The next 5 years are expected to bag a compounded annual growth of 8% for the road logistics market in India, making it a USD 330 billion markets by 2025, says a report.
‘Inter-city Logistics Market Study’, released by consulting firm RedSeer’s early-stage research arm, RedCore on Thursday reveals that the growth will be driven by factors such as the rapidly growing e-commerce sector and a growing retail sales market, among others.
As per the study, the inter-city road logistics spend in India in 2021 stood at USD 209 billion, accounting for around 87 percent of total road logistics spend. 63% of which accounted for the on-demand/spot market, while the rest 37% was for the contract market.
movement of goods on an immediate basis with prompt payments, which helps in satisfying unfulfilled and urgent demands is called On-demand/spot freight transport. It counts sectors such as defense, PSUs, agriculture, food and FMCG, and building materials, among others, as its key clients.
The report suggests, that the metros accounted for as much as 40 percent, or USD 84-billion, of the total inter-city logistics, spend of USD 209 billion.
The report said, logistics spending contributes to 14 percent of the overall GDP of India, wherein road logistics has the largest share with 60 percent of the overall market spending.
Given the massive economic opportunity that lies here, a slew of startups is disrupting this sector with innovative business models that solve most of the industry pain points from the supply side, it said.
These startups are operating across the value chain ranging from discovery and booking, value-add services, and execution with their target clientele consisting of consignors as well as truck owners, among others, the report said.
The study considers an open marketplace that leverages technology to enable stakeholders in the sector to connect, as a notable business model.
It focuses on the on-demand/spot market and allows truck owners to get instant booking from verified and trusted transporters without any commission, it said.
Additionally, multiple government policies have come up in recent years that have supported the disruption in the logistics space such as the Logistic Efficient Enhancement Program (LEEP), Digital India, and Make in India, among others, as per the study.