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Logistics Sector In India Essay

2671 words - 11 pages

T. B. S. Anil krishna,
1226112155,
Section-A.
LOGISTICS SECTOR IN INDIA
SUMMARY:
The Emerging Market Survey, 2011 conducted by Transport Intelligence highlights India’s attractiveness as a strong growth area for logistics in the future. The survey found that nearly half of its respondents agreed that India would merge as a major logistics hub in the future. Furthermore, FMCG majors, White Goods and Consumer Electronics firms are also on an expansion spree and are steadily increasing their footprint across the country. Built – to- suit options have been the preferred mode of expansion for most occupiers, with large sized transactions of around 10,000 – ...view middle of the document...

Sources also estimate that the industry employs over 45 million people and is growing at the rate of 15% with sub-sector growing at even 30-40% per annum. The Emerging Market Survey, 2011 conducted by Transport Intelligence highlights India’s attractiveness as a strong growth area for logistics in the future. The survey found that nearly half of its respondents agreed that India would merge as a major logistics hub in the future. The warehousing and logistics industry continued to witness an increase in market activity during the first half of year 2012. The demand for logistic and warehousing spaces was not only limited to leading cities such as NCR (National Capital Region), Mumbai and Bangalore, but was also spread across leading tier II cities as well. E-tailers have invested heavily into strategically located assets, and have been taking up quality warehousing space across India. The major footprint has been in NCR, Mumbai and Bangalore with smaller redistribution points in other metros.
ABOUT LOGISTICS INDUSTRY:
The Logistics industry includes five broad segments -
(i) ocean freight,
(ii) air freight,
(iii) rail freight,
(iv) trucking and
(v) third party logistics (3PL) services
Indian Logistics industry is valued at around US$30bn. The industry is projected to see a growth at a 12 - 15% CAGR to US$54bn by 2012. Growth of logistics industry largely depends on infrastructure availability. Government spending and involvement of private players will catalyze the growth of the industry. Government programs and measures such as establishment of logistics parks and investment-linked tax deduction will support the industry to speed up its growth. In India road has become the predominant mode of transportation of freight cargo. Estimate of the modal movement of cargo highlights that In India nearly 61% of the cargo is moved by road, 30% by rail and rest by airway, pipelines and inland waterways. This is as compared to a 37% share of road in the USA and 22% in China.

THIRD PARTY LOGISTICS (3PL):
Outsourcing is everywhere. Logistics industry is no exception. Logistics services like transportation, warehousing, cross docking, Inventory management, packaging and freight forwarding all are part of third party logistic services. Companies in India currently outsource an estimated of 52% of logistics. And 3PL industry is estimated to be US$ 1.5bn in FY11. 3PL represents only 1% of logistics cost emphasis its significance in the industry. Future is no doubt lying in outsourcing. As the growth in the 3PL market is expected to be in the range of 25-30% CAGR over FY11-13E. As of now, the 3PL activity is limited to only few industries like automotive, IT hardware, telecom and infrastructure equipment.
The organised 3PL market in India can be categorised into three major segments – public sector, private sector and foreign entrants. Some of the major players in each category are: TVS logistics, DIESL (TATA), Panalpina, TCI, Gati,...

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