Market Trends of India Contract Logistics Industry
Increasing E-commerce Sales are Driving the Market Growth
The logistics sector is restless, seeing the growing demand for logistics services generated by the boom and evolution of e-commerce. Rising Internet penetration, growth in last-mile delivery, preferences for online shopping due to better discounts, and online grocery logistics are expected to drive the e-commerce logistics market in India.
Contract logistics is becoming essential for retailers owing to growing e-commerce worldwide. Companies are trying to achieve online and omnichannel strategies, thus, contract logistics is necessary for retailers. Contract logistics ensures better online order fulfilment by managing the company's inventory, packaging, tracking, transportation of goods, reporting and forecasting, and warehouse management.
Meanwhile, the pandemic has driven the online sales industry, and as per industry experts, e-commerce sales are expected to hit more than USD 100 billion mark by 2023. In addition, the increasing sales were supported by m-commerce, a steady increase in the number of digital buyers in the region, and new initiatives from key players. Also, in 2022, India emerged as the second-fastest-growing economy in Asia-Pacific based on e-commerce sales behind the Philippines. In addition, retail e-commerce sales also witnessing significant growth in the country, in 2022, online retail sales witnessed a growth rate of 15% when compared to 2021. Thus, the growing e-commerce sales and enhanced focus on risk management in the supply chains, and increasing collaborations are anticipated to fuel the growth of the contract logistics market with ample opportunities for the industry players.
Growth in the Manufacturing and Automotive Sector Driving the Contract Logistics Market
Driven by the 'Make in India' initiative, the growth of the contract logistics market is primarily attributed to the swift growth of the manufacturing industry and their focus laid on core competencies and emerging needs for obtaining cost efficiency and technological integrations about supply chain activities.
Meanwhile, the manufacturing sector set the trend for outsourcing their supply chain management. It helps that the service providers have evolved into key partners, offering expert, end-to-end solutions ranging from documentation, tracking, warehousing, and legal compliance. In addition, the automobile sector also driving the demand for multi-modal logistics.
On the other hand, India imports more than USD 17 billion worth of auto components annually. Most of these are from China, the United States, and Europe. In addition, in FY 2021-2022, as per the Ministry of Commerce and Industry, India exported 56,17,246 units of automobiles, which was up by 35% from 41,34,047 sold overseas in FY2021. In addition, exports of passenger vehicles witnessed a growth rate of 42%, whereas commercial vehicle exports rose by more than 83% in 2021-2022. Thus, the growing automobile export imports are expected to drive contract logistics services across the country.
