© 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.

org (E-ISSN 2348-1269, P- ISSN 2349-5138)

A STUDY ON GLOBAL CONTEXT OF FORCED

DYNAMISM IN LOGISTICS SECTOR- A
OVERVIEW PERSPECTIVE
Dr.M.Ganesan1, G.Gowtham2

Associate Professor, Department of Commerce with Banking and Insurance Law, Dr. NGP Arts
and Science College, Coimbatore,

Ph.D Research Scholar, Department of Commerce, Dr. NGP Arts and Science College,
Coimbatore.

ABSTRACT

The paper deals with study on global context and perspective position of logistics sector
in economic growth market. The Indian Logistics market is poised to gather greater momentum
with the emergence of India as a manufacturing hub and improving multimodal transportation
infrastructure. India's third-party logistics market can be segmented into transportation 3PL
market, and cold chain market, which has seen a healthy growth. This upsurge in the cold chain
market was due to growth in the e-commerce industry, especially in the e-retail sector. Cold
Chain is one of the highest growing markets, yet it constitutes a minor proportion to the
growing logistics industry of India. India is seeing much growth in the manufacturing sector
which is also highly significant for the growth of the logistics sector. This trend is likely to
gather momentum with the gradual revival of the global economy and India emerging as one of
the earliest major economies to recover from the economic downturn.

Keywords: Transportation, Global Context, Cold chain, Taxation, challenges, International

Freight Tech, Carrier and Freight Forwarders Dynamics.
1. Introduction
India's third-party logistics market can be segmented into transportation 3PL market, and
cold chain market, which has seen a healthy growth. This upsurge in the cold chain market was
due to growth in the e-commerce industry, especially in the e-retail sector. Cold Chain is one of
the highest growing markets, yet it constitutes a minor proportion to the growing logistics
industry of India.

IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 108
 © 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

The 3PL logistics market is expected to be worth US$ 301.89 billion by 2020. 3PLs specialize
in certain industries such as frozen food. Auditing freight bills and warehousing are now
providing logistics related software, which is bringing about greater efficiencies.

The global LPI rank of India was 44 in the year 2018 and nine positions up from the
previous LPI ranking. India is seeing much growth in the manufacturing sector which is also
highly significant for the growth of the logistics sector. This trend is likely to gather momentum
with the gradual revival of the global economy and India emerging as one of the earliest major
economies to recover from the economic downturn.

2. Transportation Management
Planning, arranging, and buying the international transportation services needed to move
a firm’s freight is known as transportation management. It is probably the single most costly
element of international logistics. The transportation manager is concerned with freight
consolidation, carrier rates and charges, carrier selection, certain documentation, tracing and
expediting, loss and damage claims, demurrage and detention, movements of hazardous
materials, employee moving services, and use of private carriage.
Freight consolidation means the assembling of many smaller shipments into a smaller
number of large shipments. The reason for this is that the carriers charge less per pound for
handling larger shipments since less paperwork and individual handling are involved. Hence, a
transportation manager would like to see a customer’s daily orders consolidated into a single
weekly order, or have orders for seven customers in a foreign country handled as a single
shipment to that country, and then broken down inside that country for delivery to each of the
seven. Transportation managers must know how to determine rates and, in some markets, be
able to negotiate for even lower rates. Carrier selection is a two step phase. First the company
must decide which mode—water, rail, pipeline, truck, or air—to use for each segment of traffic
it handles. Air is the fastest way to carry international shipments, but it is also the most
expensive. Once the modal choice decision is made, the transportation manager must choose
which carrier firm or firms should get the company’s business.
3. Taxation
As we know the excise duty and service tax was levied by the central government while
the VAT was levied by the state Government, which was the one of the reason why such a
IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 109
© 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

cross-utilization of credit was not allowed. However, this does not constitute a valid reason that
justifies the cascading effect of taxes. GST was introduced to combat this problem, among
many others. With the implementation of GST, the logistics companies, which were forced to
set up many small warehouses across multiple cities, are setting up just a few, big warehouses
region-wise, and also following the hub-and-spoke model for freight movement from the
warehouses to the different manufacturing plants, wholesale outlets, and retail outlets. India's
logistics industry spends around 14% of the GDP on different types of costs incurred in
operations. The amount of cost incurred is very high in comparison to the logistics cost incurred
by other nations.
4. Technology
To tap the potential opportunity in logistics, Logistics Service Providers (LSPs) must
implant and improve their ERP (Enterprise Resource Planning). In fact, ERP has become the
buzzword in the industry as there is a growing necessity for technologies for better process
efficiency. However, a common dilemma faced by key project evaluation teams at leading
global LSPs today is whether to customize their existing ERP for their logistics business, or to
choose a best-of-breed and proven logistics solution, which is readily available in the market.
To develop India’s Logistics sector, focus on new technology, improved investment,
skilling, removing bottlenecks, improving inter-modal transportation, automation, single
window system for giving clearances, and simplifying processes are required, observes by
Gurcharan Singh, Founder, LogixGRID.
5. Challenges
The logistics industry deals in the disorganized nature of logistics. India is a man power,
heavy industry, where lack of adequate training institutions has led to a shortfall in skilled
management and client service personnel. This is a growing concern across the industry,
affecting both 3PLs and shippers faced with a shortage of supply chain and skilled personnel.
Companies need to have the right levels of qualified labor, working capital, and equipment
to successfully manage their growth and be profitable. If they are not prepared in advance, they
will find that these key resources (labor, capital, and equipment) are in short supply. Finding
skilled labor is already an issue across many sectors, and one can't get new capital equipment at

IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 110
© 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

the drop of a hat. Companies that have to scramble to create capacity won't be as profitable as
the ones that plan ahead.

5.1 Transportation Issues

In India, a predominant mode of freight cargo transportation is via road, with nearly 60%
cargo moved by road and 32% by rail. Due to over-saturated rail networks and high rail tariffs.
Movement of goods is done by road transportation, which proves to be quite inefficient,
because of poor road infrastructure, multiple checkpoints, and congestion.
5.2 Port Sector Issues
Due to high turnaround times for ships because of overcrowded berths and delay in cargo
evacuation unloaded at berths, logistics companies in India suffer unreasonably. Coastal
shipping in India gets hampered due to the weak land side and port facilities, and insufficient
depth at ports discourage large vessels, thus curbing the large scale use of it for freight
movements.
5.3 Tax Structure and Warehousing Problems
The complicated tax regime places several hardships on logistics companies in India.
Multiple State and Center taxes lead to considerable loss of time in transit on roads. The poor
state of warehousing and their restricting locations are one of the few major concerns of this
industry. Storage facilities are quite fragmented for low margin products thereby resulting in a
disincentive to create a large integrated warehousing space. The Government owned most of
the large warehouses and used for food grain.
5.4 Technological and Skill Detergents
In India, automation of processes is still in the embryonic stage and non-standardization
in the industry due to its fragmentation further slows down the progress. Acceptance and
adoption of technological advancements like RFID, tracking, warehouse management system,
etc. can resolve the issues between domain requirement and IT. Besides this, there is lack of
quality workforce in this sector, and the available skill set needs to be upgraded urgently.
5.5 Fuel Costs
The highest challenge in logistic industry is high fuel costs. If the fuel prices goes high is
likely to increase transportation costs to the shippers. Raising the fuel prices are increasing the

IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 111
© 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

surcharges added to freight rates, this will cut down the revenue and earnings of truckers as fuel
prices increase.
5.6 Customer Service
Customers want the full clarity into where their delivery is at one time. Now days, the
location of a shipment is as associated as your social network. In fact, the customer anticipation
have increased, their readiness to pay for speedy shipping has declined with just about 50% of
consumers not in the mood to pay anything excess for less than two-day shipping.
5.7 Government Regulations
Government Regulations Carriers face significant compliance regulations imposed by
government of state and other authorities.
6. International Freight Tech
International freight forwarding is slated to become the latest sector to undergo a rapid
transformation through technological innovations due to the rise of digital start-ups that are
attracting billions in funding from venture capitalists. However, until a few years ago not too
many techs focused funds paid attention to this age-old industry that has been the back-bone of
international trade for many years.
7. Digital Disruptors
Digital Freight tech start-ups have developed cutting-edge freight management platforms
for supply chain teams to manage their entire rate procurement, make optimal data-backed
freight decisions, track shipments real-time and analyze logistics expenditure and performance
online. As these start-ups grow larger, amass their own customer data and the freight
community creates more interest groups to benchmark industry-wide performance, the range of
tech-enabled services will improve resulting in more efficiency across the freight industry.
Moreover, as carriers further digitize their service offerings we expect to see more integration
between digital freight start-ups and carriers on instant pricing and bookings.
8. Technological improvements also Influence International Logistics
The most pronounced one as we enter a new century has been the revolution in
information management in international logistics. The Internet has provided access to a host of
facilitating tools for managing global supply chains. Managers today are able to control
information about inventory in transit in the same ways that managers once controlled actual

IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 112
© 2020 IJRAR September 2020, Volume 7, Issue 3 www.ijrar.org (E-ISSN 2348-1269, P- ISSN 2349-5138)

inventory stocks. Global logistics systems have become quite predictable and reliable due to
this enhanced information flow, and thus have become more manageable and precise.
9. Carrier & Freight Forwarder Dynamics
Maersk, the largest shipping line, invested in a trucking tech platform to further integrate
its services while CMA CGM, another top carrier, has started operating smart containers that
transmit real-time data on container position and condition. Airlines are digitizing rapidly too.
For instance, Lufthansa has tied up with an international freight tech firm to launch an online
instant price and booking system. In 2019, carriers will continue to invest in online price quotes
and end-to-end capabilities to further optimize their service offerings. On the freight forwarder
side, most multi-national companies are looking at making acquisitions in 2019 to increase their
market-share and improve their tech solutions as they look to benefit from the wave of
digitization. Most other small to medium forwarders will need to tie-up with digital freight
market-places to ensure they can accelerate into the future or be risked being left behind.
10. Conclusion
In 2019, customers will adopt new technologies more rapidly as the value proposition
strengthens and they better understand the potential productivity improvements and cost
savings. It will be pivotal year for international freight tech and there is now serious momentum
building that will see massive moves by carriers, forwarders and heavily funded tech start-ups
to take freight digitally forward into the future.
References
 Carbone, V. and Stone, M.A. Growth and relational strategies used by the European logistics
service Providers: rationale and outcomes. Transportation Research, Part E, Logistics and
Transportation Review, 41E (6), 495-510.
 http://www.nbmcw.com
 Arntzen, B. C., G. G. Brown, T. P. Harrison, and L. Trafton, Global Supply Chain
Management at Digital Equipment Corporation. Interfaces, Jan.-Feb., 1995.
 Role of Information Technology in Supply Chain Management- Rohita Kumar Mishra
 Status of Supply Chain Management in India- M. Venkata Ramana Reddy

IJRAR19L2025 International Journal of Research and Analytical Reviews (IJRAR) www.ijrar.org 113