Logistic challenges & solutions in india
Vainhav Tyagi
NMIMS, Mumbai
In 2007, India ranked 39th in the Logistics Performance Index published by World Bank. As India boasted of improving the road and rail connectivity, the golden quadrilateral materialized, India had an impressive GDP growth rate, barring the past couple of years, going by the common logic, all this should have augured well for India’s LPI ranking. However, India slipped to 47th rank in 2010 and made a slight comeback to 46th position in 2012, faring quite poorly in all the indicators of LPI which almost remained the same over years. For a nation whose logistics cost forms as much as 13% of its GDP, this is surely a disturbing situation to find itself in and of course, it is the need of the hour to sort out Indian logistics as one of the many stepping stones to progress.
It is a known fact that logistics i.e. the management of transporting and storing the resources obtained from the suppliers and the finished goods to the end users is an inseparable part of any trade and thereby the success of the trader or the trading nation depends on the efficiency of the available logistics system. India, in order to prosper, therefore needs to address its issues pertaining to logistics.
India vs. Singapore LPI indicators (Source: World Bank LPI report 2012)
Comparing India’s performance in various indicators of LPI over the years and with the best performer, Singapore, in the graphs, it can be concluded that India’s performance in all the aspects is quite weak compared to Singapore and secondly, it has not shown any signs of improvement over the years. The two mammoth issues that come forward from the report and thereby need immediate attention are:
1. Infrastructural issues regarding transportation
2. Warehousing
Infrastructural Issues: In the World Bank’s Logistics Performance Index, Infrastructure is a key indicator and in 2012 India managed to score just 2.87 out of a maximum of 5 which indicates the grim situation of logistical infrastructure in India. According to the statistical yearbook for India, 65% of the freight traffic in 2012 was carried over the roads, 30% over the railways and the rest through a combined of airways and waterways. Over the years despite the road freight being costlier to the railways, the road freight traffic has been increasing at a pace faster than the railway traffic which is a negative point. Now, let us focus on the issues faced by each mode of transport and the possible solutions for the same:
Roadways:
1.Challenge - Road Connectivity: India boasts of the second largest road network in the world with 33 L kilometers of roads. A general conclusion would hence be that India must be well positioned to exploit such a huge road network but the problem lies in the fact that of the total, only 2.1 L kilometers of this are the National and State highways which are fit for the heavy traffic while the
weather roads and thereby the connectivity is hampered during monsoon.
rest are the major district roads and the rural roads not suitable to handle heavy traffic and in a large part of the nation, the roads are not all-
India’s performance over the years in LPI indicators (Source: World Bank LPI report 2012)