The logistics industry in India has been on a positive growth trajectory since the last decade. The industry was pegged at USD 250 billion in 2021 and is expected to grow by a 10% -12% CAGR, eyeing a projected value of USD 380 billion by 2025. A major contributor to this growth has been the increase in the 3PL (third-party logistics) format. In fact, in India, third-party logistics is estimated to increase by $10.74 billion, at an 8% CAGR, between 2021 and 2025.
Companies that do not have the bandwidth or expertise in logistics, often rely on 3PL services, which can save time and money by providing logistics expertise, streamlining supply chains, and reducing waste. When a firm grows, its supply chain may struggle to meet demand, while large companies tend to focus on other core competencies. Most organisations can benefit from the assembly, inventory management, storage, contract packaging, or shipping support of 3PL. 3PL service providers, in essence, manage, arrange, and oversee the supply chain.3PL accounts for about 27% of the total e-commerce logistics in India (as of 2020) and is expected to grow 3X in the next 4 years.
To facilitate this growth, the 3PL industry is becoming a substantial job creator. According to industry forecast, hiring in the logistics sector has increased by 11% in between April 2022 to May 2022. In fact, driven by the 3PL format, logistics sector is poised to employ about 8 lakh people by the end of this year. While the demand for usual roles like Pickers, Packers, Loaders Unloaders, Data entry operators, Putters continues to surge, there is also an increased inclination towards hiring people with niche skills sets.
Some of the emerging profiles in the segment are consignment booking assistant, e-documentation assistant, courier delivery executive, warehouse packer, inventory clerk, logistics and distribution manager, supply chain analyst, supply chain coordinator, and supply chain manager etc. The logistics sector has also witnessed tech adoption on a large scale. Hence, the demand for AI professionals has also increased as there is a need to facilitate optimization of capacity planning, enhancing efficiency, reducing expenses, and increasing production, all while ensuring a safe working environment for employees.
India’s 3PL sector has witnessed many supportive reforms over the last couple of years. On one hand, the introduction of uniform tax rates and elimination of entry charges under GST has augmented the growth of the sector. On the other hand, even unplanned causes like COVID-19 has also prompted growth of the sector and thus the demand for skilled talent in the industry.
However, for the logistics sector to reach its true potential and create a magnitude of jobs, there are still few persisting challenges that needs attention. Our infrastructure (especially port and road) is still not very strong and transportation routes are cost intensive. With rising fuel costs, overall freight and transportation charges have increased, thereby adding more pressure on the sector. Additionally, while logistic firms have made technical progress in recent years, but they still face issues when it comes to safeguarding the documentation that is essential for proving claims in arbitrations and lawsuits. This is made worse by incomplete or inaccurate documents, as well as the reliance on manual processes.
Logistics will require digitization and automation in the future. Technology will no longer be a facilitator; rather, it will drive processes, efficiency, and optimization. Emerging technologies like data analytics, automation, and quantum computing will fuel growth. New entrants will be early technology adopters and drive adoption across the ecosystem. The logistics industry would also benefit greatly from adopting a technology-driven approach to documentation, as delays in transit and deliveries due to inadequate documentation would reduce substantially.
In terms of service, there will be more seamless integration with global logistics. For long-term growth and resilience, it is imperative that suitable warehouse facilities are built outside of the country’s major metropolitan trade hubs and along the nation’s busiest commercial routes. There should be an organized inventory of all logistics and supply chain documents for claim substantiation during arbitrations and bilateral disputes to combat other legal obstacles.
All of this would not only aid the growth of the sector but also contribute towards creating large scale employment opportunities in the country.
This article is authored by Ajoy Thomas, Vice President and Business Head (Retail, Ecommerce, Logistics & transportation), TeamLease Services. All views are personal.
