‘People and skills are the pain points’
For last 10 years, logistics trade in India was always considered a sector with a positive future and veterans felt encouraged. But at the ground level things have not moved till now and did not take the path they were expected to. Much of it was due to l
Future of warehousing and road surface transportation, logistics, and overall industry in India is now largely dependent on GST, sooner the parliament passes it, within a year of that economy will see benefits trickling in. It will improve the ease of doing business in india, industries such as FMCG, apparel, electronics, automotive, pharma, will have good reasons to celebrate. This one aspect of introducing GST will directly and indirectly will reduce product cost by close five to 10 per cent if not more, depending on industry segment. Currently as per study it is indicated that logistics cost of the total product cost close to 21 to 23 per cent in India. This is high. While in developed economy it’s close to 3 to 5 per cent.
If one were to speak to real estate companies, who have in anticipation been and have acquired huge land banks across the country, particularly closer to major potential hubs or gateway points for north, south, east and west of India. Many are ready to build state-of-the-art multiuser facility, catering to cross section of industries including cold chain products.
Cold chain vertical is huge opportunity in india. Vegetables, cold packed food, perishables, pharmacy today experience enormous wastage which adds hugely to cost escalation hence sourcing is much restricted to local or reachable zones; good supply chain infrastructure and warehouses in cold chain will discipline this.
GST will change the landscape of this country; at first it will give huge positive flip to logistics and supply chain management industry (including warehousing). Currently our trucking industry is too fragmented and faces enormous challenges with regard to skills training for drivers and much of the costing hinges on variable demand and supply of vehicles in the market place, at times this scarcity is staged.
While large manufacturing and trading companies manage and have some sense of predictability (while they suffer too), medium and smaller companies are larger victims of it, they end up mapping variable costs on month on month basis. These pain points will get addressed with global players entering market and Indian players will have to scale up with increased competition in market place, end user will be paying for service and predictability, not for hidden costs.
People and skills are large pain points of this industry which strangely have gone unaddressed or have not been addressed adequately. If quality people with right skills have to be deployed in hinterlands of the country which is where future hubs will be coming up, that is a challenge today, in order to overcome that companies need to build training institutes, resource pools on very large scales; this is very essential.
All these call for investments and holding power, which many Indian companies are not keen on, as cost of raising capital here india is very high, average rate of interest being 12 to 14 per cent. Hence we need global players to invest and build this infrastructure, politics of politicians has to take back seat in the interest of India.
We have to have (logistics, supply chain management and warehousing) long term view. In my opinion, India will go the same way the USA and Europe or other developed economies around the world have evolved, with regard to logistics and supply chain management aspect is concerned. We have to have supply chain process which is predictable with costing and visibility and be seen using latest technology. We have waited for long and change is around the corner, though this turn around the bend has been real long. Hopefully we will see the wait end soon, like in past, its same today, prospects and future of warehousing and logistics and supply chain industry here in india continues to be bright.
GST will change the landscape of this country. It will give huge positive flip to logistics and supply chain management industry (including warehousing). Cold chain vertical gives huge opportunity The challenge lies in deploying quality people with right skills in the hinterlands of the country which is where the future hubs will be coming up