FMCG Logistics

Last Mile FMCG Logistics in India

India’s supply chain and logistics costs currently account for 14 per cent of the country’s GDP at a massive $400 billion, compared to global average of approximately 8 per cent.

report by Arthur D. Little India released in collaboration with CII.

According to the report, there is a competitiveness gap of $180 billion in the sector, and this is expected to increase to $500 billion by 2030 if the inefficiencies in the supply chain are not addressed. The World Bank Logistics Index released in 2018, for instance, ranked India 44th-far behind the US at 14 and China at 26. Other countries in the region, such as Thailand and Vietnam, also have high logistics costs.

The report also noted that the Covid-19 pandemic has further laid bare the weaknesses in the logistics industry-with 75% of companies in the sector experiencing disruptions and a majority lacking a contingency plan to deal with a problem of such magnitude. The crisis has also necessitated the reimagination and redesign of supply chain management after businesses underwent digital transformation.

Meanwhile, an excessive dependence on transportation by road and the under-utilisation of waterways, rail, and sea networks, coupled with poor infrastructure, has ballooned costs for the supply chain industry. The lack of technology adoption has also proven detrimental, adding to the competitiveness gap between India and its peers. The slow adoption of supply chain technology, including artificial intelligence, blockchain, and IoT, remains a major shortcoming, the report noted.

To bridge the current competitiveness gap of $180 billion, India needs to halve logistics cost from 14 per cent of GDP to 7 per cent. “The supply chain industry in India needs to be reimagined and efforts need to be made to move towards creating an optimized and digitized logistics ecosystem, a delayered distribution system and a green, resilient and flexible supply chain,” he said. (Source: New Indian Express)

Barnik Chitran Maitra, lead author of the report and managing partner of Arthur D. Little India and South Asia

Among all the sectors of the country which were impacted by the nationwide lockdown, e-commerce and last-mile delivery showed the most resilience and recovered strongly in no time. The recent demand in the market and the growth of the e-commerce industry have transformed the global marketplace. A recent report suggests that the consumers spent $861.02 billion on online shopping in 2020, a 44% rise over the prior year. There has been a steep rise in the number of last-mile delivery operations. Last-mile deliveries are expected to result in 36% more delivery vehicles in the top 100 global suburbs by 2030. This is also expected to increase carbon emissions unless effective measures are taken.

This has also pushed the last mile delivery through electric vehicles. During this time, e-commerce giant Amazon plans to run on 100% renewable energy by 2030 and is working to include 100,000 EV delivery vans for its Prime deliveries. One more big giant in this segment is planning to accelerate the use of electric vehicles in last-mile delivery and will deploy over 25,000 EVs in the fleet by 2030, according to a regulatory filing. Now, electric delivery vehicles are becoming a more common sight on inner-city roads in most countries. IKEA is also aiming to have 25 percent of its last-mile deliveries made by electric vehicles by 2025. (Source Inc42)


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