The Indian logistics sector has experienced robust growth in the past 5 years, thanks to factors like digital adoption, supportive government policies, focus on infrastructure development, rise of 3PL and 4PL service providers, development focused policies like NLP, and growth of e-commerce and Manufacturing sector, among others. According to a report by the National Institution for Transforming India (NITI Aayog) and RMI, an independent nonprofit, as of 2022, Road transport (i.e. trucks) accounted for almost 70 percent of the country’s domestic freight demand. Today India transports more than 4.6 billion tonnes of freight annually, generating transport demand of 2.2 trillion tonne-kilometres (tonne-km) at the cost of Rs 9.5 lakh crore. The report further states that by 2050, road freight movement in India is expected to increase to 9.6 trillion tonne-km. Further, according to Redseer, currently India has up to 12.5 million trucks and this number is projected to grow at a CAGR of 4 per cent, reaching to 14-15 million by 2028.
However, the sector continues to battle challenges like highly unorganised operations, inefficient load matching, high brokerage costs, limited reach, lack of transparency and an overall fragmented network that relies heavily on personal contacts and is devoid of a knowledge base that can be easily accessed. With the accelerated growth of the sector, rising demand and the overall economic goals of the country, it is vital that the sector is able to manage these challenges and rapidly evolve to become the true backbone of a USD 5 Trillion economy. And digital adoption could be an answer to solving most of these problems.
- Fragmented and Unorganized nature of the sector: The logistic sector, especially the freight and trucking industry, continues to remain a highly fragmented sector comprising of several small fleet owners and independent operators that work on contract basis. This unorganised ecosystem not only impacts the chances for growth and work opportunities but also creates chaos and leads to losses, thus hinders growth. Digital platforms and apps that help bring various members of the ecosystem on an integrated virtual marketplace, could be an answer to building an organised and efficient trucking sector. The platform can seamlessly connect shippers with truckers and help them secure loads in real-time. Further, advanced AI-driven algorithms can ensure these matches are based on criteria that also look into optimisation of factors like route, load, distance and cost, thereby reducing empty miles and improving profitability. The integrated platforms also offer relevant visibility to small fleet owners, thereby ensuring maximum options are available to match the requirements of a vast set of clients. Additionally, tech integration means these online market places can also help providing security services and several other value-added services.
2. Lack of Transparency and Tracking: Another major challenge to efficiency and customer satisfaction in trucking is the lack of tracking and transparency. Considering the contractual workforce, fragmented nature of the market, and traditional methods of manual processes of booking, traceability was minimal, offering negligible visibility into the cargo movements. Delays, thefts, and inefficiencies often went undetected until it was too late. Leveraging emerging tech like GPS and IoT-enabled fleet management systems can help solve this by offering real-time location monitoring. Additionally, Transporters and clients can also track shipments, receive updates, and anticipate delays in real time, while also monitoring driver behaviour and vehicle performance, thus enabling proactive maintenance and enhanced safety.
- Documentation and Payment Delays: Extensive manual paperwork, and extended credit timelines have been an integral part of the logistic sector, especially for freight movement and trucking. These are also interconnected with issues like traceability of the cargo and timely deliveries, making the process more complex. Leveraging tech solutions that help Digital documentation and automated payment systems will be a game changer, as it will not only streamline the administrative processes but also reduce the financial strain and create a smooth flow of payments. E-invoicing, digital payment gateways, and blockchain-based transaction records ensure faster, more secure payments, while minimizing paperwork errors.
- Inefficient Route Planning: This has been a long-standing challenge which has serious implementation on the costs, customer satisfaction and overall freight movement. Sometimes lack of information on road closures or recent accidents that impact a particular route, also play a role. This leads to longer transit times, increased fuel costs, and missed deadlines. Leveraging AI-driven route optimization tools can help to not only identify the shortest routes, but also analyse traffic patterns, road conditions, and weather forecasts to suggest the most efficient routes.
- Load Optimisation: One of the integral parts of driving efficiency in trucking is matching the right load with the appropriate truck size and type. However, traditionally this has been based on guesswork, resulting in underutilized space or overloaded vehicles. These can in turn lead to losses, higher chances of accidents, attract regulatory penalties and even impact the vehicle performance. Additionally, small fleet owners and truck owners also suffer from underutilization of their trucks and also instances of empty miles. Leveraging tech tools that use load-matching algorithms, can help identify the best truck type based on carefully analysed factors like cargo weight, volume, and type to recommend the most suitable truck for each job. Further, these tools also ensure that trucks are utilized to their full capacity, minimising empty miles, optimising fuel consumption, lowers operational costs, and avoids legal penalties, resulting in more sustainable and profitable logistics operations. Digital marketplace for trucking and apps for truck load booking can allow businesses to input cargo details and receive instant recommendations for the most suitable trucks, further streamlining the process, and reducing dependency on brokers for these critical decisions.