India Logistics Market Outlook to FY24

The report titled “India Logistics Market Outlook to FY24–Driven by Government Infrastructure Push, New Age Logistics Startups, and Technology Innovation” provides a comprehensive analysis of the status of the logistics sector in India. The report covers various aspects including the current logistics scenario in India, its components viz, freight transportation, warehousing, CEP, VAS, and cold chain industries, the issues and challenges, major growth drivers, investment in infrastructure, tech disruptions and innovations, and competitive benchmarking. The report concludes with market projections for the future of the industry including forecasted industry size by revenue.

India Logistics Market Overview and Size:

India has been ranked at 4^th position in the world in railway freight traffic after China, the US, and Russia. Under the land freight corridors, 65% of domestic freight volume carried through the road; high compared to ~50% in developed countries. Logistics India has witnessed an average CAGR during FY14-FY19 due to favorable policy reforms from the government, continued investment in infrastructure by both the government and the private sector; the influx of foreign players in the market in recent years, increasing consolidation, and investing in innovative technologies has stimulated the growth in the market.

India Logistics Market Segmentation:

Freight Transportation: India’s transportation market forms the largest chunk of the logistics sector with over 50% share in terms of revenues during FY’2019, due to relatively higher traffic congestion & lack of flexibility in other modes, and comparatively low barriers of entry in road freight. Small fleet owners dominated industry (70% of all fleet) operating at a margin of 8-12% and average transaction days of 12-15 per month. These SFOs primarily operate on Spot bookings while MFOs and LFOs working on LHAs. The slowdown in the economy, especially the core sectors is adversely affecting demand. Excluding November, IIP has fallen during Aug-Dec 2019, (largest fall of 4.6% in Sep) Capital Goods and Consumer Durables’ production declined by 18.2% and 6.7% respectively. In the future, IR and GoI are actively making efforts to make rail freight competitive with road freight.  Eastern and Western DFCs are expected to be fully operational by 2020, and 4 more corridors are in the pipeline. IR is also looking to rationalize rail freight rates.

Warehousing: Warehousing Industry in India is home to 200+ organized players and numerous unorganized players. India’s warehousing market has shown steady growth over the last few years on the back of continued institutional investment, ever-increasing demand, and consolidation in the industry, especially after the passing of the GST Act. It has been estimated that around 90% of overall warehousing space controlled by unorganized sector. Unorganized players offer prices ~50% below the market rates as compared to organized players but offer only storage. More than 20% of warehouse space is concentrated in 8 major cities: Mumbai, NCR, Pune, Hyderabad, Bengaluru, Kolkata, Chennai, Ahmedabad. Industrial Warehouses form the largest share of the warehousing space in the country, with a Grade-A warehouse becoming the new benchmark for quality. Investment has been rising in the sector owing to 100% FDI allowance, higher cap rates around 150-200 bps1 greater as compared to commercial assets and approval and funding risk for greenfield investments

Cold Chain: It has been estimated that about 40% of the food produced in the country (67 million tonnes) valued at ₹92 billion is wasted in 2018 at all levels from harvesting to the end stage of consumption. Of this, 4.6-15.9% of food wastage happens in fruits and vegetables, 5.2% in inland fish, 10.5% in marine fish, 2.7% in meat, and 6.7% in poultry meat. Owing to this, the cold chain market in India has shown a robust growth with a CAGR of 10.1% during the period 2014-2019 in terms of revenues. The growth was primarily due to the growing production and storage of frozen products. It has been observed that more than 60% of total cold warehouse capacity only suitable only for storing potato. The cold chain industry is highly fragmented with 3,500+ cold storage and transportation players.

Competitive Landscape of Major Players Operating in the India Logistics Market

Road Transportation Market: The road transport market is extremely fragmented with more than 70% of India’s overall fleet being held by Small Fleet Operators (SFOs), accounting for a majority of the volume of goods transported. Major companies operating in the road freight market include TCI Freight, Agarwal Packers and Movers, Varuna Group, Gati, VRL Logistics, Safexpress, NTC Logistics, KerryIndev Logistics, V Trans, Om Logistics, Sical Logistics, Bluedart, and DTDC. The road transport industry is highly competitive on the basis of price, type of fleet, delivery/transit time, and value-added services. 

Warehousing Market: The warehousing industry in India is fragmented with the presence of both organized and unorganized players in the market.. Location and price are the key parameters for the selection of a warehousing partner in the country, with the quality of services increasingly becoming important as the industry undergoes a shift from unorganized to organized players. Major companies include Safexpress, Stellar Value Chain, KerryIndev Logistics, Shree Shubham Logistics, Central Warehousing Corporation, Avvashya CCI, TCI Supply Chain Solutions, Rhenus Logistics, Avanthi Warehousing Services, ATR Warehousing, and North West Carrying Company.

Cold Chain Market: The cold chain industry consists of companies offering cold storage and cold transportation services in the country. Under the cold transport, Organised players are few in number and operate on a pan India basis, using a hub-and-spoke model for operations. Major companies provide cold chain services include Snowman Logistics, Coldman Logistics, Gubba Cold Storage, Gati Kausar, Crystal Group, ColdStar Logistics, and ColdEx.

Co-Packing Market: Major players in the co-packing industry include CLR Services, ORganico Beverages, Gossip Flavored Milk, Jam Jam Group, Packmasters, Jain Packaging and Solutions, Fibro Foods, Usha Foods, Jayanti, and Bharat Vikas Group.

India Logistics Market Future Outlook & Projections

The logistics market in India is expected to experience a medium level of growth owing to improving infrastructure, increasing industrial output, significant consolidation of the market, and booming e-commerce. The logistics industry is expected to witness the entry of new players and new mergers and acquisitions between the players. Improvement in port infrastructure: Dwell times have reduced in JNPT, the largest container port in the country, as well as all the major ports from 82 hours in 2016-17 to 59 hours in 2018-19 and, are expected to reduce further. Moreover, phase I of the Bharatmala Pariyojana set to be completed by 2021-223, which includes 34,800 km of roads. Focus on road infrastructure and dependence on roads for freight transport is expected to continue. Container trucks proportion in the market is expected.