Bridging the gap – what modern technology means for logistics

Digital technology is advancing faster than any other innovation in history and is now nearly ubiquitous.research forecast The number of active internet users in India will grow by 45% in the next five years And, with 622 million Indians already online, society is steadily moving toward making digital connectivity a necessity rather than a luxury. As part of the Digital India initiative, many transformative digital platforms have sprung up – UMANG, GSTN and BHIM-UPI to name a few – all with the aim of building digital security and trust among Indians. This has led to a rise in on-demand consumerism in recent years as platforms have gained greater traction. Looking back over the past few years, the preferences and expectations of the average Indian consumer have changed dramatically.

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A key success story associated with the country’s technological revolution over the past 5 years has been digital payments, and India has firmly established itself as one of the global leaders in financial technology. UPI is one of the flag bearers of this shift, with the rise of payment gateways facilitating seamless payments. When UPI initially went live, the total number of UPI payments was 6% compared to 36% for card paymentsHowever, in FY2021, UPI’s share expanded to 63%, while the share of card payments shrank to 9%.This also has huge implications – digital payments volume in India is estimated to grow at an average annual rate About 50% in the past five years. This success story has had a direct impact on the logistics industry, simplifying payments throughout the logistics lifecycle for both consumers and logistics providers.

Untapped potential in the logistics industry

India’s logistics industry is huge, accounting for about 14% of GDP, is expected to grow from around US$250 billion in 2021 to around US$380 billion in 2025, at a compound annual growth rate of 10-12%.Furthermore, more than 90% of the logistics sector is unorganized 90% of the logistics sector is unorganized, Includes small owners (fleet size less than 5 trucks), broker or carrier affiliates, small warehouse owners, freight forwarders, and most recently gig labor. And, as with any large unorganized game, technology presents enormous opportunities for impact. We’ve seen this more clearly in the last mile space in recent years.

One of the biggest challenges facing the current unorganized logistics industry is cost-effective scalable pairing between consumers and transporters. The challenge lies in the long tail of SME and retail consumer use cases (beyond enterprise use cases), which are often addressed by smaller brokers and transporters with limited reach and speed. This model is not cost-sustainable at scale.

The evolution of logistics

Modern platforms have been able to ensure that these transmission networks are digital, Available immediately with no reach or access restrictionsA key success story here is the on-demand intra-urban last mile logistics model. Due to the short distance, the ticket size of this model is small, and in order to be sustainable, it needs to achieve efficient pairing costs supported by seamless discovery, distribution and transportation. Some new-age technology platforms are doing a commendable job here, which directly translates to massive increases in vehicle utilization, higher revenue per delivery vehicle, and savings for customers.

The impact of e-commerce

Over the past decade, the rapid rise of e-commerce and on-demand consumerism has directly impacted the logistics industry, setting high standards for ad-hoc, just-in-time and expedited deliveries, leading to a dramatic shift in the first mile, middle mile and last mile deliver. This has led to the rise of concepts like dark shops and two-wheel gig jobs that barely existed before. We now have an entire industry around two waves of gig workers, a massive long-tail workforce, and key technology interventions around onboarding, tracking, payments, and more. The industry has reached an unprecedented scale today. Furthermore, e-commerce growth will only accelerate in the future due to the advent of direct-to-consumer commerce. This enables small businesses to reach a wide audience digitally and sell their products. It will be fascinating to see how the logistics industry responds to this change.

The impact of government intervention

Indian politicians.A key policy it has launched in this direction is the National Logistics Policy (NLP), which aims to reduce logistics costs from Currently 14% to 9-10% of GDP. Technological initiatives such as the United Logistics Interface Platform (ULIP) form the key backbone of NLP, leveraging rich databases of logistics-related information and resources provided by various ministries to provide functions such as driver and vehicle verification, cargo tracking, route planning, inventory management, etc.

what the future looks like

All in all, these are very promising times for the logistics industry in the country, with the rapid rise of consumerism creating higher demands for logistics at sustainable costs. Technology is playing a very critical role in solving this problem, aiming to solve issues of coverage, discovery, inventory management, shipping, tracking, payment, etc. Large scale and cost effective. This has seen the emergence of many new age technology-based logistics organisations, as well as substantial government investment through policies and initiatives such as NLP and ULIP. It will be very interesting to see how the industry develops and adapts further in the coming years.



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The views expressed above are the author’s own.



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