The Indian logistics sector, as a linchpin of the seamless movement of goods across diverse industries, plays a pivotal role in the national economy. Despite its significance, the sector faces persistent challenges that threaten to hinder its progress and global competitiveness.
According to a recent Ernst & Young report, India is projected to grow to a USD 26 trillion economy by FY48. As the nation gears up for rapid growth over the next 25 years, the transportation and logistics (T&L) sector has to facilitate this. The efficient flow of goods, materials, and products is regarded as the lifeblood of an economy, and in India, with its vast and diverse landscape, the logistics industry has a pivotal role. But the disproportionately high cost, approximately 7.8% -8.9% of the country’s GDP against the global average of 8%, is a major challenge confronting the Indian logistics sector. This directly impacts the global competitiveness of Indian businesses, placing them at a disadvantage compared to international counterparts with lower logistics expenses.
Efficiency and economics of logistics
A primary challenge stems from the intricate network involving multiple players and intermediaries, leading to a multitude of cargo exchanges. This not only results in high costs but also introduces inefficiencies into the system. The unorganized players often prioritize manual labor over technology due to its perceived cost-effectiveness.
The diversity in export and import commodities further compounds the situation by causing a mismatch between the types of containers used. This lack of standardization contributes significantly to operational inefficiencies within the industry.
On the digital front, the absence of a seamless data infrastructure to map the movement of goods creates challenges in optimizing operations due to a lack of data-driven decision-making. This deficiency hampers the sector’s ability to make informed choices for enhancing efficiency.
Although some digital solutions exist, they fall short of providing comprehensive end-to-end visibility, leaving gaps in the tracking and monitoring of goods throughout the supply chain. The poor adoption of digital technology in logistics exacerbates the issue, leading to inefficient route selection, reliance on manual processes, and uninformed decisions resulting in increased costs.
Furthermore, the Transportation and Logistics (T&L) sector grapples with a multitude of challenges, including the impact of inflation, macro-environmental effects such as the Ukraine and Israel wars, ongoing disruptions in the supply chain, the looming threat of recession, rising interest rates, increased fuel prices, and a cautious consumer base. These factors collectively contribute to a complex and challenging operating environment.
Adding to the complexity is a siloed infrastructure setup within the sector, which hinders seamless collaboration and communication between various components. Additionally, there is a deficiency in modern equipment adoption, further impeding operational efficiency. The uneven utilization of freight resources exacerbates these challenges, creating an environment where the sector needs help to adapt to the dynamic landscape effectively.
How does one manage such economic tumult? Successful companies in the sector are future-proofing themselves by adopting strategic measures.
Unifying customer data
Amidst heightened uncertainty, smart Transportation and Logistics (T&L) organizations proactively strategize for best-, expected-, and worst-case scenarios. The efficacy of such planning hinges on the continuous monitoring and analysis of crucial signals, such as capacity in key lanes, customer spend by lane, and customer lifetime value. This meticulous approach facilitates informed decision-making regarding resource allocation, strategic investments, and adjustments in response to market dynamics. Achieving this level of agility necessitates the seamless integration of customer data across sales, service, and operations.
Unfortunately, a considerable portion of T&L business operations, especially in sales, marketing, and customer service, still rely heavily on manual methods, such as phone calls, spreadsheets, and email. This leads to important knowledge being scattered across shared drives or even just in employees’ memories, creating risks for operational continuity, particularly during employee turnover or absence. Imagine the challenge of locating critical information for a special high-value consignment when the responsible individual is unavailable or unknown; the importance of efficient information management for maintaining strong customer relationships.
Logistics companies acknowledge the need for diverse services but often fail to segment or analyze customers based on value. Without centralized customer data, it’s challenging to apply intelligence and analytics to identify trends or prioritize strategic initiatives effectively.
T&L companies embracing data unification experience rapid and substantial benefits. Integrating multiple data sources and creating a cross-sectoral use case for logistics stakeholders facilitates improved data accessibility and enhances operational efficiency within the logistics sector.
Delivering superior shipper experiences
Transportation and logistics leaders are leveraging the power of centralized customer data to drive efficiencies and enhance business resilience, ultimately elevating the overall shipper experience. A prime example involves harnessing internal and external data through artificial intelligence (AI) to predict customer retention and identify potential churn.
This predictive approach empowers sales and marketing teams to take proactive measures, enabling them to address potential issues before they escalate into crises. Real-time data intelligence equips customer service agents with the capacity to make informed decisions swiftly, leading to faster problem resolution. The intelligent assembly of data unfolds compelling narratives that provide valuable insights.
By scrutinizing volume trends across different geographies or evaluating staffing requirements in warehouses, docks, or call centers, businesses can uncover critical information. Remarkably, many large companies lack access to shipper-specific on-time delivery performance, a gap that shippers themselves often fill based on their firsthand experiences. It becomes imperative for sellers to possess data reflecting both successes and failures to truly comprehend their relationships and engage effectively with clients.
Effective leaders ensure that their teams have access to the right data, fostering a deeper understanding of customer interactions. This strategic approach yields tangible results, as evidenced by a notable 29% increase in sales productivity. By embracing data-driven decision-making and prioritizing insights, T&L leaders not only enhance operational efficiency but also cultivate stronger, more informed relationships with their clients.
Ultimately, combining these strategies is crucial to exceed the expectations of shippers. While navigating economic ups and downs, T&L companies must redefine their approach from quoting to final delivery. Automation, AI, and real-time data integration offer solutions to reduce redundancies, cut costs, and foster efficient growth. Equipping teams with the necessary information ensures smarter decision-making, even in ambiguous situations, leading to tangible outcomes. In essence, the evolution of T&L requires a holistic approach, unifying data, enhancing customer experiences, and leveraging technology to emerge stronger and more resilient in an ever-changing economic landscape.
In conclusion, over the past few years, the world has witnessed transformations that have significantly disrupted global supply chains. Consequently, the T&L industry must undergo an intense transformation. To shape the future of transportation and logistics, companies should adopt a distinct strategy, focusing on essential imperatives such as envisioning the future, achieving operational excellence, keeping up to date with emerging technology, and unifying customer data, to ultimately deliver better customer experience. By addressing these key areas, T&L companies can scale up, incorporate fresh capabilities, and strategically enhance their businesses to ensure resilience and future success.
(Disclaimer: Gourav Ray is Regional Vice President – Sales, Salesforce India. Views are personal.)
