The growing urbanisation and citizens’ growing reliance on the e-commerce segment is giving a push to the Urban Logistics demand. This growing demand for Urban Logistics is compelling organisations to look at ways that can facilitate a smooth supply chain that is cost-effective, sustainable and worth every penny. In this feature, we explore the challenges and opportunities posed by growing urban freight demand, the importance of developing the right infrastructure to mould it for modern India, and the role of technology in facilitating smooth and sustainable operations.
Urban Logistics, a buzzword concerning the movement of goods in urban areas is witnessing rapid growth in today’s day and age. The Indian cities are driving the nation’s economic activity, contributing about 63% to the national GDP. And, it is the urban freight transport that is working as a crucial enabler of this economic activity.
Urbanisation continues to bring more and more people to its cities and metropolitan regions. To be exact, India is expected to add 124 million people to its cities in this decade. With this rapid growth, the demand for urban freight will also increase by 140%, says a report on “Enhancing Urban Freight Systems” by RMI India.
Along with the growing urbanisation, the changing consumer behaviour and rapid growth in the e-commerce market, which is expected to reach 11 lakh crores by 2022, urban logistics also works as the cherry on top for the growth of overall urban freight demand.
This growing urban freight demand due to changed consumer behaviour, demanding both quick and more frequent parcel deliveries to homes along with comfort to consumers, is also bringing in challenges along the lines of environmental impact, costly final mile, and safety issues.
The challenge lies in the influx of commercial vehicles resulting in urban traffic congestions, vehicle pollutions, and parking difficulties, says Sandeep Chadha, Founder & Managing Director, Warehouster Capital.
Another challenge is the poor infrastructure, which is also taking a toll on the environment. “Because of unplanned urbanisation and other factors, we do not have strong infrastructure. Warehousing, parking, roads, and many other elements need to be looked into,” says Uttam Digga, Chief Operations Officer, Porter who sees poor infrastructure as a prime challenge in urban logistics.
Speaking along the same lines, Rubal Jain, Managing Director, Safexpress says, “Modern supply chain will call for closer proximity to consumers’ markets as well as better consolidated/ transhipment facilities. Most cities are in their most basic state and do not have comprehensive logistics systems.”
“The biggest challenge faced by the industry today is insufficient integration of transport networks, information technology, and warehousing & distribution facilities & real-time flow of information, regulations existing at a few different tiers, are imposed by national, regional and local authorities,” said Alexandre Amine Soufiani, Managing Director, FM Logistic India while highlighting more logistical challenges
Having highlighted the challenges of the growing urban freight demand, there is a need and urgency to employ smarter city logistics, emphasises Mr Chadha.
As the cities grow rapidly, the scalability and complexity of urban logistics are increasing exponentially, he says. And, along with this, there is a myriad of opportunities for the industry to tap upon.
“Growth in urbanisation will give you the right set of densities to optimise your solution. With the increase in density, more aggregates will come in and shared economies will get benefitted, leading to businesses flourishing in the field. To sum it up, density with fragmentation is exciting and an enabler of opportunities,” Mr Digga explains.
Urbanisation will bring new business structures and innovations and help move businesses towards sustainability.
Urban logistics will offer unique tailor-made solutions for the transport of goods in cities by consolidating & rationalising the existing logistics platforms and creating innovative solutions for the future through the use of information and communication technologies,” said Rubal Jain.
An increasing shift towards renewable or ‘green’ energy sources (solar, wind, etc.) is already propelling the development of electric mobility and facility solutions for logistics, and more opportunities for companies will rise in this realm as urban logistics put into the spotlight the environmental impact of the operations.
To tap on the growing market, we will see more infra investments by the sector and more innovations which will open gates of opportunities and enhance economic competitiveness, reduce logistics-related costs, improve air quality, create jobs, and help achieve climate goals.
CASHING IN ON OPPORTUNITIES WITH BETTER INFRASTRUCTURE
As opportunities for the logistics industry arise with the growth of Urban Logistics, a dire need to build the right infrastructure also tags along, one which is efficient enough to meet the consumer’s need and expected time of delivery and reduces road congestion promotes sustainable practices.
To keep the operations hassle-free and sustainable, the industry needs to develop new infrastructure closer to the cities and at the same time learn to fully utilise and work with the existing ones to manage the vehicles entering the cities.
This is an abridged version of the original article that was published in the August Issue of the Logistics Insider magazine. To read the complete feature article, get your digital copy now.
