TRANSPORTATION SECTOR OVERVIEW-2020

Statistics, news & updates: everything you need to know about the Transportation Industry in India

Snapshot

  • Summary
  • COVID-19 Impact
  • Industry Clusters
  • Growth Drivers
  • Key Players
  • Market Stats
INDUSTRIAL EQUIPMENT SECTOR

Sub-Industries

  • Air Equipment & Components
  • Cargo
  • Marine Equipment & Components
  • MRO for Airlines
  • Railway Equipment & Components
  • Railways
  • Road
  • Ship and Boat building

Summary

India’s natural coastline and vast river network give it a competitive edge in providing transportation and logistics services, both domestically and internationally. These can be classified into ports and ports services, warehousing, transport – shipment services, e – logistics, inland waterways for freight and passengers, expressways and dedicated freight corridors. India’s logistics service sector itself is expected to grow from $ 115 billion to $ 360 billion by 2032.

India should closely look into the development of the service industry, given the potential and need for sustained large scale investment. Investments typically have a long gestation period. However, once the infrastructure is created, linkages to the rest of the economy provide significant multiplier effects.

Covid-19 Impact

The Covid-19 pandemic has made business tougher for domestic port and logistics companies, which were already grappling with falling earnings amid the global economic slowdown.

Currently, different sections of the business, like warehousing, trucking and last-mile delivery among others, are facing several challenges, with labour shortage being the biggest challenge across all the segments. Longer turnaround time in case of ports, demand shock impacting volumes and supply chain disruption impacting last-mile delivery some of the other challenges facing the industry.

The coronavirus outbreak has stalled the continuous growth of cargo volumes, which registered positive growth for the period December 2019 to February 2020, to a negative year-on-year growth of 2.01 per cent in March 2020, dragged lower by a significant drop in container and liquid cargo volumes, said a CARE Ratings report.

In FY20, cargo handling at India’s major ports grew by a meagre 0.82 per cent as against 2.90 per cent growth achieved in the previous financial year.

Going ahead, container traffic is likely to be affected by the slowdown in the automotive industry and other container cargoes (imports of white goods and granite exports) for FY21 due to weak demand.

Map – Industry Clusters

Growth Drivers

  • The Indian Government keeps reaffirming its aim to improve the logistics industry in India by making attempts to modernize the functionality starting with infrastructure development. The administration has introduced key infrastructural development projects to increase access to the untapped rural markets in the country.
  • These projects will focus on bringing more efficiency to the supply chain and improve connectivity issues faced due to the geographical vastness of the country and the different terrains present.
  • Revolutionary policies and reforms rolled out by the Indian government such as the Goods and Services Tax (GST), granting of the infra status, and relaxing the FDI policies will play a major role in 2020 with the boost of the Indian logistics industry received. GST changed the face of the way Indian logistics worked.
  • Since then, the logistics industry shifted towards creating logistics with multi-modals and large formats, Industrial centres that can act as goods distribution and aggregation hubs were also encouraged to expand due to the introduction of GST.
  • The advent of technology in the logistics industry has spelt loads of progress in the operations and various systems. Technology such as artificial intelligence, machine learning and the internet of things are meant to move the foundations of traditional and old-school logistics operations in the country.
  • Though it may take some time, it shows promising results to make better improvements in productivity than any other means while streamlining the operations systems of the Indian logistics sector. When such modern technology can replace a system that is prone to error, we expect great things to happen.

Key Players in India

 National

  • Mahindra Logistics
  • TCI Express
  • Container Corporation (Concor)
  • VRL Logistics
  • Blue Dart Express

International

  • Fed Ex
  • Gateway logistics
  • XPO Logistics
  • DHL
  • H. Robinson
  • Expeditors International

Market Stats

  • India’s transportation sector is dominated by the road segment (~75%) which has seen huge infrastructure investments over the past decade. On the other hand, there has been under-investment in rail, leading to it losing share within transportation. In the past 12-18months, we are seeing a transformation trend of FTL moving to LTL or express rapidly as customers are demanding smaller and quicker deliveries directly to distributors rather than multiple warehouses in every state.
  • The value of the Indian logistics Industry in 2019 is said to be around $160 Billion and the world anticipates this to grow to at least $250 Billion in the year 2020.
  • This growth can be attributed to the increasing number of e-commerce retailers and their stellar services to the citizens of the country.
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