How Technology Is Transforming India's Logistics Industry

Logistics provider Blowhorn has expanded its operations to achieve 2 million deliveries a month, serving more than 70 cities in India amid a surge in online orders following the sudden hit in 2014. As the industry continues its digital transformation, the Bangalore-based company connects clients to warehousing facilities and delivery vehicles within cities through its website and mobile app.

Mithun Srivatsa, who co-founded Blowhorn in 2014, describes his business as “an Uber for moving goods” and “an Airbnb for warehousing”, as it possesses neither the trucks nor the stockrooms offered with its network. The company has received financial investments from the Michael and Susan Dell Foundation and India’s Venture Catalysts, among others.

“Shopping adoption increased during the pandemic and has actually spurred more and more people online,” claims Mr. Srivatsa, who is the company’s president. “Instantly, you had individuals like my mother, who was 65, making a decision to acquire their groceries online.”

India’s logistics sector was worth $320 billion in 2019 and accounted for 11 percent of the nation’s GDP, according to a report by consultancy Redseer.

“Logistics has continued to be a backbone for numerous industries and throughout the years has improved its technology-based offerings to match various sectors and their demands,” the consultant states.

Its information shows that e-commerce transportation grew 70 percent year-on-year to 2.55 billion shipments in 2020, and it projects that this will increase to approximately 10.5 billion by 2025.

“The market generally now is very bullish,” states Anjani Mandal, the chief executive at Fortigo Network Logistics, a trucking platform based in India’s tech center, Bangalore. “The e-tailers have had rapid growth due to the lockdown.”

In March 2020, India imposed one of the world’s strictest lockdowns across the country in response to the pandemic, meaning individuals could purchase only essential goods or services. For the first month of the lockdown, Mr Srivatsa at Blowhorn explains that the firm did “a tiny portion of volumes we were doing previously” as a result of the “mayhem” and “mass confusion” caused by the restrictions.

Yet as individuals moved towards online orders, the service began to see a surge in popularity from its e-commerce clients and experienced “some of our best growth months during the pandemic”. With this boost, the firm is expecting to achieve profitability this year.

The logistics market comprises road transport, warehousing, and other delivery networks such as air, sea, and rail.

Road logistics, at a value of $240 billion in 2019, comprises the lion’s share at 75 percent of the market, according to RedSeer. It states that “the road logistics market and last-mile distribution are moving in the right direction to success”.

The last-mile delivery segment, which is the area Blowhorn focuses on, is expected to expand to become a $6 billion to $7 billion market by 2024, up from $800 million to $900 million in 2019, Redseer estimates.

There have been numerous factors working in the industry’s favour.

“Recently, there has been a rise in ecommerce with more fleet in place to accommodate the increasing demand,” claims Nakul Singh, the founder at ANS Commerce. This e-commerce enabler helps brands sell online.

This has prompted “growth in investment in infrastructure, last-mile connectivity, and emerging technologies improving the logistics landscape in India,” he states.

The warehousing sector in India, which accounts for approximately 13 percent of the logistics sector, is going from strength to strength amid the e-commerce boom.

“The Covid-19 pandemic has been positive for growth in the warehousing market,” claims Niranjan Hiranandani, the founder and managing director of Hiranandani Group, a Mumbai-based property developer. “A huge quantum of Grade A warehousing spaces are being developed.”

The founder of the digital logistics platform Zipaworld believes that better integration of parts of the network can yield much greater efficiency.

“The enhanced logistics and supply chain cost, which is virtually 14.5 percent [of the price of goods] in India, calls for integration and digitalisation of processes,” claims Ambrish Kumar.

“The old traditional logistics sector is yet to fully adapt to technological innovation,” with the e-commerce market requiring clear tracking of deliveries and precise delivery timelines, he states.

As logistics becomes increasingly tech-enabled, you need a specific set of people to operate or expand the company.

Amitava Saha, the owner and president at XpressBees, an express logistics carrier in India, states that its use of technology has been a significant factor in its strong performance throughout the pandemic, as it has offered it “a capacity to re-route and to avoid hotspots”.

Although technology is proving beneficial, there are barriers to its widespread adoption.

“There’s a lack of skilled manpower,” claims Mr Saha. “As logistics is becoming more tech-enabled, you need a certain standard of people to run or expand the company, which is very different from the workforce that many traditional logistics companies had.”

Mr Mandal at Fortigo, which connects clients and vehicle fleet owners in the broader road logistics field, explains that despite the broader bullishness, many truck owners have been hit hard by the pandemic. This was because shipments across states and between cities became more challenging due to COVID-19 curbs, and truck owners struggled to repay loans on their trucks after the Reserve Bank of India’s six-month moratorium ended in October.

“As a consequence, the number of vehicles started to decrease at the end of 2020 and by February 2021, the number of vehicles went down by 20 percent, from 5 million to just under 4 million,” he claims.

In the short term, the organization is taking a hit during the second wave of COVID-19 infections, as many factories remained closed.

This affected Fortigo’s business, as it relies on the movement of steel and materials, as well as fast-moving consumer goods. There have been other challenges posed by the second wave for logistics firms in India, including staff falling ill and workers returning to home towns, leading to labour shortages.

On Saturday, 120,529 new cases of COVID-19 were discovered, and the nation recorded 3,380 new deaths, according to the Ministry of Health. This brought the total number of cases since the pandemic began to nearly 28.7 million and the number of deaths to 344,082.

In the long run, however, the industry remains positive on the transformational power of technology.

Road logistics in India is highly unorganised, with most vehicles owned by individuals or local businesses. Technology has begun to bring greater structure to the market, Mr Mandal says.

“The major advancement that took place in the sector was that the role of digital logistics became dominant in large organisations,” he claims. This has led to rapid growth for firms like his in recent years.

Digitalisation is still relatively new, and there is a long journey ahead, yet the industry will have no choice but to adapt, XpressBees’ Mr Saha states.

“I believe that going forward, tech-based logistics will grow at a much faster rate and take over a bigger share of the market compared to traditional logistics companies.”

Mr Srivatsa also expects considerable growth, as “a 100-year-old sector” faces a period of disruption.