Logistics and warehousing sector has become an imperative part of the supply chain and distribution system

Jung Hun Baig

Executive Director & Deputy Chief Executive Officer, CJ Darcl

How is the logistics and warehousing sector progressing in the country as we move forward towards becoming a US$ 5 trillion economy?

As Indian economy progressed, the logistics industry has played a vital role in empowering other sectors. The underlying factors driving this upward trend is the increasing demand of e-commerce in India. In recent years, e-commerce has expanded aggressively to tier-2 and tier-3 cities across the country, which has further led to the growth of the logistics sector to keep up with the rising demand. Increasing internet penetration and e-commerce expansion are propelling the demand for warehouses, especially in smaller cities because of the efficient operation of the logistics market.

As the Indian government expands the road network and invests heavily in rail transportation (DFC), logistics infrastructure is expected to improve. As a result of such improvements in infrastructure, Korean and global companies will be very likely to consider India for their global production base, and will also become partners in the Indian government's 'Make in India' program.

India's US$ 5 trillion economic power is a result of the development of roads/railways/sea transportation infrastructure, connecting port facilities, which serve as a pathway for exports and imports, warehouses, which are the source of exports and imports, and port-warehouse factories. Ideally, this should lead and support industrial development. As a result of digitization of logistics services, a drastic improvement has been made which boosts the economy by speeding up deliveries and improving international relations. The growth of e-commerce, foreign infrastructure investment, and digitization has fuelled the development of transportation and logistics services tremendously. The growth of retail business in the domestic market as well as the development of e-commerce requires systematic logistics services. It is becoming increasingly important for customers to get better service and faster delivery. These customer demands require the development and support of logistics.

Today, logistics and warehousing sector has become an imperative part of the supply chain and distribution system. According to a recent report by McKinsey Global Institute (MGI), India's logistics sector would expand at a Compound Annual Growth Rate (CAGR) of more than 10 percent, from $200 billion in early 2020 to at least $320 billion in 2025. The new emerged trends like Omnichannel shipping, globalization and compliance etc. are few factors that are reshaping the logistics and warehousing industry. The logistics and warehousing drives growth in the segment with technological advancements, consolidation, government support, newer business models, and investment, it is playing a crucial role in stimulating the Indian economy in the post-Covid world.

How is the warehousing and logistics market picking up in the post-Covid scenario?

With the outbreak of Covid-19, lives and livelihoods were turned upside down, and life as we knew it changed dramatically. Businesses across the globe, regardless of size or sector, have been disrupted on a massive scale. Supply chain and logistics industries, however, were at the forefront of this disruption. As a result of the crisis, logistics operations became more streamlined and efficient. Almost after two years of the pandemic, the logistics industry has undergone a major transformation. The sector continues to evolve and grow with multiple trends emerging this year as it adapts efficiently to the volatile global scenario. There are various trends that have emerged post-pandemic like:

• Rapid Technological Advancements: Logistics industry players now use technology for some of their strategies, but few years back the industry was largely relying on manual processes. In recent years, however, technological adoption has increased, and the pandemic has further accelerated it. Today, almost all the processes in the logistics sector from order taking, inventory, and warehouse management, to packaging, shipping, and last-mile delivery, are automated. This trend is likely to prevail for the foreseeable future as technology continues to gain a stronghold in the world.
• Improved warehouse management: Warehousing is often overlooked outside the logistics industry. It is an integral part of the ecosystem. Logistics players have begun automating almost every aspect of warehouse management in order to ensure human resources are dedicated to more important, complex tasks.
• The shifts in shopping habits: With the growing internet penetration and smartphone usage, consumers increasingly shifted their shopping habits to online shopping. This shift in online shopping that has led to a surge in need for efficient logistics has platforms constantly enhancing their offerings for ultimate customer satisfaction.
• Personalized customer experience: These days, consumers prefer more personalized e-commerce & logistics experience. Logistics platforms are deploying technologies such as AI, IoT, and Big Data to garner insights into consumer preferences and customize their experience to cater to this growing demand.

Other advancements that have taken place are sustainable practices, the rise of D2C market, omnichannel services, the blockchain, focussed last-mile deliveries for better customer experience, contactless deliveries, push for 3PL warehousing, on-demand warehousing and fulfilment for convenient storage and shipping for brands and sellers. The rapid growth of retail will also be accompanied by the development of e-commerce. Last-mile delivery and warehouses are essential for retail growth. There used to be integration between Sales and Delivery, but now Sales and Logistics are separate. This is what developed countries experienced as they developed in the past. For this, we need to focus on the development of warehouse and deliver logistics.

What opportunities do you foresee for your business? What is your market outlook on the logistics & warehousing?

India is expected to be one of the fastest growing major economies of the world for the next few years according to all major rating agencies and financial institutions. This growth will need a robust, modern, efficient and widely spread logistics and warehousing industry. 

CJ Logistics is growing its business with a share of more than 50% in the Korean logistics market. In Korea, with the logistics concept of TES (Technology, Engineering, System), we conduct a test-based on IT and automation that will be launched in Korea, this will expand globally. For example, this growth is based on full-automation of Picking and Sorting, big-data analysis using AI, and logistics management systems such as specialized WMS and TMS. The time is coming when India's rapid development and high level of logistics services are required. This will support the development of Indian industry while transferring Korea's advanced technologies to India. The company will also establish and connect each region's central hub based on strong transport capacity across India. In addition, we will provide a one-stop logistics solution by connecting with India and CJ Logistics' global bases. As the company's slogan, ‘We Design Logistics', we also promise to provide the most suitable logistics solution to the customers.

We also expect to grow with faster pace in the coming years due to various factors including easing monetary policy, lower inflationary expectations, and monetary and regulatory reforms.

We are leading the digital transformation for productivity and efficiency, as there is no doubt that moving forward, technology will play a key role in enabling better logistics. Artificial Intelligence and a horde of other devices like drones, electric vehicles, automated systems, high-tech security, and efficient management systems have made the processes much easier for the logistics sector as well as for the clients.

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