A ‘Bolt’ from the blue so­lu­tion to de­mands

De­mand is a prob­lem in many of the de­vel­oped coun­tries, but man­ag­ing those de­mands has been the big­gest chal­lenge in In­dia, shares Su­mit Sharma, Co-founder, GoBolt.

Cargo Talk - - Guestcolumn -

The lo­gis­tic sec­tor is help­ing in man­ag­ing the de­mand of sup­ply chain, where it man­ages the flow of things from the ini­tial stage to the fi­nal stage of con­sump­tion in order to meet the re­quire­ment of the cor­po­ra­tions. This in­cludes the phys­i­cal items such as food, ma­te­ri­als, an­i­mals, equip­ment, and liq­uids even the ab­stract items such as time and in­for­ma­tion to op­er­ate. The items mainly draw in lo­gis­tic sec­tor usu­ally in­volves the flow of in­for­ma­tion, han­dling ma­te­rial, pro­duc­tion, pack­ag­ing, in­ven­tory, trans­porta­tion, ware­hous­ing, and of­ten se­cu­rity. In­creas­ing in the flows of trans­porta­tion has been thus a fun­da­men­tal com­po­nent of mod­ern changes in eco­nomic sys­tems at the global, re­gional and lo­cal scales. These changes are not merely quan­ti­ta­tive with more trans­porta­tion in mo­tion, but also struc­tural and op­er­a­tional.


Struc­tural changes in­volve man­u­fac­tur­ing sys­tems with their ex­pand­ing ge­og­ra­phy of pro­duc­tion, while op­er­a­tional changes mainly fo­cus on bulk trans­porta­tion with its ge­og­ra­phy of dis­tri­bu­tion. The work­ing of lo­gis­tics en­ables a greater ef­fi­ciency of move­ments with an ap­pro­pri­ate choice of modes, ter­mi­nals, routes, and sched­ul­ing. The pur­pose of lo­gis­tics sec­tor is to make avail­able goods, raw ma­te­ri­als and com­modi­ties, ful­fill­ing four ma­jor re­quire­ments re­lated to order, de­liv­ery, qual­ity and cost ful­fil­ment.

And thus lo­gis­tic sec­tor is considered as mul­ti­di­men­sional value added ac­tiv­ity in­clud­ing pro­duc­tion, lo­ca­tion, time and con­trol of ele­ments of the sup­ply chain.

True, trans­porta­tion is a cru­cial junc­ture which acts as the ner­vous sys­tem of the econ­omy in In­dia.

In the cur­rent sce­nario of the lo­gis­tics, gen­er­at­ing rev­enue in In­dia is low as com­pared to other de­vel­oped coun­tries. Prob­lems faced by the In­dian lo­gis­tic in­dus­try:

De­te­ri­o­rat­ing the con­di­tions of roads in the coun­try is no less even today.

The mid­dle­men trouble (break­age and in­crease of over­all op­er­a­tional cost) while mov­ing from one state to an­other.

Lack of GPS track­ers in ve­hi­cle re­duces the trans­parency for cus­tomers and the driver.

Cost as­so­ci­ated with trans­porta­tion re­mains con­stant in­clud­ing va­ri­ety of bribery in dif­fer­ent states.

Be­ing the cru­cial part in the ma­nip­u­la­tion of lo­gis­tic, trans­porta­tion in­volves mov­ing load, de­liv­ery speed, ser­vice qual­ity, op­er­a­tion costs, the us­age of fa­cil­i­ties and en­ergy sav­ing.

Cost of petrol cre­ates a ma­jor im­pact on the cost of cer­tain prod­ucts which will re­sult in sig­nif­i­cant changes in sup­ply chain.

But in the same line, it is im­por­tant to un­der­stand the growth as­pects in the lo­gis­tic in­dus­try: –

The in­crease in in­vest­ment from both pub­lic and pri­vate sec­tor y-o-y

When In­dia be­comes the man­u­fac­tur­ing hub

In­fil­tra­tion of e-com­merce giants into the hy­per-lo­cal de­liv­ery seg­ment and ex­press

In In­dia, trans­porta­tion alone holds 60 per cent share of lo­gis­tic in­dus­try and rest 40 per cent is con­trib­uted by ware­hous­ing, value-added lo­gis­tics, etc. Be­ing the back­bone of man­u­fac­tur­ing and trad­ing ac­tiv­i­ties in the econ­omy lo­gis­tics has an im­por­tant role to play, where the ex­pen­di­ture is ris­ing and de­mand is al­ways high. Be­fore GST sets its foot in In­dian mar­ket it is im­por­tant to know the be­fore and af­ter ef­fect of GST in lo­gis­tic sec­tor.

Tax­ing is­sues

The in­di­rect tax sys­tem in In­dia is not only com­plex with var­i­ous taxes ap­pli­ca­ble to an in­dus­try but also widely seen to be bungling and dif­fi­cult. An­other as­pect of the sys­tem is that taxes are non-cred­itable more­over due to re­stric­tion in the law or be­cause there is no com­pat­i­bil­ity be­tween cen­tral and state levies. In ad­di­tion to this, a re­sult of mul­ti­ple ap­pli­ca­ble levies, the charge en­gaged in the mak­ing of goods, sale of goods and pro­vi­sion of ser­vices has to ful­fil with pay­ment, re­port­ing and re­view re­quired un­der such special tax au­thor­i­ties. The GST sys­tem has put down to ren­o­vate the present in­di­rect tax rule with the pur­pose of ad­dress­ing the above-men­tioned is­sues.

The ma­jor al­ter­ation pro­jected un­der the GST sys­tem is that GST will in­volve one ef­fec­tive duty of tax on a busi­ness as com­pared to the mul­ti­ple levies of tax.

For many who think GST has in­creased the cost of ev­ery item today, should know that the re­cent GST has brought the cost of lo­gis­tic sec­tor fall down by 5-10 per cent. For the first time, the lo­gis­tics sec­tor has got the right plat­form, where they are ap­pre­ci­ated and sup­ported for the cost con­scious mar­ket. GST does bring dou­ble pos­i­tive im­pact. Trans­porta­tion mainly works on road and time spent at In­ter­state check posts due to a dif­fer­ence in taxes be­tween states ac­counts to idle time has been elim­i­nated in GST regime. Hence, trans­port time would re­duce by 1015 per cent and the cost of trans­porta­tion will be by 5-10 per cent which will re­duce the costs for cus­tomers and lo­gis­tics com­pa­nies, mak­ing it more ef­fi­cient and prof­itable.

The work­ing of lo­gis­tics en­ables a greater ef­fi­ciency of move­ments with an ap­pro­pri­ate choice of modes, ter­mi­nals, routes & sched­ul­ing

(The views ex­pressed are solely of the au­thor. The pub­li­ca­tion may or may not sub­scribe to the same.)

Co-founder GoBolt

Su­mit Sharma

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