Despite progress, challenges persist:

Infrastructure Gaps:

Despite significant investments in infrastructure projects such as the Bharatmala Pariyojana and Dedicated Freight Corridors (DFCs), challenges remain in terms of road quality, port congestion and inadequate rail connectivity. These gaps lead to delays in transportation and increased costs, directly impacting overall logistics expenses.

High Dependency on Road Transport:

Over 60% of freight movement in India relies on road transport, which is often less efficient than rail or waterways. The heavy reliance on roadways increases fuel consumption and transit times, contributing to higher overall logistics costs.

 Last-Mile Deliveries: 

The rapid rise of e-commerce has increased the pressure on last-mile delivery, particularly in urban areas. Issues like inadequate addressing systems, limited parking and regulatory challenges further complicate the last leg of logistics, leading to inefficiencies and higher costs. Last-mile delivery also accounts for a substantial share of overall logistics expenses.

High Port and Inland Haulage: 

High port charges and inland haulage costs contribute significantly to the overall logistics cost in India. For instance, vessel-related charges at Indian ports are much higher than those at global counterparts, making Indian exports less competitive. Additionally, rail freight margins have been inflated, which adds to transportation costs.

Fragmented Market Structure:

The logistics sector in India is highly fragmented, with many small players dominating the market. This clustering leads to inefficiencies in operations and supply chain management, making it difficult to implement standardized practices and optimize costs effectively.

Regulatory Complexity:

The logistics sector continues to face regulatory challenges, including multiple layers of taxation and compliance requirements. These bureaucratic hurdles create barriers for new entrants and hinder operational efficiency for existing businesses.

Slow Technology Adoption:

Although digitalization has been identified as a critical area for improving logistics efficiency, the sector's slow adoption of advanced technologies like IoT, AI, and blockchain remains a challenge. Smaller companies, in particular, face difficulties in implementing modern systems due to high upfront costs and lack of expertise, which slows down the overall improvement of the logistics process.

Government Measures to Tackle the Current Challenges

Infrastructure Development Focus: 

The Government is actively investing in infrastructure to address bottlenecks and improve connectivity, particularly in underdeveloped regions:

Sagarmala Programme: Investments in port connectivity and inland waterways are part of efforts to enhance trade efficiency. 

Public-Private Partnerships (PPPs):

The government is fostering public private partnerships to drive innovation and enhance operational efficiency:

Private players are being invited to develop warehousing zones along highways through tenders, promoting collaboration between public and private sectors. 

Adoption of AI and Predictive Analytics: 

The government is promoting advanced technologies like AI, predictive analytics, and machine learning.

The Logistics Data Bank project under PM Gati Shakti utilizes technology for supply chain visibility, which reduces delays and enhances planning.

 

 

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