Logistics to create vocations for 3 million by 2022?
TeamLease Services estimates that the logistics sector will create employment for at least three million people by 2022. Mayur Saraswat, Head of North Business, TeamLease Services, shares that technology disruptions will create more skilled jobs such as IOT, Big Data, AI and Robotics. As the report says, the logistics sector will create 3 million jobs in next four years. Please elaborate on that.
With the new-found infrastructure status and GST giving tailwinds to the sector, the logistics sector in India is set for a major transformation. These factors, coupled with domestic consumption led GDP growth and evolution of the logistics sector, in response to India’s industry and economic requirement – is resulting in an inflection point in terms of job creation. The sector is poised to grow at a CAGR of 10.5 per cent and generate `21,00,000 crore in revenues and three million new jobs by 2022. Of these, Mumbai, Delhi –NCR, Chennai and Bengaluru will generate 1.74 million incremental jobs. The bulk of the job creation will happen within the seven sub-sectors of logistics. Road freight will generate 1.89 million incremental jobs, followed by waterways (450,000 incremental jobs), airfreight (400,000 incremental jobs), warehousing (120,000 incremental jobs), rail freight (40,000 incremental jobs), courier services (60,000 incremental jobs) and packaging (40,000 incremental jobs).
If the sector has the potential of creating 3 million jobs, then the sector also need to have sufficient skill set. What do you feel about the current skill gap and required skill sets in the logistics sector?
There is a critical need of manpower development in logistic sector, which is undergoing rapid evolution, both in terms of scale and scope of services, thanks to the growth rate that sector is experiencing. Today, the manpower available in the Indian logistics sector critically lacks domain skills. The gaps in skills required are at all levels, from senior and middle management to the junior and operational level. At an overall level, there is a lack of specialised knowledge of practices and most workers only have basic in-house experience driven skills with no formal education, training or certification. Given the way the industry is organised there is very little impetus on skill building and it gives rise to gaps in the core technical skills. In fact our study shows that by 2022, the industry will experience a skill gap of 950,000 people across the seven sub-sectors and eight key cities, which are currently hubs for logistics related jobs. In addition to the functional and domain skills, the employees lack knowledge of regulatory affairs, technology, communication and effective planning, which are major skill deficit that the sector is facing across junior to mid to senior level. Future jobs will be more technology driven and analytical. Technology disruptions will create more skilled jobs such as IOT, Big Data, AI and Robotics, Cloud Computing,
Manpower development in logistic sector is needed. The sector is undergoing rapid evolution, in scale & scope of services
Drones and driverless vehicles.
Where do you see the role of start-ups in logistics industry?
While the logistics sector is growing, its future is dependent on ability to embrace technologies, improve its processes and drive continuous improvement management in the operations. Therefore, there is a need to develop a disruptive solution that can tackle problems related to IT, warehouse management, networking, communication and complete logistics control. The start-ups in logistics space have a significant role to play in driving technology adoption and helping streamline the organised business such as trucking. So we see emergence of start-ups which are bringing solutions in area of real-time fleet tracking, providing mobility solution, IoT solutions, route optimisation that will help the transportation, trucking, warehousing, freight & cargo companies. We also see emergence of start-ups which offers last mile delivery and hyper local delivery services.
How will infrastructure status help grow the logistics industry?
Infrastructure status for the logistics sector will help attract more funding and credit at competitive rates and on a long-term basis. This will specifically enable logistics companies to: 1) Access larger amounts of funds as External Commercial Borrowings (ECB). 2) Access longer-tenure funds from insurance companies and pension funds, and 3) Be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL). Rising logistics costs impacts global competitiveness of exporters, so this move will help the export segment and make Indian goods more competitive in the global markets. It will also help bring down cost of goods in the local markets. It is estimated that logistics costs account for 14.4 per cent of GDP, and this infrastructure status will help reduce this by about two per cent in next three to four years. In line with the infrastructure status, the union government has earmarked `6
Lakh Crore, for investment in the infrastructure sector in this current fiscal budget of which 50 per cent would be spend on creation and upgradation of roads, railways and ports. Companies across industries, whose operations depend significantly on warhousing and logistics can now expand their presence in Tier II and Tier III cities and create a stronger network of warehoused and logistics facilities in these cities – which will translate into more growth for companies and more jobs for people. Overall, this move will improve the competitiveness of the logistics industry and help stimulate job creation.
Mayur Saraswat Head of North Business TeamLease Services