5 logistics problems in India to look out for

Logistics companies in India are spread across geographies, come with different specializations, and provide a variety of services. If you are dealing with multiple providers handling different services for you, the chances are, you could then face some problems somewhere down the line. These problems can lead to high logistics costs and irreparable damage to your organization and brand reputation. 

To be better prepared, take look at some of the problems you and your organization could face.

1.      Trucks: How their unavailability is a problem in India

The unavailability of transport vehicles at the last minute can be very troublesome for both you and the service provider. In India, this is more common with the trucking industry that takes care of a significant percentage of the logistics companies' functions in India. The trucking industry in India is highly fragmented and is in the hands of mostly small-time truck operators. According to estimates, 50-70% of truck owners in India own around one to five trucks. Because of this, there can be fierce competition among operators, which could lead to truck owners resorting to overloading for recovering investments.

2.      Overhead costs: Why they’re high

One of the main factors contributing to the overhead costs of logistics operations is the high density of manpower designated to different tasks. The more human resources involved with activities, the higher will be the quotes. With the digitization of services, some logistics functions can be carried out entirely without any manpower involved. This reduces costs significantly. However, with not many providers completely digitizing their services, one has to often pay more for the extra manpower involved in these companies.

3.      Multiple modes of transportation: How they get involved

Logistics companies in India often need to move raw material or finished goods from the client’s facilities to other warehouses and locations. This means that different goods might require different modes of transportation, warehouses, and movements across geographies. Multiple transport modes have goods going through hand-offs and agencies and often facing non-standard operating procedures during transit. This leads to delayed times and higher management costs, which then get incorporated into the final billing for services provided.

4.      Asset-Load mismatch: How it takes place

One of the common causes of cost escalation is the mismatch of the asset (container/trailer/truck) to the load. Usually, the cause is a misunderstanding of requirements by the shipper, which is often followed by less-than-appropriate solutions. The mismatch usually alludes to the wrongly optimized asset in terms of volumetric efficiency.

5.      Coordination: How its poor quality affects services

Lack of coordination is a common reason for inefficiency in logistic services in India, despite the presence of ERP frameworks in logistics operations. Deviations from manufacturing/production or vessel schedules at port or delay in packaging and picking or loading or skew during month-ends, delayed documentation, and thereon coordination between freight forwarders/ocean lines, CHAs, and CFSs, etc. can strain the supply chain and the transportation schedule. This can affect the value chain, costs, and production plans of logistics companies in India and your organization as well.

With the infrastructure largely under-developed and incapable of catering to a growing economy, logistics management in India is complex. Make a note of the issues listed above and keep them in mind to anticipate any problems while dealing with different logistics companies in India .

Note:

COVID-19 Update - The local and state government in India have been announcing extensions of the nationwide and state-wide lockdowns. All forms of freight routes are active, but with limited capacities. Please get in touch with the local service providers or authorities before you undertake any operation.