5 minute read
Infiltrating India
Anand Baldawa, CEO, thinKitchen knows the Indian market inside out, he tells us how brands can permeate this vast and diverse country – starting with logistics…
While India is an attractive market given its size and scale across customer segments, it can appear to be a daunting market to approach from a product distribution viewpoint, especially on the logistics front. Unlike markets in America or Europe, there is no single large logistics or retail partner in India who can make doing business easier. However, what most people may not know that logistics, which is an essential component of distribution can be managed with relative ease in India. A strong logistics network integrates everything that a business needs to transport, store, and deliver goods to its location. It is an efficient integration of first mile, mid mile and last mile connectivity. Effective logistics is an optimization of all three through lead time reduction and cost management. First mile delivery involves the transportation of products from the merchant or manufacturer’s premises to a central warehouse. Middle mile delivery – also known as second mile delivery – generally involves the transportation of products from the warehouse to retail locations/ fulfilment centres. In contrast, the last mile delivery is the movement of finished products from the fulfilment centre to the consumer. In a product’s journey, it is moved from the warehouse shelf, to the back of a truck, to the customer’s doorstep—and hence the final step of this process, is known as the “last mile of delivery.”
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India is replete with third party logistics providers (3PL) that function as a one stop shop and manage end-to-end solutions for customers, who outsource their multi-nodal logistics needs, with real time data driven tracking and competitive pricing. Then there are reliable and experienced in offering secure inbound and outbound logistics including freight forwarding, transportation, warehousing and VAS such as material handling, packaging, sorting, labelling and reverse logistics amongst others. They are expert logistic providers who offer door-to-door delivery across regions. Some of the leading logistics companies in India are BlueDart, GATI, AllCargo, TCI, DHL. FedEx, Dehlivery, VRL all of which offer a combination of complete logistic solutions. Industries like auto components, BFSI, IT components, pharmaceuticals, e-commerce and retail amongst others are customers of 3PL or contract logistics.
India has 12 major ports which handle a cargo traffic of over 712 million tonnes (in the current fiscal) and numerous air cargo terminals that are gearing up to handle 10MT of cargo by 2030.
When it comes to first mile logistics, contract logistics providers may be involved in providing logistics across the globe or may have a region wise focus such as a focus on Asia, Europe, Africa or some other global region. Most large and mid-sized logistics providers would have international offices and representatives along with strong domestic networks and operations within India. They offer ex works logistics services from the country of origin to India, taking care of all paper work and clearances required to pick, pack and transport the goods from the vendor/ supplier point of origin. They may work via self-license or a leased license to facilitate customer
Air miles
clearance at the country of origin and the destination port in India.
India has 12 major ports which handle a cargo traffic of over 712 million tonnes (in the current fiscal) and numerous air cargo terminals that are gearing up to handle 10MT of cargo by 2030.
Mid mile logistics lies at the heart of the logistics chain and 3PL providers in India provide the necessary support to facilitate the transport of goods from warehouse to distribution/ fulfilment centres. As per reports, in 2022 industrial and warehousing space leasing rose electronics retailer recently leased over 3 lakh square feet warehouse space for its exclusive use. Similarly, at thinKitchen, there is 15,000 square feet warehouse space with a dedicated warehouse management team, located a three-hour drive time from the landing port of Mumbai, in our own premises, to house and manage all inventory at a centralised location.
The world of logistics is moving closer to the end consumer and India is no exception. In order to make last mile delivery sustainable and quicker, businesses are bringing their fulfilment centres nearer to consumers, offering inventory management and pick, pack ship services at the end. They are also using technology to deal with multiple pick-up points, delivery modes and destination points. 3PL and express delivery service providers are also looking at innovation to enhance efficiency and efficacy of the last mile delivery. Amazon India recently launched its own air fleet, Amazon Prime Air, to offer faster deliveries across the country, making it the third region globally where Amazon offers this service. India’s vast consumer base is spread across the length and breadth of the country over 27000+ pin codes (also known as zip codes) and brands and logistic companies are aiming to service as many possible in minimal time. A case in point is thinKitchen which today services 98 per cent of all Indian pin codes.
India’s logistics industry is six per cent to 46.3 million square feet in major cities in India and 3PL and ecommerce sectors drove 52 per cent of the total absorption of this space in 2022. This enables 3PL providers to offer safe, reliable, customised and economic solutions to clients. Apart from relying on 3PL service providers for warehouse space, corporates and brands may have their own warehouse space for cost effective and efficient mid mile logistics. Tata Croma, one of India’s leading consumer expected to increase making a significant impact on the country’s GDP. In recent times it has seen significant impetus with initiatives such as GST and the introduction of e-way bills. In 2022, the logistics sector saw the launch of multiple government initiatives $1.3 trillion GatiShakti National Master Plan for multi-modal connectivity and infrastructure, Open Network for Digital Commerce (ONDC), the Infrastructure Finance Secretariat and the overarching National Logistics Policy. The
Amazon India recently launched its own air fleet, Amazon Prime Air, to offer faster deliveries across the country, making it the third region globally where Amazon offers this service.
National Logistics Policy seeks to integrate various logistics services and create a seamless supply chain network, it will increase the competitiveness of India’s logistics sector by reducing costs, improving efficiency and increasing the use of technology. The policy also prioritizes the development of multi-modal transportation infrastructure, including ports, airports, and roadways to improve connectivity and reduce bottlenecks in the supply chain. India aims to be among the top 25 countries by 2030 in the Logistics Performance Index (LPI). In the current fiscal year there has been an increase in capital expenditure on infrastructure investment by 33 per cent i.e., Rs 10 lakh crore for 2023–24, which is 3.3 per cent of India’s GDP. There is also an emphasis on simplifying taxes, reducing compliance, improving the regulatory environment and pushing technological and digital solutions for paperless trade operations as well as improving cost efficiencies.
Clearly logistics in India is a priority growth area with a focus on infrastructure, technology and service. Logistic providers and businesses in India have the right tools at hand to providing optimal logistic solutions and ultimately delivering a world class customer experience by getting the product to the right consumer with maximum efficiency.
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