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Post by Dec 12, 2023 6:02:55 AM · 5 min read

Trends In Indian Intra-City Logistics Market Post The Pandemic Period

The Indian logistics sector is currently facing massive disruptions, a definite change for the better, driven by tech innovations & advanced product developments. The pandemic has undeniably changed the business landscape to a great extent, further compelling many companies to re-examine their strategies to stay relevant and deliver to the ever-evolving consumer expectations: the Indian traditional logistics industry being one of them. The critical shift towards digitisation and contactless operations has helped this industry in a significant way. According to a study, the Indian logistics industry, notably one of the biggest in the world, is growing at an average of 10.5% every year and valued at around $215 billion.

Approximately, 15-20% of the road transport industry consists of intra-city logistics. About 80% small businesses aren't presently offering online services, which means a large portion of the market and opportunities thereof are yet to be explored in the logistics sector. In the meanwhile, demand for last-mile delivery in India is on the rise, especially from Tier-2 and Tier-3 cities shifting their focus towards intra-city logistics. E-commerce is also booming in India's Tier-2 and Tier-3 cities than in Tier-1. To add on to that, the Government’s push for ‘Make In India’ products encourages Direct-To-Consume (D2C) brands to bring their products seamlessly to customers’ doorstep. These small D2C sellers struggle to afford the resources in order to manage end-to-end operations, have a variety of vehicles and offer faster delivery - all this & more, all by themselves. This is where Uncle Delivery steps in to ensure efficient order processing, enhanced delivery fulfillment, and more. Customer preferences are constantly evolving and changing rapidly with respect to same-day delivery due to the increased internet penetration over the last few years. While the on-demand economy has been impacting all fields, many prefer to opt for logistics support externally, from a dedicated platform like Uncle Delivery due to prevalent inefficiencies of the traditional market. 99% of the market is still unorganized and opting for our professional, reliable and faster delivery solutions promises SMEs and individuals cost-effectiveness, convenience and commitment that they are looking for.

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As per a report published by ResearchAndMarkets.com on "India Intra-City Logistics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2022 - 2027)” the Intra-City Logistics Market in India is expected to register a CAGR of over 5.3% in the period of 2022-2027. As per another report, organized players only own 10-15 percent out of the estimated size of the Indian logistics market (US$ 215 billion), and the online vertical is estimated between US$ 20 and US$ 30 billion by 2025.

Road logistics is considered to be the largest and takes up almost 75% of the overall market size. From there, intra-city logistic service providers, who usually deal with quick and on-demand delivery needs, commit to guaranteeing same-day delivery services. In the forthcoming years, the adaptation, capabilities & willingness of businesses to advanced technologies is going to be undeniably crucial to be able to survive in this fast-paced industry.

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Key Trends In The Indian Intracity On-demand Logistics Industry:

  • Growth potential at a CAGR 7-8%

The Covid-19 pandemic resulted in the increase of internet usage, which in turn, enhanced the scope for digitisation & demand in the logistics industry. Due to this critical shift, the logistics market can be expected to grow at a more rapid pace. According to a RedSeer article, road logistics, 14% of which consists of intra-city, is expected to grow with a CAGR of 7-8%, i.e. into a $372 billion industry by FY26.

  • 60% of intra-city to be driven by on-demand

Bigger players may have in-house fleets, however, many small businesses still prefer to outsource their delivery requirements to a dedicated delivery platform, and the demand for such service providers is only expected to go up, given the benefits that come along. Over 50% enterprises have outsourced over 80% proportion of their business to logistics partners.

  • Availability & price remain key factors responsible for outsourcing

Amidst so many players occupying the logistics space, availability of vehicles for delivery and cost-effective solutions remain on top of the chart apart from reputation while choosing the right service provider for business delivery.

Also read: Mistakes to avoid while choosing a delivery service provider for your business

Other reasons include, safety of items, geo-reach, driver behavior, live tracking, fast service, responsiveness of customer support team, add-on services and so on. Since 99% of the market is unorganized, many areas of delivery demands are yet to be touched upon by the growing list of enterprises, small businesses and start-ups, in turn, opening up massive economic opportunities ahead.

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  • Support from government policies

Multiple government policies & efforts have provided the much-needed impetus to the logistics industry. To name a few, the Logistic Efficient Enhancement Program (LEEP), PM Gati Shakti National Master Plan, Digital India, and Make In India, among others

  • Digital literacy is on the rise, so are the D2C sellers

D2Cs are the backbone of the logistics industry. The Covid-19 pandemic paved the way for adoption of online services to a major extent. Smaller D2C sellers do not always have the access to ample resources to carry out end-to-end operations on their own. Hence, they have turned to third-party logistics companies for a fulfilled delivery experience in the final stage of delivery. This is where intra-city delivery companies like Uncle Delivery come in and begin to play a very pivotal and eminent role in the growth of the overall logistics industry. The developing D2C sector is creating an array of opportunities in the delivery chain, consequently giving the future of intra-city logistics a massive boost in terms of growth. To add to that, smaller cities are consuming more volume in the e-commerce sales these days. Online spending per customer has gone up significantly over the past years, especially post the pandemic period. With the widespread adoption of digital services, online shopping and ecommerce business, these numbers are only going to rise further.

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The eventual fate of the industry seems exceptionally brilliant and makes it certain to observe outstanding growth and development in the coming years. The increased participation of both the public and private sector is vital for the growth of the intra-city logistics industry. Changing consumer preferences, infrastructure readiness, product developments & advancements, automation technologies, cloud computing, big data analytics, machine learning, robotics, and artificial intelligence shall drive the future of Indian Intra-city Logistics. The industry is shifting from its highly fragmented traditional methodologies to smarter solutions for different delivery needs. As per reports, India’s logistics & supply-chain costs amount to a whopping US$ 400 billion, up to 14% of the GDP, compared to the global average of 8%, raising a competitiveness gap of nearly US$ 180 billion. Customers are at the center of the supply chain, and are willing today to pay a premium to get what they want - delivered at the time they would like to have it, in a manner they prefer and the whole delivery experience with the chosen logistics partner. What has been happening so far with the traditional logistics market is not here to stay. The World Economic Forum (2016) stated that the digital transformation of the global logistics sector could translate into a value of US$ 1.5 trillion for the participants and an additional US$ 2.4 trillion worth of societal benefits by 2025. The future of the logistics industry greatly depends on the continued infrastructural progress, e-commerce boom, boost to warehousing market, adaptability of the different players to technology and changing demand scenarios. With Uncle Delivery, you are about to enter into a world of standardized logistic solutions for your new-age business and delivery problems. To know our offerings, fleet variety and how we become enablers for your small businesses and enterprises, download our app today from the play store / app store.

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