Logistics is a fragmented industry, as it consists of different subsectors: road, air, rail, sea and infrastructure.
Traditionally every company has to deal with these various groups individually. For the timeframe of 2015-2020, the Indian logistics market is likely to witness consistent annual growth of around 8-9 per cent and reach to the revenue level of about $190-200 billion by 2020. This estimation largely depends on the growth of the economy and major industries like engineering, pharmaceuticals, automotive, food processing and others. The major export countries for Indian products are the United States, the United Arab Emirates, China, Singapore and Great Britain. The major import trading partners are China, the United States, Switzerland, the United Arab Emirates and Belgium.
For those Dutch companies with extensive experience in the logistic sector, now is a right time to share knowledge to improve existing systems in India. For example, the Indian market currently offers opportunities for Joint Ventures with and acquisition of Indian storage and logistic companies.
The sector has largely developed into a system where one designated logistics partner handles the majority of a company’s logistics operations. These partners are referred to as 3PL (third-party logistics): companies that typically specialize in integrated transportation and warehousing services that can be customized to meet the company’s needs. The needs for controlling the costs of logistics and focusing on core competencies drives more and more companies to look for such 3 PL players.
About 95% of the country’s trade by volume and 70% by value are moved through maritime transport. India is the 20th largest maritime country in the world. Its strategic location of a long coastline that borders important global shipping routes makes it a major maritime nation. There is a considerable demand for knowledge and expertise in sea port management, dredging, jetty construction, container management and vessel traffic management for all 13 major ports and 187 minor ports that facilitate the movement of goods through sea.
The major goals of the Indian Ministry of Shipping’s Maritime Agenda 2010-20 are:
-Expand capacity of ports from 1,247 MT to 3,200 MT by 2020.
-24 port expansions and development of two Greenfield ports on both coasts
100% FDI is allowed under the automatic route for:
- Leasing of existing assets of ports and construction and maintenance of assets such as container terminals, bulk/break bulk/multi-purpose and specialized cargo berths, warehousing, container freight stations, storage facilities and tank farms
- Handling equipment
- Setting up captive power plants
- Dry docking and ship repair facilities.
Constant efforts by the government to further develop the port sector have also boosted the dredging industry, thereby leading to increased demand for capital and the maintenance of dredging.
India is looking for cooperation in the areas of training, vessel design, VTS, Radar (radars that can detect oil spills, water depth, water streams etc.) navigational aids and safety audits.
Utilize the Dutch technology to improve quality of roads and intelligent road management
Demand for Dutch safety systems and intelligent management throughout the whole of India
Airport management and the handling of cargo and passengers. Mainly in Mumbai, Delhi, Chennai, Bangalore, Calcutta, Hyderabad and several smaller airports spread over India.
Opportunities will surface for infrastructure developers, construction companies and technology and equipment providers. Increased demand for rail wagons will benefit equipment providers. Technology providers can mainly benefit from the greater demand for warehouse management software and a common ETC platform across tolling centers.
Similarly, logistics providers also stand to benefit on multiple fronts from the implementation of the new vision for India’s infrastructure. Benefits include greater demand for Third-Party Logistics (3PL services) such as warehouse management and end-to-end transportation management. In addition, there will be more opportunities for coastal operators to create charter and liner services in commodity bulk materials like coal, cement, iron ore, transport, and increasingly, in container transport.
Furthermore, companies operating in the area of logistics value addition are much needed in India. For example, companies who are into handling of cargo by replacing human labor can make a considerable contribution to the Indian logistic market. For instance, the Indian Agrofood sector requires such services, since the majority of fruits and vegetables go to waste due to poor post-harvest handling and storage methods.