Digitization: The way forward for Indian transportation companies

The logistics sector in India is at the cusp of an unprecedented growth, and digitization will be the power that would transform the landscape.

Estimated to have a value of over $200 billion, the Indian logistics industry is now looking at a healthy post-pandemic future. For long, it was deemed to be a labour-heavy industry with poorly educated truck drivers, subpar infrastructure and consistently plagued by bad condition of vehicles. However, today the Indian logistics industry is integrated with the most advanced digital tools and is able to carry out end-to-end online operations. Governmental reforms and rapid extension of high-speed roads are also steadily bringing down the risks and travel time. This is heartening because the pandemic impact made all the stakeholders realize the urgent and widespread need to digitize logistics operations.

With 13% of its GDP being spent on logistics, India is paying dearly and up to twice as much as the developed nations. This money can be saved by digitizing processes. Let’s take a look at two of the core areas where technology is bound to transform the Indian logistics sector.

Operational efficiency – More than 1 crore trucks of different sizes and types operate in India. About 90% of these are owned by the small and unorganized sector operators with a fleet size of less than 5 vehicles. Unlike other industries that see the heaviest concentration in metros, the trucking industry is present predominantly in the Tier II, Tier III and smaller towns. Thus, they are not only disjointed, but also struggle with technology adoption. When the pandemic hit, most of these truckers had to sit idle as transport hubs were under lockdown and lack of online networking made it difficult for them to procure loads. On the other hand, supplies were hit just as hard. Thus, the demand and supply sides were not able to work efficiently due to lack of communication.

By using advanced technology-driven logistics platforms which are now available in India, these small-scale trucking operators can build an online presence for themselves. There are several cloud-based tools that can be used to optimize and monitor operations, communicate to potential leads and promote the business digitally. Further, leading online logistics marketplaces offer compliance, verification and digital payment facilities which safeguard the interests of shippers and transporters alike. Through this community driven logistics approach, the smaller transport companies can deliver a stellar experience to their clients without the need for heavy upfront investment in hardware and proprietary tech. The streamlining of processes and reduction of time spent on manual processes leads to speedier operations and trucks are able to spend more days (25-26 days in case of digital operations compared to 16-17 days conventionally) on road, thereby generating higher ROI.

Accountability – One of the biggest reasons why Indian logistics services are costlier and less efficient is the lack of accountability and trust. In the absence of transparency and real-time visibility of operations, shipments get delayed. At times, the shippers don’t pay the truck drivers on time. All this has created an environment of mistrust. Consequently, truckers and shippers tend to operate within their closed loop networks. While this might help in preventing fraud, it leads to exploitation of both sides and lack of standardized as well as accountable operations. However, digitization will transform the scenario as the end-to-end logistics operations get digitized and stakeholders are able to monitor everything in real time. Logistics managers become better informed and assured, thus enabling them to take superior decisions and make accurate timeline commitments. 

Today, we have technologies such as cloud, AI, IoT and GPS etc to digitise end-to-end logistics operations including the paperwork and regulatory compliances. By using the online platform model for the services, the Indian logistics industry can reach global standards of ease, efficiency and accountability. We can turn India into a global manufacturing hub and a $5 trillion economy much sooner than the projections by adoption of industry-wide digital logistics operation!

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