Oman Observer

Challenges and opportunities in logistics

In today’s environment, the biggest challenge for companies is to adapt to new market trends. By 2020, global logistics is expected to grow by up to 3 per cent a year. According to the Global Logistics Market report, logistics generated revenue of $1.301 billion in 2011. The report states that logistics companies need to accept challenges and market trends.
“Logistics represents a number of new opportunities, such as the greater importance of the market within the region, the expansion of e-commerce and the provision of professional services in the industrial sector. The unsustainable market environment, the ever-growing online market, the shifts in markets to Asia, the growth in demand for special transportation services, requires new corporate strategies and substantial investments in logistics services,” said Dirk Friebel, logistics expert Roland Berger.
China, Japan and India are the leading Asian providers of logistics services. It is expected that along with China, other emerging countries such as Indonesia, Thailand, Malaysia, the Philippines and Vietnam will grow by more than 10 per cent per year.
Although South East Asia is a new logistics cluster, local infrastructure still needs to reach Western standards when it comes to quality. Singapore and Hong Kong are just some of the countries that need investments to improve their transport infrastructure.
The Global Logistics Summit (GLS-2018) was held in New Delhi from April 5 to 6, 2018, with an aim to improve logistics and connectivity, which are vital for increasing intra-state and international trade flows.
The Summit was organised by the Ministry of Trade and Industry, the Federation of Indian Chambers of Commerce and Industry (FICCI) and the World Bank Group. It provided a platform for holding discussions for global experts, academics, government officials and representatives of the private sector and industry.
The sectors include; transport, material handling, storage, packaging, transport safety, inventory management and supply chain management, procurement and customs services.
The government has defined logistic as a multimodal logistics park consisting of an internal container storage (ICD) with a minimum investment of Rs 50 crore and a minimum area of 10 hectares. In November 2017, the status of the infrastructure was granted to the logistics sector.
India spends about 14.4 per cent of GDP in the logistics and transport sector. It employs over 45 million people across the country and certain subsectors grow at a rate of 15 per cent and even 30-40 per cent per year. It provides an efficient and cost-effective flow of goods from the manufacturing sector, which is dependent on other commercial sectors.
The Ministry of Trade and Industry of the Union is developing the National Logistic Portal to ensure easier trading on the international and domestic market. The portal will connect all stakeholders of the Eksim (export and import), internal trade and movement and all trade activities on one platform.
It will be realised in stages and will meet the commitment of the central government to increase competitiveness in trade, create new jobs, increase India’s performance in global ranking, and open the way for India to become a logistics centre. Interested parties such as traders, manufacturers, logistics providers in infrastructure, financial services, government services and groups and associations will all be on one platform.
In a speech for the 2018-2019 budget, the Union Finance Minister announced that the Ministry of Commerce will create a portal that will be a unique online marketplace for trade and connect business, create opportunities and bring together various ministries, departments and the private sector.
The Indian logistics sector is highly defragmented and very complex with more than 20 government agencies, 40 partner government agencies (PGAs), 37 export promotion tips, 500 certificates, and 10,000 articles included in it. Currently, it has 160 billion market sizes and includes 12 million jobs, 200 maritime agencies, 36 logistics services, 50 IT ecosystems and banks and insurance agencies.
The government aims to reduce logistics costs from the current 14 per cent of GDP to less than 10 per cent by 2022. According to the Economic Review 2017-18, the Indian logistics sector provides life for more than 22 million people. Improving this sector will allow a 10-per cent reduction in indirect logistics costs that will lead to exports from 5 to 8 per cent. Also, the worth of Indian logistics market is currently estimated at $160 billion and is expected to rise up to about $215 billion in the next two years.

Stefano Virgilli
stefano@virgilli.com