Frost & Sullivan recently hosted the fifth edition of its annual strategy workshop for the logistics sector, titled ?Supply Chain Transformations 2014?. In this edition, Frost & Sullivan sought answers on logistics opportunities from India?s international trade and emerging industries, the diverse logistics challenges of rural vs. urban markets, etc.
Frost & Sullivan?s studies found that the transportation and logistics market in India grew at a CAGR of 7.2 per cent between 2009 and 2013. But growth in the last two years was only in the range of 4-5 per cent, mainly due to the decline in exports and imports and a slowdown in the domestic market?s urban consumer segments. However, an analysis of India?s trade statistics (by Frost & Sullivan) found that the country?s trade value (excluding petroleum and oil) with countries it has trade agreements with grew by 12.2 per cent in 2013-14. Similarly, it was identified that rural population income and consumer expenditure has grown faster in urban areas. In addition, while overall consumer goods and retail industry witnessed sluggish growth, the organised retail segment witnessed a substantial growth enhancing its share from less than 5 per cent in 2009 to approximately 7 per cent in 2013. Based on these findings, Frost & Sullivan sought insights from different stakeholders of the logistics sector at this year?s logistics workshop.
Speaking on the occasion, V G Ramakrishnan, Managing Director – South Asia, Frost & Sullivan said, "For logistics service providers (LSPs) to effectively tap opportunities in fulfilling varying logistics needs of international trade, emerging industries, and rural markets, a suitable and specific set of capabilities for the respective segments must be possessed and a collaborative approach involving logistics end users must be adopted. Logistics end users are increasingly open about utilising shared resources of LSPs to gain efficiencies. But, lack of cooperation within the LSP fraternity is resulting in several inefficiencies affecting all the stakeholders of the logistics fraternity."
During the session on how to tap logistics opportunities from India?s international trade, it was summarised that LSPs in the country must primarily understand their leading trade partners and the most traded commodities. Further, they also need to understand the changes in composition of leading trade partners over the years and the outlook on expected changes in the coming decade. This would enable LSPs to focus their capabilities in the high potential trade corridors and thereby gain maximum opportunities. In this context, the role of free trade agreements of a country in influencing trade growth and shift was discussed in detail along with showcasing of major free/preferential trade agreements that India has in force currently. It was also noted that Asia?s share in India?s total trade increased from 40 per cent in 2004 to 56 per cent in 2013, at the cost of North America and Europe.
During the session on tapping logistics opportunities from emerging industries in India, the entire fraternity opined that online retail, healthcare, electronics and communications, and renewable energy industries offer highest potential. The combined size of these industries as of 2013 was about US$ 80 billion. Speakers and panellists in this session also opined that the online retail industry could disrupt conventional supply chain models of several industries, and implementation of the uniform Goods and Services Tax (GST) regime in the country by 2015, which could add more momentum for this industry. It was summarised that LSPs need to gain capabilities to support innovative supply chain and inventory management models, along with technology enabled visibility to fulfil the needs of these emerging industries. The workshop concluded with the session on addressing diverse logistics needs of urban and rural markets, comparing these on several key parameters. It was established that rural income and expenditure is growing faster than urban income. However, rural areas severely lack the logistics infrastructure available in urban areas. Panelists and participants opined that LSPs should take initiatives to collaborate among themselves as well as with end users to facilitate growth of logistics infrastructure in rural areas, only then can they tap the emerging opportunities from this segment. Meanwhile, to successfully tap opportunities in the international market, the opinion was formed that LSPs need to enhance their infrastructure, network reach, and industry specific logistics expertise.
The workshop witnessed participation from about 100 logistics experts and thought leaders representing different stakeholders of the sector like LSPs, logistics service users, automation and technology solution providers, academic institutions, and media/publication companies.