The logistics industry faces many challenges, from customer service and transportation issues to supply chain visibility. Over the last few years, eCommerce has blossomed, and many international companies have established their stand in the Indian marketplace. However, it has also brought a load on logistics-based activities and put a strain on supply chains. Have you observed any change in the logistics transport systems around you?
As logistics is the backbone of the Indian economy and makes up to 14.4% of the Gross Domestic Product (GDP), it is essential to resolve the most significant issues related to logistics. Which is the biggest problem in the field, you may ask? It is the unbalanced transportation problem.
What is an unbalanced transportation issue?
Every organisation has the vision to establish an automotive supply chain to ensure that their goods and products reach the audience. But companies have lately started facing a significant challenge with the distribution. The unbalanced transportation problem refers to a situation with unequal supply and demand. In some cases, the supply may exceed the demand, and in others, the need may exceed the supply.
Either way, the unbalanced transportation issue can cost the company a significant sum. It can hinder the organisation’s operations, increase costs, and not fulfil customer demands. Additionally, the physical movement of goods from manufacturers and warehouses to the final customers can incur more transportation costs for companies.
Reasons for the imbalance
There is a need to reduce the massive transportation cost that companies pay to get their products transported from supply origin to demand destinations. Transportation accounts for 40% of the logistics cost, which can give rise to other issues like unaffordability. Throughout the pandemic, supply chains experienced major disruptions. Therefore, there is a steady recovery phase that the logistics sector in India is going through.
One of the primary reasons for the unbalanced transportation issue in India is the lack of proper transportation systems. With the demand for last-mile deliveries increasing, India’s logistics sector is expected to grow at a compound annual growth rate of more than 10%. However, many companies, including ones from the eCommerce industry, rely on bikes or informal truck companies as a mode to deliver products.
Both these systems need more resources and sophistication. While using scooters for logistics and last-mile urban deliveries is not a new phenomenon, it is the most popular one. We have seen delivery personnel from prominent companies lug around sacks of parcels to be delivered on tiny mopeds. This process can be risky as the packages are often heavy and burden the moped. Similarly, companies that use mini-trucks, tempo, or vans to deliver goods can be reliable. But ultimately, the packages delivered in them are often less in quantity, making it an unaffordable option.
How can the logistics sector improve?
This unbalanced transportation issue can end up hindering companies’ growth and can be financially unfeasible in the long run. This problem can be resolved if appropriately analysed, and India’s logistics sector can undergo a significant transformation. Here are a few areas in which the industry can improve:
Collaborate with legitimate transport companies
India only has a small number of formal transport companies that can use efficient technologies and integrate them into companies’ supply chains. Collaborating with such companies can help you leverage their systems and provide comprehensive logistics solutions to customers.
Increase supply chain transparency
Transparency within the supply chains can be incredibly beneficial for businesses as it can help make better decisions. For that, it is also essential to implement a formal supply chain management system to keep track of all information.
Integrate data-driven decisions
It is possible to eliminate the challenges in the supply chain by simply optimising the supply chain. Companies implement big data to track patterns and trends and determine the problem. Using this, they can also arrive at potential solutions quickly, which can benefit their business in the long run.
Optimise truck use
Logistics can cost a lot, with trucking costing as much as 30% in particular cases. Many companies that use trucks for transporting goods can find it unaffordable due to rising fuel costs and limited products that need transportation. If you want to avoid a waste of resources, it is essential to optimise truck use by maximising the capacity of each truck.
Enhanced inventory management
Transportation services in India can have higher logistics costs which are 2 to 5 times the global average. Even then, you cannot blame all of this on vehicle use. It can also be due to a lack of inventory management and tracking systems. To enhance inventory management, it is essential to implement software and digital systems that can store and rack inventory efficiently.
Promote fuel-efficient vehicles
Companies can also consider switching to fuel-efficient vehicles to combat the rising fuel costs and counter emissions. Many supply chain companies have found electric vehicles (EVs) more economical for last-mile logistics. Introducing fuel-efficient vehicles with enhanced capacity to transport goods can be a favourable option for companies in the long run.
The roads and highways also need work to be optimal for logistics functions. Once these changes are implemented, they can benefit all significant companies, provide employment opportunities, curb vehicle emissions, introduce better technologies in the logistics sector and resolve the unbalanced transportation problem.