Logistic Industry In India an Overview www.ziaahmed.

org

LOGISTIC INDUSTRY IN INDIA

By:- Zia Ahmed
www.ziaahmed.org
zia@ziaahmed.org

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Logistic Industry In India an Overview www.ziaahmed.org

Table of Contents
LOGISTIC INDUSTRY IN INDIA ................................................................................................................... 4

Key Drivers of Growth in Logistic Industry .............................................................................................. 4

Express delivery industry witnessed 15% CAGR over last 3 years............................................................ 4
EMS speed post - focused on documents business ................................................................................ 4
Organized players offer pan-India network and account for 65% of the express market.............................. 5
Outsourcing - a new growth area........................................................................................................... 5
Express cargo companies cashing in on 3PL opportunity ........................................................................ 5

CURRENT SUPPLY AND DEMAND ............................................................................................................. 6

The logistics industry structure .............................................................................................................. 6

Elements of logistics costs in India ........................................................................................................ 6
Multimodal transport............................................................................................................................. 6
Road logistics ...................................................................................................................................... 6
Trucking industry in India...................................................................................................................... 6
Express industry in India....................................................................................................................... 7
Courier industry in India........................................................................................................................ 7
3PL market in India: Poised for remarkable growth ................................................................................. 7
Ocean logistics .................................................................................................................................... 8
Containerization: Fastest growing cargo segment in shipping .................................................................. 8

FUTURE SUPPLY AND DEMAND................................................................................................................ 8

Transport Systems............................................................................................................................... 8
Strong container growth to boost major capacity addition of various ICD/CFSs.......................................... 9
Container train business: Cashing on inland transportation of containers ................................................ 11
Transport Systems............................................................................................................................. 12
Challenges in the industry................................................................................................................... 13

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Logistic Industry In India an Overview www.ziaahmed.org

List of Tables

TABLE 1: MAIN PLAYERS IN LOGISTIC INDUSTRY IN INDIA ............................................................................................... 6

TABLE 2: CHANGING INDUSTRY DYNAMICS................................................................................................................... 7
TABLE 3: KEY PLAYERS IN ROAD LOGISTIC .................................................................................................................. 8
TABLE 4: NUMBER OF CFS IN INDIA .......................................................................................................................... 11
TABLE 5: EXISTING AND PROPOSED CFS AT JNPT ..................................................................................................... 11
TABLE 6: VARIOUS CATEGORIES FOR CONTAINER TRAIN LICENCE ................................................................................ 12
TABLE 7: MINIMUM REQUIREMENT FOR CFS............................................................................................................... 12
TABLE 8: PLAYERS APPLIED FOR LICENSES ................................................................................................................ 13
TABLE 9: KEY PLAYERS IN THE INDUSTRY.................................................................................................................. 13

List of Figures

FIGURE 1: NDIAN EXPRESS CARGO INDUSTRY USD BILLION........................................................................................... 8

FIGURE 2: CONTAINER CONTRIBUTION OF VARIOUS INDIAN PORT .................................................................................. 9
FIGURE 3: CONTAINERIZATION OF TOTAL CARGO IN %................................................................................................. 10
FIGURE 4: CONTAINER GROWTH IN MN TEUS............................................................................................................ 11
FIGURE 5: CFS CONCENTRATION IN INDIA ................................................................................................................. 12
FIGURE 6: CONTAINER TRAFFIC FLOW ...................................................................................................................... 14

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Logistic Industry In India an Overview www.ziaahmed.org

LOGISTIC INDUSTRY IN INDIA

Strong economic growth, coupled with increased outsourcing by companies for their logistics requirement, is likely
to result in a 20% CAGR in the express cargo distribution business over the next five years. Robust GDP growth,
coupled with a sharp rise in domestic as well as international trade, has been driving logistics business over the
past decade in India. There are three ways of dispatching consignments or cargo - a) full truckload - used for
movement of bulk materials such as cement, food grains, etc, b) part truckload - used for movement of spare
parts, samples, etc, and c) couriers - used for dispatching documents, files, books, etc.

Key Drivers of Growth in Logistic Industry

Economic growth driving logistics demand. India has witnessed a sharp increase in trade over the
past five years, led by strong economic growth and liberalization. With increasing exports and India’s recognition
as a manufacturing hub, international trade has also picked up considerably over the past five years.
Consequently, the need for logistics services has gone up sharply over the past few years across industries.
Increased outsourcing - key driver for logistics solutions Manufacturing companies are witnessing
increasing requirements for logistics services as raw materials are sourced from one end, assembled in another
part of the world and then distributed to some other location. Such globalize manufacturing systems require a
modern supply chain technology. Consequently, companies are increasingly outsourcing their logistics
requirements from logistics service providers to achieve better service and cost reduction.
VAT implementation to drive further growth in the industry With VAT implementation across the
country and gradual phase out of Central Sales Tax (CST), manufacturers do not require warehouses and depots
across all states to avoid double taxation. Instead, manufacturers can operate their warehouses & depots on a
hub-and-spoke mechanism. Under this mechanism, companies can have large regional warehouses, which will
then supply cargo to particular regions resulting in huge boost for cargo transportation over the next 5 years
Express delivery industry witnessed 15% CAGR over last 3 years
Express businesses offer document, small package, and general distribution services throughout the country and
overseas, on a time-definite basis. They have significant investments in brand, technology, infrastructure, people,
and regulatory development. They offer wider, value-adding, services than couriers, including border management
(octroi, customs, and security), track and trace, trade facilitation, warehousing and distribution, and performance
accountability. Within the logistics sector, the express distribution industry is the key beneficiary of growth in the
logistics space. Express distribution players are well placed to take advantage of the sharp growth in trade within
and from India on the back of their strong distribution networks, technology and warehousing services. Express
distribution is Rs40bn (USD 1 billion) industry, and has been witnessing 15% growth over the past 3-4 years. We
believe the industry is currently in a nascent stage and growth is likely to explode over the next 5 years in view of
robust economic growth, VAT implementation, increased outsourcing and rising international trade. As a result,
we expect the express cargo distribution industry to witness 20% CAGR over the next five years. The express
industry focuses on documents, transport of packages and freight, carried by fleets of fully owned or dedicated
aircraft, trucks, trains and delivery vans. The bulk of business is dominated by 24-hour guaranteed and next-day
deliveries. Overnight air services, while an essential link in the delivery chain, are now closely coordinated with
road and rail movements, in integrated, precisely timed, door-to-door operations
EMS Speed Post - Focused on documents business
EMS is the express arm of the Post & Telegraphs Department of India, operating in association with other
member countries of the Universal Postal Union. Both Speed Post Domestic Services and Speed Post
International Services are offered under the brand Speed Post. EMS offers online tracking of its consignments,

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Logistic Industry In India an Overview www.ziaahmed.org

which gives it edge vis-à-vis unorganized players. Moreover, EMS tends to focus on documents business rather
than packages/ cargo.
Organized players offer pan-India network and account for 65% of the express market
Organized players use technology-based infrastructure, and integrated air and surface solutions in the domestic
and international markets to their advantage. Considering that huge investments are required to set up a pan-
India network, economies of scale play a very important role. The organized players offer superior service to
clients in comparison to their unorganized counterparts as they provide online tracking of cargo, warehousing
facilities, etc. This has enabled organized players to garner a larger share of the express cargo distribution
industry. Given their extensive networks and high service standards, organized players have captured 65% of the
express business, while unorganized or semi-organized players account for ~25% of the total market. The
remaining 10% is serviced by EMS Speed Post. However, within the domestic sector, unorganized players offer a
price advantage over organized players. As a result, organized sector has only 45% share of the market with
unorganized players having a comparable 41% share. The remaining 14% market share lies with EMS Speed
Post. The express industry handles two types of consignments, i.e. documents and non documents. On an overall
basis, documents account for ~60% of the total organized sector revenues while non-documents constitute only
40% of the market
Outsourcing - a new growth area
Manufacturing companies are witnessing increased requirement for logistics services as raw materials are
sourced from one end, assembled in another part of the world and then distributed to some other location. Such
globalize manufacturing systems require a modern supply chain technology involving the use of specialized
software and networks in a coordinated effort to design, manufacture, ship, assemble, and distribute components
and finished products. Consequently, companies are increasingly outsourcing their logistics requirements from
third party logistics (3PL) service providers to get better service and cost reduction for their logistic requirements.
3PL logistics activities and solutions cover order compilation, dispatch planning, physical transportation, in-transit
monitoring, confirmation of deliveries, payment to transporters and providing MIS to the client. 3PL helps clients
achieve efficient inventory turnover and working capital management.
Express cargo companies cashing in on 3PL opportunity
A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics
services to companies for part or sometimes all of their supply chain management function. Third party logistics
providers typically specialize in integrated warehousing and transportation services that can be scaled and
customized to customer’s needs based on market conditions and the demands and delivery service requirements
for their products and materials.To successfully offer 3PL solutions to clients, express cargo companies need to
have a comprehensive and integrated multi-modal transportation service. Moreover, time bound transportation of
cargo is essential for providing 3PL solutions. In the recent years, express cargo companies have identified 3PL
as a new growth opportunity. Their inherent know-how, distribution management skills, technology and
infrastructure enable them to offer such services to clients. Globalization has led to increased movement of cargo
across geographies. We believe the logistics sector is currently in the nascent stage and growth would likely
explode in the coming period in view of the strong economic growth, VAT implementation, increased outsourcing
and international trade. We expect the express distribution sector to continue witnessing 20% CAGR over the next
five years.

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Logistic Industry In India an Overview www.ziaahmed.org
Table 1: Main Players in Logistic Industry In India

Logistic company profiles International logistics companies Express Industry

TVS Logistics Services Limited Exel DHL
Safexpress DHL Danzas FedEx
Container Corporation of India Ltd. (CONCOR) Aramex India UPS Jet Express Private Limited
Dynamic Logistics SembCorp Logistics TNT India Private Limited
Gati Limited AFL Ltd
ABC India Ltd AFL WIZ (Domestic Express Courier Services)
Associated Road Carriers Ltd DTDC Worldwide Express
Patel Roadways Limited (PRL) Elbee Services Ltd.
South Eastern Roadways Corporation Limited (SERL) First Flight Couriers (P) Ltd
Transport Corporation of India Ltd (TCIL) Overnite Express Ltd
Blue Dart

Current Supply and Demand

The logistics industry structure
The global logistics industry was estimated at about USD 3.5 tn in 2005. India currently spends 13% of its GDP on
logistics, which is expected to come down to 8-10% due to adequate logistics systems and acceptance of 3PL
service providers. This has created a need for a range of logistics & supply chain management (SCM)) solutions
ranging from logistics, supply chain, transportation and material handling to storage, warehousing, IT, inventory
management, etc., that benefit the productivity and efficiency of the entire value chain. Indian logistics industry is
characterized by dominance of the unorganized market. Players can be broadly categorized as local transporters,
transporters providing some kind of value-added services such as warehousing services, and completely
integrated players providing 3PL services. The transportation service provider segment is completely dominated
by small local trucking companies and individual truckers. The freight forwarding service provider segment is also
represented by thousands of small customs brokers and clearing & forwarding agents, who cater to local cargo
requirements.

Elements of logistics costs in India

In India, the logistics market is still in a nascent stage and is predominantly considered for transportation. The
major elements of logistics cost for Indian industries include transportation, warehousing, inventory management,
and other value-added services like packaging.
Transport systems Logistics worldwide is heavily dependent on the kind of infrastructure and modes
available for transportation. Based on the usage of modes, it can be classified into unimodal transport (traditional
mode) and multimodal transport systems.
Multimodal transport The concept of door-to-door delivery, which involves making use of all the modes
of transport like rail, road, air and sea is termed as multimodal transportation. This significantly reduces the overall
cost involved in the complete chain of logistics.
Road logistics The road transportation sector, dominated by the unorganized sector, has been growing
at the expense of Indian Railways in the freight segment. Road transport will continue to be dominated by the
unorganized sector in the future. During 1991-92 to 2002-03, freight transport by road grew at an estimated CAGR
of 7.75%. In 2002-03, freight carried by the road transport sector is estimated at 607 billion tones km (btkm). This
is expected to touch 1,023 btkm in 2009-10E.
Trucking industry in India The trucking industry in India is characterized by fragmentation and
unorganized players. It is estimated that close to 80% of the industry in unorganized. It is mostly controlled by
private players with dominance of small fleet operators. It is a plain vanilla offering and the barriers to entry are
very low, as 65% of the players are small fleet operators owning 1-5 fleets

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Express industry in India

Express businesses offer document, small package, and general distribution services throughout the country and
overseas, on a time-definite basis. They have significant investments in brand, technology, infrastructure, people,
and regulatory development. They offer wider, value-adding, services than couriers, including border management
(octroi, customs, and security), track and trace, trade facilitation, warehousing and distribution, and performance
accountability. In 2005-06, the total industry market size in India was INR 40 bn( USD 950 million). Of this, the
total organized express industry is at approximately INR 26 bn(USD 500 million), and the organized domestic
segment at INR 11 bn(USD 250 million). The Express Industry Council of India survey projects the industry to
grow at 20% every year.

Courier industry in India

Couriers mostly offer point-to-point document deliveries across metropolitan areas using manual administration
and operational systems. Some offer small parcel deliveries and some offer regional and even national services.
They are all ‘low-cost operators’ with limited infrastructure and they exist in both organized and unorganized
segments of the economy. The courier industry has world over been recognized as an essential and
indispensable part of any economy. In India, various factors like growth of the industrial segment, growth in
exports and imports and overall economic scenario of the country have contributed to the growth of the courier
industry. Domestic courier industry with a turnover in excess of INR 22 bn is still in a nascent stage. India has
more than 2,300 courier companies. It is a highly disintegrated industry with nearly 20 players in the organized
sector, 2,000 in the semi organized sector, and the rest in the unorganized sector. There are a few major players
in the organized sector who have a combined market share of 90%.

3PL market in India: Poised for remarkable growth

The 3PL market in India is still in a relatively nascent stage, with multinational companies in all industries being
predominant users of these services. However, domestic majors in leading industrial sectors have also begun to
follow the footsteps of their multinational counterparts, starting with outsourcing their basic logistics functions.
Realizing the significant cost reductions and several other benefits gained by these companies, a large number of
small to medium companies in all the industries are gearing up to use 3PL services for their logistic functions,
resulting in tremendous potential for 3PL market in India. One of the most important logistics functions for Indian
industries still are transportation and warehousing, which are likely to be outsourced to 3PL service providers.
High level of growth is estimated for the Indian 3PL market in the next 5-7 years. The Indian 3PL market,
estimated at about USD 890.3 mn in 2005, is expected to grow at a CAGR of 21.9% to touch USD 3,556.7 mn in
2012E. Other sectors which have shown substantial contribution to 3PL market and significant growth potential
include information technology, hardware and electronics, FMCG, and retail sectors.

Table 2: Changing Industry Dynamics

Services Today Future
Consignment Tracking Track and Trace GPS/GIS- dynamic routing of inventory
Logistics Transportation Movement Solutions, manpower, money and material
Regulatory Compliance Consultative + Compliance
Transportation Trucking Bonded: Express, Trucking
Warehousing Space provider Dynamic engagement between stock and fulfillment
Material Movement Pick up & drop off Procurement & movement

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Figure 1: ndian Express Cargo Industry USD billion

Indian Express Cargo Industry

1.49
1.60

1.40 1.15

1.20 0.99
U
S
0.87
D 1.00

M 0.67
i 0.80 0.60
l
l
i 0.60
o
n 0.40

0.20

0.00
2003 2004 2005 2006 2007 2008
Year

Table 3: Key Players in Road Logistic

Road Express Air Express Courier Industry Warehousing Industry Trucking Industry 3 PL Service Provider
Gati Gati Bluedart Exel Logistic Delhi Assam Roadway Exel
Safeexpress Safeexpress Firstflight AFL Patel Roadways Bax Global
TNT( Speedage) Bluedart AFL Om Logistic SemCorp
TCI DTDC CWC Panalpina
Overnite Safex Geo Logistic
Professional Courier DHL

Ocean logistics
With a coastline of 7,517 kms, India has 12 major and 184 minor ports. Ports play a vital role in the supply chain
of most exporters from India. It involves various intermediaries like freight forwarders, customs house agents,
multi modal transporters, and inland container depots & container freight stations.

Containerization: Fastest growing cargo segment in shipping

One of the most remarkable developments in the traffic carried at various ports across the world is
containerization of bulk goods, which were earlier carried loosely from one port to another. This has resulted in
multiple benefits in terms of reduction in cost, increased safety of goods transported, increased speed of
transportation, and significant increase in efficiency in handling cargo. This is evident from the fact that traffic
handled at various ports in India has grown at a rate of 6.7%, whereas container traffic has grown at a CAGR of
14% from 2.2 million TEUs in 2000 to 4.7 million TEUs in 2006.
Future Supply and Demand
Transport Systems
India’s container traffic growing at CAGR of 14% Burgeoning trade is driving container traffic at major ports in the
country. In the past five years, India’s container traffic has increased at CAGR of 14%. There has been a sea

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change in accepting containerized trade in the region, which has played a crucial role in this high growth rate.
Remarkably, India’s container traffic is growing faster than the global container traffic during the past 6-7 years.
The country’s growing external trade, particularly textile, automotive, auto ancillary, engineering, and capital
goods, have boosted containerization in India. India’s growing domestic market is one of the major drivers of
containerization. Containerization to contribute 22% to total cargo by 2010-11E The robust growth of India’s
manufacturing industry has pushed up India’s containerization. The government of India has pursued a policy of
developing a number of Inland container depots and container freight stations to facilitate modal interchange and
distribution of cargo and most importantly to avoid awkward customs procedures from the waterfront.
containerization at major ports of India contributed about 11% of total cargo handled at those ports in 2000-01, it
increased to 16% in 200506, and is estimated to further increase to 22.7% by 2010-11E.

Strong container growth to boost major capacity addition of various ICD/CFSs

ICD: (Inland Container Depot). To capitalize on the growing trend of containerization of international trade,
containers are permitted to be moved to points in close proximity to important industrial stations, so that the
imported goods are cleared at as close as possible to the importers premises. The facility also enables exporters
export goods from a point that is closest to their premises. With this aim of creating a suitable place and facilitating
export and imports, ICD were created.
CFS: (Container Freight Station). For examination, assessment of the containerized cargo, both import and
export CFS were set up. They are appointed as custodians of imported goods by the commissioner of customs
India currently has 177 ICD/CFSs in various parts of the country with a majority of them in the northern and
western regions. With high growth in container trade, most of the ports and the CFS near them are working at
100% capacity utilization. JNPT, India’s largest container handling port which carried 2.8 mn TEUs, accounts for
59% of total containers handled in India and the CFS’ capacity in the region is ~ 900,000 TEUs. In the recent past,
there have been many players who have established their presence in the ICD and CFS segment. The barriers to
entry are also low as land acquisition is the only criteria for establishing presence and in the present scenario;
volume generation is much higher as compared to ICD/CFS handling capacity. We believe that the quality of
service provided at the CFS and strong relationship with shipping lines is an important differentiating factor in the
industry
Figure 2: Container Contribution of Various Indian Port

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.
Figure 3: Containerization of total cargo in %

Containerisation in India

23

25

16
20

15 11

10

0
2000-01 2005-06 2010-11
Year

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Figure 4: Container Growth in Million TEU’s

Steady Container Growth

9.2
10

6.2
7

6
m 4.5
T
E 5 3.9
U
s
4

0
2004 2006 2008 2010
Year

Table 4: Number of CFS in India

Region CONCOR Others Total
North India 15 22 37
South India 10 58 68
West India 13 39 52
Central India 9 - 9
East India 8 3 11
Total 55 122 177
Table 5: Existing and Proposed CFS at JNPT
Existing CFS at JNPT Capacity TEUs/annum Proposed CFS Capacity TEUs/annum
B/Lawrie 96,000 AMEYA CFS ( CMA-CGM) 48,000
Conware 39,000 CWC CFS LOGISTIC PARK ( MSC) 72,000
CFS- JNP 61,200 FORBES- GOKAK ( PATVOLK) 40,000
CFS-D’node 72,000 SOL LOGISTIC 115,000
CWC 54,000 PNP MARITIME 57,000
DRT 97,200 THAKUR CFS 139,500
GDL 186,000 TRANSINDIA CARGO SYSTEM 60,000
Maersk-CFS 99,600 APOLLO INTERNATIONAL 60,000
Maersk 42,000 NHAVA SHEVA LOGISTICS 90,000
TLP 105,600 DADAJEE DHACKJEE LOGISTICS 60,000
SEABIRD 37,200
ULA 46,200
MSWC 20,400
CWCL 19,200
JWC 14,400
PREETI 7,800
TOTAL 997,800 741,500

Container train business: Cashing on inland transportation of containers

In India, till some time back, container carrying was a monopolistic industry. Container Corporation of India
(Concor) was the only player allowed to run container trains. While container traffic increased at a phenomenal

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rate, Concor was unable to keep up with that pace and hence, the government, to boost container traffic, decided
to end the monopoly and allow private parties to enter the business segment.
Figure 5: CFS Concentration in India

Indian Railways has issued licenses for running container trains and till date 14 players have received licenses for
running through various categories. The four categories that Indian Railways has issued license for are:
Various players who have already applied for the license for container trains for various categories are:
Table 6: Various Categories for container train licence
Category Routes License fee USD mn
Category I JNPT/Mumbai Port – NCR 11.5
Category II JNPT/Mumbai Port – Hinterland and not NCR 2.3
Category III Pipavav, Mundra, Chennai/Ennore, Vizag, Kochi with Hinterland 2.3
Category IV Kandla, New Mangalore, Tuticorin, Haldia/ Kolkata, Paradip and Marmugao- hinterland 2.3

Transport Systems
We believe that rail-linked ICD and cargo generation are the most important factors for success in the business.
Some of the minimum requirements for setting up of a CFS are:
Table 7: Minimum Requirement for CFS
Land CFS: min 1hectare; ICD: min 4 hectare
Traffic volumes ICD: 7000 TEU’s/year ( EXIM); CFS : 1000 TEU’s/year ( EXIM)
Rail head ICD Investment in rolling stock, tracks, equipments etc
Others Customs clearance

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Table 8: Players Applied for Licenses
INR 500 mn= USD 11mn INR 100 mn = USD 2.2 mn
Concor J M Baxi
MSC ( Hind Terminal) Delhi Assam Roadways
NOL ( Hindustan Infrastructure) Bothra Shipping
SICAL Pipavav Rail Corporation
ETA
Adani Group
P & O Ports ( DPW)
Gateway
Reliance
Table 9: Key Players in The Industry
Multi Modal ICD/CFS Container train Freight forwarders Container Companies Shipping
Lines
Allcargo Concor Concor AFL CONCOR Maerskline
United Liner Gateway Gateway Air and Sea Cargo Indian Container Leading P&O Nedlloyd
Agencies Distriparks Distriparks System Company
Agil Freight Allcargo Reliance Alpha Cargo Express Maersk APL
SICAL SICAL Express Freight MSC
Forwwars
JM Baxi JM Baxi

Challenges in the industry

Dominance of large number of unorganized companies The logistics industry is highly unorganized. It
is estimated that the unorganized segment accounts for over 80% of revenues across the value chain. There are
a large number of market participants present across the value chain. Logistics encompasses transportation,
warehousing, distribution, and value-added services. In transportation, predominately in the road segment, the
market is highly fragmented with individual truck owners and small unorganized companies holding significant
market shares. Truck owners with less than five trucks account for 67% of the total trucks owned and operated.
Warehousing activity is also highly unorganized with individual owners dominating this segment. The fragmented
nature of the industry leads to end-user industries utilizing disintegrated services to form their logistics chain. This
involves dealing with a large number of transporters, warehouse agents, and distributors. These market
participants are involved only in providing disintegrated services with little value addition to the entire process and
hence, are in a position to offer highly competitive rates, many a times undercutting organized companies.
However, with companies moving to outsource logistics in an effort to remain competitive, share of the
unorganized sector is slowly dipping over the years.
Infrastructure changes essential to improve efficiencies The logistics industry is hampered due to
poor infrastructure such as roads, communication, and ports. Over 50% of all goods are transported by road. The
road infrastructure is poor in the country. Of the total road length of over 3 mn kilometers, national highways
constitute only 1.9% of the road network amounting to 57,737 kilometers. On the other hand, national highways
carry over 45% of the total goods transported by road. This puts enormous pressure on the highway system. Also,
the poor condition of roads and their maintenance further strains users. Another reason was that only about 1% of
national highways were four-lane till 2000, leading to slower pace of goods movement, affecting transporters’
efficiency and higher cost due to higher usage of fuel, directly affecting profitability and turnaround time. It is
estimated that in India a commercial vehicle on an average runs at a speed of around 35 kilometer per hour
(kmph) compared to over 100 kmph in other developing countries. However, this problem is likely to have a lower
impact over the long term as the government has initiated projects to four or six-lane national highways covering
the four metro cities and connecting the North-South and West-East corridors. These projects are planned to
provide world-class roads that are likely to cut down travel time and ensure savings in fuel and maintenance

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costs. This is further likely to have a positive impact on the profitability of truck operators and help in consolidating
the road freight industry. Reformation of government policies must for development of industry Government
policies affect growth and efficiency of logistics management companies. In India, lack of such a policy means that
individuals and smaller companies are able to offer cheap services to end-user industries, affecting profits of large
organized companies. The policy on tracking, if implemented, is likely to positively impact companies which can
invest in such technologies. In current market conditions, although logistics management companies are willing to
invest in such technologies, the issue of cost sharing by the end-user industry is acting as a restraint. Government
policy mandating usage of tracking devices is likely to force end-users and logistics management companies to
invest in such technologies and the cost of offering these services will reflect the cost involved in tracking.

Figure 6: Container Traffic Flow

Sources
1. Logistics Spreading Out- Edelweiss Securities
2. Logistics: Helping in Wealth Creation – Kotak Securities
3. Retail, Franchising and Logistics-Price Waterhouse Coopers
4. SSKI India Research

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