requirements,” she said, adding that, however, successful implementation will require close coordination between various stakeholders, including the government, logistics providers, and industry associations.

Varuna Group’s Juneja explained that currently, the sector grapples with problems such as fragmented transportation networks & multiple small time players, reliance on manual paperwork, and insufficient infrastructure, all contributing to elevated operational costs. These challenges not only impact businesses but also result in increased expenses for consumers.

Zaiba pointed out that the logistics sector also faces a shortage of skilled manpower to leverage innovative logistics technologies fully. “Building a workforce proficient in data analytics, IoT, and AI is crucial for realising the cost-saving potential of these innovations. Lastly, addressing last-mile delivery issues in densely populated urban areas is a persistent challenge. Developing efficient urban logistics solutions and improving traffic management are essential to reducing the final leg of logistics costs,” she said.