India has become one of the fastest-growing economies in the world. We have been set at the forefront of both imports and exports. The logistics market in India is forecasted to grow at a CAGR of 10% between 2019-2025. With this amount of growth, there are bound to be various difficulties hindering the industry.
The logistics industry in India has become one of the biggest sectors. Things aren’t the same as they used to be in 1970. At Mega, we have witnessed this change with every passing decade. With the help of government policies, improvement in infrastructure and innovation in technology, the industry has the means to satisfy customers.
As this takes place, there are gaps in the service and supply chain system that may prove to become a hindrance.
Manpower And It’s Need
According to National Skill Development Corporation, the supply chain sector in India has employed over 16.74 million skilled employees, and the number is expected to rise to 25.04 million by 2022. Regardless of the size, the sector is still not getting the recognition that it needs. Drivers are the backbone of logistics yet there are gaps in skills in the workforce as well as other critical factors that affect them from every end. This hampers the quality of service.
The Vicious Cycle
Let’s look at the scenario holistically. In India, the logistics sector is not a lucrative career choice for many, which is why many young professionals don’t want to take this path. This perception is what blocks or restricts the supply of skilled labour. Factors like poor education, unskilled labour and lack of quality manpower have created gaps in the delivery of efficient and timely services.
But this is just the tip of the iceberg. The industry is led by unorganised sectors who hire unskilled drivers to cut cost. Many times, these drivers are not trained to handle goods the way a skilled professional would so this creates trust issues between clients and the logistics providers.
Moreover, skilled professionals do not want to join the sector due to lack of decent pay. When clients are not ready to pay reasonable rates or cut costs to transport goods, it hampers the development of the logistics company which in turn creates lack of manforce.
There is no correct ecosystem for development. Even organised Transport companies who have decent infrastructure struggle with this. Unethical competition has led Transporters to do whatever it takes to keep up with the competition, regardless of the skills required, and cost cutting by clients will not help them in any way.
Now let’s come to the development factor. A robust technology is required today to manage everything in real-time. But again, customers do not want to pay anything extra for this technology. This fact is hampering logistics companies from developing important tools like applications, monitoring tools, softwares etc. They need to be able to have access to technology in trucks & warehouses in order to ensure that work goes on smoothly.
Finally, the lack of infrastructure in the country plays a huge role in hampering logistics growth. Dangerous roads, no pit stops, no proper eateries, no hygiene or comfort is provided to drivers which makes Indian hi-ways very unsafe. Many drivers have to risk their lives to deliver goods in India. Consider this factor and combine it with the poor payments that drivers get and you will understand why logistics is not a lucrative career choice for many. It is often taken by the less educated to make ends meet. This problem cannot be overlooked!
It all boils down to a) reimbursement of correct rates from customers b) IT and Hi-way infrastructure and c) Change management by Transporters. This vicious cycle will not stop until new reforms are made to regulate the industry.
What Can Be Done To Eliminate These Gaps
The biggest catalyst in reforming this sector are companies a.k.a clients. Companies need to understand that logistics is not a secondary option to consider.It is as important as their own operations. Hence, they need to offer realistic payments to ensure that logistics providers can cater to them with all necessary needs. Most Freight contracts disallow detention payments, levy huge penalties for non-placements and do not provide for IT development.
Toning down unhealthy competition
Organised sectors and unorganised sectors are made to compete in an unhealthy match to give contracts which is really hurting the trust factor in the industry. Logistics Companies need to strive to train their workforce with all the necessary skills required to handle the job. No matter which sector they come from. This unhealthy competition, created by the need for cutting Transport cost, will only degrade the industry’s future.
The Indian logistics and supply chain system is quite fragmented. There are multiple parties involved. Hence effective communication is catalytic. The workforce needs to be trained to communicate effectively and keep all the parties in the loop. Having the right knowledge and good written and oral communication will make transactions smooth and improve the quality of logistic services.
Technology can help here. For example, at Mega, we have curated our IT solutions on the concept of “Single Version of Truth” where all the partners of the Supply chain can track all processes and other details regarding deliveries through our “Megamatic” app. This is helping us bridge the communication gap and improve trust in the chain.
The use of computers is imperative in any field, including logistics. Having a basic knowledge of computer use can help professionals adapt to industry-specific softwares. Apart from this, logistics companies will need to get resources and support from the industry to create revolutionary technology to manage data, ensure proper coordination and advance their management. This will of course come at a cost and Customers should be ready to pay for such deployment of IT by Transporters and logistics service providers.
Companies need to cooperate with logistics firms and set down norms of disclosure in a safe manner. Logistics professionals need to be able to have technology and other available equipment in trucks and warehouses so that they can coordinate with their teams to get things done. There needs to be a single supply of data at companies so that multiple logistics providers can safely manage things without leaking any information.
It’s important to be the jack of all trades in this industry. We have witnessed these gaps at Mega Fright and our company has been taking important steps to train our staff in a way to improve efficiency in order to provide quality services.
However, we still believe that the logistics sector does not get the recognition it deserves, in the eyes of the customers as well as the government. There are serious needs that have to be catered to in order to make this industry appealing to the youth because without a workforce, the industry is sure to crumble.
To Make India Future ready with a competitive and robust logistics hub, all partners of the supply chain including Customers, Government and Logistics Service providers have to be trained, it cannot be left to the service providers alone. We are optimistic that the industry can catch on with the trend and we can contribute to filling these gaps.