Expected trends in the logistics sector in 2021


2020 was a year filled with uncertainties. It reduced human interaction, compelled people into staying at home and forced a quick shift from the offline to online mode.  Serving the nation tirelessly in these times was the logistics sector which took upon itself to ensure a smooth and efficient connectivity across value chains to keep the world going. The sector- which was itself struggling during the adverse circumstances- learned, relearned and adapted to the changes.

As per reports, the Indian logistics market is expected to grow at a CAGR of 10.7 percent between 2020-2024. Now as we enter 2021, we take a peek at the trends that will drive the sector.

Agile supply chains with new operating models:  

During the pandemic , the graph of uncertainties was at its peak and at that time, forecasting errors were bound to happen especially when operating on conventional models. A lot of gaps and flaws in the business models were highlighted, which affected the underlying drivers of the sector like available cargo capacity, commodity price, etc. Now as we enter 2021, shippers will be keener to work with companies who are quick to adapt, are more reliable and can provide easy communication and visibility across the chain.

Furthermore, to make the supply chain more agile, emphasis will be given on the infrastructure that will respond to disruption quickly and will be a combination of speed, cost and efficiency. We will see a further push to build-to suit warehousing and in-city warehouses.

Technology Advancement:  

While the pandemic caused many disruptions across verticals, it did help the industry make a much- needed shift towards technology.  Companies understand the need and importance of automation in making the industry more efficient and agile. It is believed that Big Data will play a vital role in taking the industry forward.

More and more companies will be seen adapting Blockchain, IoT(Internet of Things) and AI(Artificial Intelligence) to ensure smooth, efficient and transparent operations to tackle demand and deal with the fluctuating demand.

Rise of Ecommerce:

As people were compelled to stay at home due to safety measures, a massive boon was seen in the e-commerce segment. We saw people shop for essential items via online modes during the pandemic. In light of the same, many brick-and-mortar businesses during these times were forced to adapt to the online mode to survive, which further led to the increase in e-commerce segment. As per a 2019 report by Deloitte, e-commerce market in the country will touch $84 billion in 2021 from $24 billion in 2017.  In 2021, more businesses will be making a shift towards the online mode which along with the change in consumer behaviour will help derive the segment.

Solving the Last-mile Delivery hiccups:

It is believed that the last mile cost accounts for 40-50% of the entire supply chain.  With the change in consumer behaviour and increased demand of the ecommerce sector, it increases the risk of encountering inefficiencies. In 2021, the demand and need for a more efficient last mile segment will be of utmost importance as we expect consumer expectations on delivery services to move up the value chain.

Apart from increasing the last-mile efficiency, companies will also be making a shift towards Electric Vehicles (EVs) for their last mile operations with the sector giving more importance to sustainability.

In January 2020, Amazon India made an announcement to include 10,000 EVs (both 3Ws and 4Ws) in its fleet of delivery vehicles by 2025. IKEA also intends to be 100% electric globally in terms of mobility by 2030.

Similarly, Flipkart has also committed to replacing 40% of its delivery fleet with EVs.

To conclude with, 2021 will certainly herald a new phase for a sector amid innovations, technologies and expectations galore.

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