‘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

Cargo Talk - - Guest Column -

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

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