We all live in an era where everything that we use is expected
to be smart. Thanks to the technological advancement taking place at an exponential pace, the things around us are getting smarter every day. Almost all sectors and industries have embraced technology to make workflows and processes easier & simpler. There is nothing we can think of that has a non-existing virtual version. Starting from smart phones, smart TVs, smart watches, smart lights, smart plugs & switches, smart homes, mobile apps for buying retail products, food, merchandise, groceries, electronics, home appliances and everything we can think of – web and mobile applications for booking travels, vacations, doctors’ appointments, virtual meetings, commuting, pick-ups & deliveries, properties and so on. Sadly, the logistics sector is yet to hear something of the sorts of smart logistics.
Dearth of smart logistics
In our study about the logistics sector, we understand that the logistics ecosystem is lagging in terms of technological advancement, not just in India but globally. The traditional logistics companies and practices are still orthodox and outmoded, that come with manual processes & heavy paperwork.
In India, the logistics sector contributes to almost 14.4% to the GDP and employs more than eight million people across the country. Despite this, the logistics cost is 14% of the GDP as compared to 8-10% in the developed countries with a proportionately equal contribution to GDP. This is mainly because of the vastly fragmented and unorganised players in the sector who have disintegrated work processes. The worth of India’s logistics sector that currently stands at $160 bn is aimed to grow to $215 bn in the next two years. However, there are several hurdles that stand in the way of this mission and those are the lack of digitisation, automation and simplification of the logistics sector. Or in other words, lack of smart logistics.
The logistics sector comprises several stakeholders, that include the buyers, sellers, exporters, importers, manufacturers, logistics companies, freight forwarders, warehousing service providers, first & last mile transporters, customs brokers, air & ocean terminal handlers, airlines & shipping lines or carriers, customs, government authorities, trade bodies & associations and so on. Here, I would like to cite the scenario of air cargo which ought to be the fastest mode of goods transportation. However, for a logistics service seeker or the end-customer who wishes to send cargo by air, must presently go to multiple vendors for carrying out his dire requirements, like warehousing, transportation, freight forwarding, customs brokerage, etc. This is a time-consuming process and due to the lack of integration between the various stakeholders, the cost factor is exceedingly high. Furthermore, the air cargo booking, customs, clearance and planning process involves around 27 different stages before a cargo gets uplifted by air. Hence, the whole process becomes very cumbersome and complicated. On the other hand, if we look at the closest counterpart of air cargo, which is air travel, automation took over almost two decades back. We cannot remember when we last went to a travel agent to book our travel or vacation. There are numerous websites and mobile applications from where we can easily book our air travel & vacation easily, and that too in no time.
When can we see a completely digitised logistics sector?
In fact, not just the multiple logistics, freight forwarding & transport companies, but even most international air and ocean carriers are still in the process of digitising their operations or have not yet started. Hence, it can be said that a completely digitised logistics sector can only be seen after another half a decade. The various companies and players in the logistics sector would have automated their internal & external processes through ERP & CRM systems for their convenience and for their customers. However, that is not helping integration of the processes, due to which, the overall bigger purpose is not met. The logistics cost has remained status quo or has only increased over the past few years.
We can see many start-ups emerging and getting established successfully to automate the various levels of the logistics processes. Also, there are many traditional logistics companies that have made huge investments in automating & centralising their global operations or have got into mergers and acquisitions. There are many start-ups which have focussed on automating and improving the first & last mile connectivity. There are some start-ups that have come up with query management & e-booking systems for air and ocean freight. However, the major concern is that these developments are taking place on a service or entity level and are not benefitting the complete supply chain.
What needs to be done
The traditional logistics sector to sustain, survive and excel in the present times requires a digital transformation revolution. The e-commerce and e-retail sectors have taken the expectations of the customers & consumers to a different level. It is high time that the logistics stakeholders and the government, together, work out more single window gateways and make logistics a seamless affair.
The government has taken several initiatives like forming a logistics division in the Ministry of Commerce and appointing a Special Secretary (Logistics) for the development & integration of the Indian Logistics sector. It has also implemented and made endeavours to automate the Indian customs with electronic portals, like SWIFT, e-Sanchit, Turant Customs for easing the customs clearance processes that earlier required a lot of documentation & have been very time consuming.
The government, logistics players, air & sea port authorities, trade bodies, carriers & other stakeholders, should together work on API integration of their applications wherever possible and work towards creating & promoting more centralised platforms. Plus, the government should promote start-ups and tech-based companies that are developing platforms for easy accessibility for the logistics service seekers. The National Logistics Policy and its plans need to be implemented on priority. The logistics infrastructure of the country needs to be improved with automation and virtual access on a B2C level. Most of the airports and sea ports of India lack modern equipment, like cranes, forklifts, automated x-ray machines, scanners, etc. There needs to be integrated freight corridors across the country with hassle-free and seamless movement of transport carriers through road & rail. The multimodal transportation and connectivity need to be developed & used so that air is not the only means for quick logistics.
Role of AI and ML
We are living in an era where technologies and products like Machine Learning (ML), Artificial Intelligence (AI), Augmented Reality (AR), RFID, drones, air ships and even hyperloops are no more just imaginary but are being implemented in real life, that are going to make movement of people and goods much simpler, safer & seamless. ML and AI can be used with the large amount of data that is available in the logistics sector for mitigating risks, reducing the demand & supply gaps, predicting & planning the manufacture and movement of goods based on the seasonal fluctuations & consumer behaviour.
A transparent logistics system
India is a big country with vast resources and strong workforce. Moreover, the Indian domestic consumption has increased multifolds in the past decade, owing to which the country has become one of the biggest markets of the world for e-commerce, foreign investments, manufacturing and warehousing hubs. There are manufacturers of different levels across India – be it big companies, SMEs or small set-ups. However, the manufacturers in the remote areas of India are not able to access the right gateways for global recognition and exposure. A transparent logistics system and supply chain without loopholes & with sheer visibility is the need of the hour. India can rise further up on the global EoDB index much faster if the logistics sector gets a technological impetus.
The logistics sector requires more web and mobile applications from where manufacturers, exporters, importers can sit back at ease & avail the logistics services in the domestic & global front. The ‘Make in India’, Atmanirbhar Bharat Abhiyan, vocal for local, digital India initiatives can be successful and futuristic with a robust & automated logistics sector.