Service sourcing strategies will lead transformation of Indian logistics ecosystem

In the current scenario of Covid-19 impact on the market, KION India is ready with the offering to manage labour shortage and no-contact material handling. Sunil K Gupta, President, KION India, shares more on the market trends and the company’s plans.

What is your outlook on the MHE market in the coming years?

Covid-19 has affected business in a wide way at different levels. The situation however, would improve as the market normalises and there is some movement in liquidity. However, there would be an overall upgrade in the retail, logistics and warehousing segment to cater the new opportunities.

Our Indian industry will eventually expect no-contact material handling. There is possibility for a surge in automation – automated material handling equipment to keep workers safe and making it easier for warehouses or factories to support shortage in labour workforce. Installing these machines is simple and easy to modify as per schedule or demand. Our KION portfolio includes such products and we are ready to offer such solutions as per customer requirement.

How is the warehousing and logistics sector progressing in India?

Currently, the Indian logistics sector is valued at around $160 billion and was forecasted to grow at 10.5 CAGR during 2019 to 2025. However, with the onset of Covid-19, there would be a breakthrough, and warehousing and logistics sector could be the fastest one to recover.

The industry dynamics may change. There will be advancements in digital technologies as consumer preferences would be changing due to e-commerce and government reforms. Also, there would be a shift in service sourcing strategies which would lead the transformation of the Indian logistics ecosystem.

Provision of infrastructure status to logistics, the introduction of the E-Way Bill, and GST implementation which have been driven by the government will be streamlining the logistics sector in India. Set up of a logistics division under the Department of Commerce, including various technology updates, and development of dedicated freight corridors and logistics parks are pushing the upgrade of the logistics industry.

There were many start-ups in India which gained a substantial foothold after the onset of e-commerce, and there are several new companies that are gaining traction. Online platforms have increased competition and lowered freight costs with real-time data availability and a transparent value chain. It is imperative for logistics service providers to innovate and adapt to the transforming logistics landscape.

Preference in digitalisation will improve the efficiency and performance in freight management and port operations. Warehouse automation shall be the focus to achieve operational efficiencies to counter supply-chain cost pressures in the industry. Increased investment in infrastructure, last-mile connectivity, and emerging technologies are the topics which are driving the logistics landscape in India.

How is the material handling equipment segment gaining from the growing warehousing and logistics operations?

In warehousing, the government has taken measures in the last few years, which has led to the transformation to extensive, organised, large area warehouses from unorganised smaller ones. Palletisation of material handling has been focused upon by major medium and large organisations. Big brands have invested in large warehouse spaces to meet the demand which we forecasted for this year in retail.

However, the small industries have started identifying the benefits and started to use smaller equipment. With the increase in industrial growth, rise in demand of consumer goods and services augmented by increase in disposable income and focus on efficiency and safety, market would be shifting towards automated products and solutions in the coming years. In other countries, organisations have already benefited from these products and have efficiently improved the material handling technique.

Practically, after a certain volume; manual material handling is beyond human control and requires advanced and automated solutions. As much we move towards large capacity warehouses, automated and smart warehouses become vital for efficient operations. With the environment awareness as well as compliances and government push towards green and clean energy, future smart warehouses are likely to be based on non-pollutant energy-efficient material handling equipment. Battery-operated electric forklifts and warehousing equipment will be the base of automated/smart warehouses and pull the demand of battery-operated material handling equipment.

How do you look at the government’s policy support initiatives?

The government initiative of the economic package for MSMEs will definitely drive the small and medium organisations which are associated with the industry in the form of vendors, suppliers, transporters and channel partners and thus bring in the required liquidity into the business to streamline their operations. We are expecting the market to recover with the improvement in liquidity.