This year has demonstrated resilience of air cargo and logistics sectors, bouncing back from disruptions. Collaborations within supply chain proved vital, leading to cost reduction, and efficiency. The New Year will lead to more cooperation among airlines and forwarders, forecast experts.
Ritika Arora Bhola
There will be an augmentation in sea and air business. Domestic cargo demand will continue to be robust with e-commerce movement even as capacity grows too. More global transshipments, perishable and temperature cargo are likely. Labour shortage in logistics sector, and automation will be the industry’s focus areas. By leveraging cutting-edge technology, the sectors aim to streamline and automate various aspects of its logistics operations, enhancing efficiency and mitigating the impact of workforce limitations.
The industry’s commitment to achieving net zero by 2050 underscores the importance of policy support and collaboration. To streamline services and provide solutions, professionals are focusing on developing first mile and last-mile services in collaboration with forwarders and shipping lines, by providing a seamless and efficient customer experience.
The industry’s strategic focus in the New Year revolves around expansion and automation. Firms are investing in electric vehicles (EVs), cargo drones, setting up warehouses and micro-warehouses for clients of all sizes, and pursuing growth opportunities. With logistics and air cargo sectors gaining due recognition after the pandemic, emphasis is being laid on prioritizing air cargo in ongoing Free Trade Agreements (FTAs) by the Indian government, believed to facilitate EXIM trade, reduce trade barriers, and increase investments.
Stress is being laid upon improving the cold chain infra for perishable transport in India. It meets worldwide technology and quality needs and may be considered trustworthy. However, when the scope of operations and efficiency are considered, there is significant space for improvement, feel experts.
One of the important challenges in India’s cold chain infrastructure is the reliance on smaller vehicles for transportation as compared to other countries. These smaller vehicles are less efficient, particularly while ferrying larger perishable products. This inefficiency increases transportation costs and can frequently lead to delays and losses in the supply chain. India’s cold storage facilities are yet to become energy efficient. This is a serious concern, especially in a country where perishables and pharmaceuticals are in high demand.
In tune with regulatory bodies
The opening of a new office in Cochin marks a strategic move to strengthen the firm’s presence in the Indian market. The success of this venture underscores importance of local presence for logistics firms in Indian market. One of our achievements in this year is the progress made towards launching India’s first greenfield air freight station (AFS) at Kapashera, New Delhi. The delay in AFS operations due to non-posting of customs manpower by Central Board of Indirect Taxes and Customs emphasizes the need for relationships and effective communication with regulatory bodies. This year underscores importance of investing in technology and digital solutions.
The CCPL will continue its efforts to work with customs to expedite posting of customs officers at its AFS and develop plans for efficient operations once customs manpower is available. Upgrading of IT capabilities will help improve client interaction and streamlined cargo tracking and processing activities. Investing in a robust IT infra, including a user-friendly customer portal, mobile apps, and data analytics tools to provide real-time information and insights to clients will be included in the growth plans of CCPL in the New Year.
Focus on interline partnerships
For the air cargo industry, this year was full of challenges. Due to demand and supply mismatch, which resulted in devising various strategies to fill the available capacity, airlines must focus on interline partnerships, contracted cargo and global transshipments to maximize belly capacity. Despite the drop in special cargo, there was a good demand for perishables.
The New Year will lead to collaboration among airlines and forwarders and lead to augmentation in sea and air business. Domestic cargo demand will continue to be robust with e-commerce movement even as capacity is set to grow. Expect more international transshipments, perishable, and temperature cargo as this segment is set to grow. Mobile phones export is likely to grow as manufacturing pace is picking up. Airlines will focus on core sectors to increase their tonnage.
Digitalisation & sustainability
This year has been a challenging one for the logistics industry due to the slowdown of economies, especially in Europe and the USA. Capacity for air and sea carriers is not a challenge anymore and the reliability with ocean carriers has improved. The geopolitical situation is worsening with Israel-Hamas conflict adding to the Russia-Ukraine crisis, and it has impacted global stability. The PMI in the major economies is contracting and this indicates that recovery will be slow and likely to stretch into H1 of 2024.
At Dachser, we are focusing on customer centricity and quality will continue to play a pivotal role. Key topics such as process automation, digitalisation and sustainability will be our top focus areas in 2024. I am hopeful the situation will start to improve in early 2024 and global economies will be back on the recovery and growth trajectory in due course.
2023 bounced back from disruptions
As this year is coming to an end, global aviation industry faced complex challenges due to economic and geopolitical factors, including inflation, potential war impacts, supply chain disruptions, and regulatory burdens. Despite hurdles, the industry may return to profitability, albeit with regional disparities. The logistics sector amid macroeconomic challenges, managed tight labour markets, elevated inflation, and disrupted supply chains, while transitioning towards sustainability. The industry’s commitment to achieving net zero by 2050 underscores the importance of policy support and collaboration. This year demonstrated the resilience of aviation and logistics sectors, bouncing back from disruptions with strength. Collaborative partnerships within the supply chain proved vital, leading to improved coordination, cost reduction, and enhanced efficiency. Reflecting on this year, it is evident adaptability, sustainability, and collaboration are fundamental pillars for success in the industry.
We have focused on increasing capacity with the addition of two new aircraft, embraced automation and digitalisation to improve our infrastructure, and expand our market presence through retail expansion. These initiatives position us well for sustained growth, technology utilization and new opportunities, while adhering to ROI-based Capex plans. As part of DHL Group’s DHL e-commerce division, we align with ‘Strategy 2025-Delivering Excellence in a Digital World’ and pursue sustainability goals in areas of environment, social responsibility, and governance. The implementation of government initiatives such as PMGS and NLP will accelerate transportation and logistics infrastructure development.
De-risk resilient supply chains
The global logistics industry underwent significant transformation, shifting from a demand-driven model to one characterized by a surplus in supply in 2023. The logistics and supply chain sector encountered many challenges, including economic slowdowns, geopolitical issues, and supply chain disruptions. With these changes and disruptions, the drive to de-risk and build resilient supply chains is on everyone’s agenda.
With companies wanting to de-risk their supply chains, India is an attractive alternative. In India, the expansion of the logistics industry has been supported by a robust economy, government initiatives to enhance infrastructure, and a favourable business environment. Investments in infrastructure were particularly noteworthy, with an effort to upgrade airport facilities, cargo terminals, and transportation networks.
Emerging themes such as ‘Make in India’, ‘Digital India’, ‘Start Up India’, and ‘Production Linked Incentive Schemes’ have it attractive for MNCs to establish manufacturing plants in India, further driving economic growth. The government allocated a budget exceeding US$26 billion to the PLI scheme, with a strong focus on the industrial and high-tech sectors.
Secondly, as the supply chains become more complex, companies want their logistics providers to be global and able to help them operate across many countries. Notably, the year was also marked by several mergers and acquisitions in the supply chain industry, as more shipping companies moved into the logistics sector.
To support our retail and e-commerce clients, our recent investments include a modern multi-user facility located in Luhari, strategically positioned to capitalize on India’s rapidly growing retail sector. This cutting-edge facility features advanced warehousing solutions, with a strong focus on sustainability, including a sprawling 20-acre Miyawaki Forest Plantation, solar power generation, and eco-friendly energy provision.
We have also set up our sixth control tower Bengaluru, specializing in supply chain management and advisory services. The Centre of Excellence ensures our customers enjoy 24×7, multilingual support for end-to-end visibility, performance monitoring, and supply chain process enhancement.
Strategies for the New Year
As we commemorate the completion of an impactful year since the inception of our freighter programme, we reflect on a journey marked by resilience, adaptability, and significant accomplishments in our cargo operations.
With 2023 drawing to a close, our cargo operations have not just endured challenges; they have emerged stronger, reaffirming their indispensable role in our overarching strategy. Presently, we operate three dedicated Airbus 321 freighters and utilize cargo capacity on leased B777 aircraft, particularly on routes to Istanbul, contributing to our growing expertise in the international cargo domain.
In 2022, we launched our dedicated freighter programme that swiftly commenced both domestic and international operations. Some of the highlights include successful flights from Delhi to Mumbai and Kolkata to Yangon, ferrying 19,000 kg of cargo. Our collaboration with Turkish Airlines bolstered our capabilities with wide-body pax flights (B777) on DEL-IST and BOM-IST routes that substantially augmented our international cargo capacity.
Simultaneously, we have been proactive in enhancing airport cargo infrastructure, implementing digital solutions for efficient cargo handling and pioneering collaborative partnership models, fostering a multilateral approach for cargo management.
Growth is not merely an aspiration, but a resolute commitment for us in the New Year. Strategic planning will be our guiding compass as we navigate uncharted territories in the dynamic cargo landscape. In 2024, we will witness the realization of meticulous growth strategies, finely tuned to meet the evolving demands of the cargo industry. Focus on innovation and technological advancements will keep us at the forefront of industry developments. Armed with insights from our past experiences, we embark into the New Year with a mindset geared towards continuous improvement, operational efficiency, and unwavering customer-centricity.
Prioritizing customer feedback
Emphasizing the importance of collaboration and working with good partners with complementary skill sets to enhance WestJet Cargo’s capabilities. Embracing a mindset of not being afraid to fail, promoting a culture of learning quickly and being agile. This was evident in areas such as route planning, where adjustments were made promptly. We also prioritize customer feedback and actively listen to customer needs thereby adjusting to schedules to provide optimal solutions.
Demonstrating flexibility in operations, whether in adapting schedules or responding to changing market demands, to ensure efficient and responsive cargo services. Challenging internal processes, fostering an environment that encourages innovation and problem-solving, resulting in competitive resolutions to continuously challenge the status quo.
Expanding the fleet by adding the 737-800 BCF (Boeing Converted Freighter), a strategic move that broadened cargo services beyond passenger flights, incorporating dedicated cargo capacity and embracing digital solutions for enhanced efficiency and service delivery. Not limited to the collaboration with Wiremind , a digital partner, suggests a focus on leveraging technology to streamline cargo operations and offer innovative solutions.
Continuing to collaborate with strategic partners that complement WestJet Cargo’s strengths. Notably, partnerships with ‘Awesome Cargo’ and ‘Flex Port’ are likely to contribute to expanding the company’s global reach into Latin America and Asia.
Building on the introduction of Havana in 2023, WestJet Cargo plans to explore and add new destinations and routes to its network. This expansion will involve both freighters and passenger belly cargo flights for both the wide and narrow body, allowing for a comprehensive and versatile cargo network.
Employing a strategic planning approach to navigate market dynamics and challenges effectively. This includes adapting to changing industry landscapes and positioning WestJet Cargo as a key player in the global cargo sector.
Meanwhile, continuing to invest in our people and their career development, diversity, and inclusion. People are at the heart of the success of the cargo carrier.
Emerging tech integration
Israel-Hamas and Russia-Ukraine conflicts have given rise to uncertainties and highlighted the need for adaptability and flexibility. Simultaneously, ecological, and environmental challenges spurred by climate change underscore the vulnerability of just in time management. The integration of emerging technologies has proved instrumental in addressing logistical challenges. These technologies enhance efficiency by reducing errors, improving inventory management, and optimizing warehouse logistics through automated data analysis. The logistics sector’s pivotal challenge in the year gone by is sustainability, given its contribution to CO2 emissions.
Also, India’s climb in the World Bank’s Logistics Performance Index, from 44th position to an impressive 38th in 2023, highlights the effectiveness of the National Logistics Policy (NLP). The NLP’s approach, aiming to enhance synergy across transport modes, reduce logistics costs, and bolster global competitiveness, is poised to redefine the logistics industry’s landscape, akin to how UPI revolutionized banking. Labour shortage in the logistics sector, and automation will be our focus areas.
By leveraging cutting-edge technology, we aim to streamline and automate various aspects of our logistics operations, enhancing efficiency and mitigating the impact of workforce limitations. Recognizing the evolving preferences of our customers, we anticipate the rapid growth in less-than-truckload category. This adjustment is in line with market needs, as customers are preferring faster and flexible transportation alternatives, preferring not to wait for full truckloads.
FTAs to facilitate cross-border trade
In this year, supply chains faced disruptions due to geopolitical tensions, inflation, and reduced demand. Despite these challenges, IMF stated India is projected to remain strong at 6.3 per cent in 2023 and 2024.
India emerged as one of the fastest-growing economies. Technology adoption played a key role in strengthening the logistics ecosystem. With focus on FTAs, India is well positioned to become an enabler of trade and one of the leading players in the international supply chain.
DP World is dedicated to exploring new markets both domestically and globally. Our free trade warehousing zones in Nhava Sheva and Chennai, located near ports, facilitate EXIM activities, offering foreign businesses seamless entry into India and an opportunity to diversify their supply chains. The upcoming greenfield terminal in Kandla will have a cargo handling capacity of 2.19 million TEUs annually.
We offer our customers integrated logistics solutions with a single point of contact—DP World curates digitalization such as visibility to support end-to-end inventory tracking at SKU level. With our rail freight network, we are focused on increasing domestic rail freight services’ share to minimize road transportation and drive sustainability.
This will help customers unlock the competitive advantage offered by multimodal networks, while reducing their carbon footprint.
2 facilities open in Pune, Bhiwadi
The takeaways of this year include the fast adoption of technology, commitment to environmental sustainability through initiatives such as EVs and solar power, the establishment of Grade A warehouses, and the use of energy-efficient equipment. KSH Logistics saw growth, reaching 30 per cent over the year. The opening of a multiclient facility in Pune and Bhiwandi, the incorporation of electric vehicles into the product line, and expenditures in warehouse automation and modern technical tools were all part of the expansion initiatives. We intend to increase our growth rate by 30-50 per cent. To this end, we will grow our standalone warehouse and transportation operations as well as our multiclient warehouse facilities across India. To accommodate demand for automotive and industrial products, we intend to open MCF in Bengaluru and Delhi NCR. We are increasing our EV fleet to help our clients reach their ESG commitments. The company is investing in warehouse automation and tech and providing consultative services.
Developing first & last-mile services
One learning is the rapid expansion and increased demand for bonded cargo storage and warehousing within the Inland Container Depot (ICD). This demand has increased the need for Grade A warehouses and alternative storage needs in the Pune market. Shipping lines have shown a paradigm shift in strategy, exhibiting a tailored approach to customer onboarding in the areas of first-mile and last-mile transportation. The shift is consistent with a broader industry trend of increased the Non-Vessel Operating Common Carriers (NVOCC) volumes, especially from the Far East and the South Asian markets.
There has been an increase in inventory idling across major shipping lines in contrast with the trends recorded in 2021 and 2022. Despite these developments, the industry has faced hurdles due to an overall cost increase following COVID. This has pressurised the market to keep transportation and handling rates stable. A bright spot among the obstacles is the ICD’s effective reconstruction, which has improved efficiency and capacity. This strategic decision has helped to secure new commercial prospects.
Exploring new markets by developing a hinterland base, placing to optimize transportation logistics and improve container turnaround, is a critical component of our strategy. The recent investment in 40 new trailers has strengthened our transportation capabilities, creating a solid platform for future growth. Recognizing the changing landscape, we are focusing on container and warehouse storage as a key focus, particularly in response to rising demand in the Pune region. To streamline our services and provide comprehensive solutions, we are focusing our efforts on developing first-mile and last-mile services in collaboration with shipping lines and forwarders, with the goal of providing a seamless and efficient customer experience. We are preparing to meet demand for high-quality warehousing and transportation services as we anticipate the arrival of new Original Equipment Manufacturers (OEMs) in the Pune market in the coming year. This entails expanding our storage and transportation capacities to capitalize on emerging growth prospects. We are investigating alternative energy as part of our commitment to sustainability and environmental responsibility.
Consistency in branding
As retailers grappled with online competition, the logistics industry faced its own version of the challenge. The surge in e-commerce demands efficient, and diverse services, pushing logistics providers to adapt to be in the competition. In addition, as retailers are compelled to offer a seamless omnichannel experience, logistics firms are required to integrate physical and digital touch points. Consistency in branding, inventory management, and customer service across all channels is non-negotiable.
Consumers’ craving for personalized experiences extends to the logistics sector, emphasizing the need for tailored services and data-driven solutions. This requires investments in advanced analytics, customer profiling, and personalized offerings. Rapid delivery services’ rise has pushed logistics to optimize supply chains and partnerships to meet customer expectations for same-day and next-day deliveries.
Like retailers assess physical stores, logistics firms must evaluate operational costs. Streamlining operations, adopting efficient technologies, and innovative cost management approaches are important for maintaining quality services.
Looking ahead, our focus in 2024 revolves around expansion and automation. We invest in EVs, set up warehouses, micro-warehouses for clients of all sizes, and aggressively pursue growth opportunities. Our strength lies in the ability to evolve and adapt to the changing landscape of logistics. One of the critical lessons we have learnt is the significance of growing with our team. Our transparent, bottom-to-top approach fosters a sense of ownership and responsibility among our team members, aligning their objectives with our company goals.
Local businesses empowered
- Empathetic client e-engagement: this is the main lesson we learnt in this year. Understanding the distinct challenges encountered by our valued clients, mainly Indian e-commerce sellers and D2C brands, enabled us to provide innovative solutions, emphasising not just the delivery of services but also the overall well-being and growth of our clientele.
- Agility and adaptability: the logistics landscape continues to evolve rapidly. This year highlighted the need for agility and adaptability, whether serving domestic or global clients. Our ability to swiftly pivot and tailor our services to suit the diverse needs of our clients was pivotal to our success.
- Empowering local businesses: our commitment to empowering local businesses resonated throughout this year. We witnessed the resilience and untapped potential of local entrepreneurs and are steadfast in our dedication to furthering their growth in the New Year.
- Technological integration: In 2024, we will invest in technological integration. This strategic endeavour aims to optimize operations, enhance efficiency, and provide real-time insights to our clients, ensuring that they stay ahead of the curve.
- Global expansion: expanding our horizons is a focal point, as our services will transcend borders, catering to international e-commerce sellers. This expansion aligns with the increasing demand for cross-border e-commerce solutions.
- Sustainability initiatives: As part of our corporate identity, we prioritize environmental responsibility. The New Year will witness our dedication to sustainable logistics, encompass initiatives to minimize our carbon footprint and champion eco-friendly practices within the industry.
- Client-centric approach: our services will remain intricately tailored to address the unique challenges our clients face, evolving in step with their ever-changing needs. Our strategic goals for 2024 are ambitious, fueled by technological advancements, sustainability, and a commitment to our clients. We aim to bring positivity and innovation to the logistics sector, while empowering local businesses internationally.
Festive season to drive demand
Despite the industry fluctuations, TCI’s growth outlook remains consistent. As we move into the New Year, we anticipate the extended festive season and favourable monsoon will continue to drive demand for our services. The TCI-IIMB Supply Chain Sustainability Lab also continues to build a community of solvers, by combining research with industry expertise. At TCI, we have always taken pride in the ability, dedication, and cohesiveness of Team TCI. This year, however, has reinforced our trust as our sincerity, commitment, capacity to provide our customers innovate solutions such as control towers and bots, replicate practices across industries to move up another level. We will continue to invest more in training and upskilling of our workforce. As always, we will keep sharing our knowledge and new learnings with the industry through our Knowledge Initiative—KNIT. In line with the Vision India@2047, our investment strategy is also evolving. We have stepped up on strengthening our rail and coastal multimodal service offerings and building related network. In addition to our investments in warehouses and containers, we recently entered into an agreement with a Japanese shipyard for building two Cellular Container Vessels of around 7,300 MT dead weight tonnage (DWT) each for a price of `300 crore.
Expansion across global borders: recognising India’s ability to play a larger role on global platform, TCI understands that many Indian manufacturers and exporters will have global aspirations. Given the size of our markets, many global players are eyeing opportunities in India and we are expanding our footprint to the West to facilitate seamless trade. This is in addition to our presence in countries such as Bangladesh, Nepal, and Sri Lanka. TCIL Middle East Logistics Services LLC is poised to provide end-to-end logistics solutions, with a focus on various sectors, including chemicals and petrochemicals, energy, healthcare, automotive, construction, agriculture products and beverages, engineering, electronics and electrical, pharmaceuticals, and retail-FMCG.
In 2024, we will continue to adhere to our CORE business fundaments, moving ahead with a clear vision to build upon the successes of this year. We will continue to partner across key industry sectors such as consumer goods, infrastructure, automotive, and engineering to contribute to India’s growth. Through our partnerships with Niti Aayog, DPIIT and Gati Shakti Vishwavidyalaya, we will strengthen logistics industry and drive standardization. We will commit resources to infrastructure projects such as MMLPs and the adoption of the ULIP.
Demand for skilled workforce
This year was a transformative one that underscored the need for innovation, agility, and customer-centricity in the B2B logistics landscape. Flexibility became crucial in dealing with challenges from global events and supply chain issues. Integrating technology played a key role in boosting efficiency with real-time tracking back up by such as AI-driven route optimization and automated inventory management.
Prioritizing customer needs gained importance, stressing personalized experiences. Sustainability became a must, not just aligning with corporate responsibility but also proving cost-effective through eco-friendly practices. MOVIN plans to invest heavily in technology in the coming years, as our systems and processes are built to be agile and drive efficiency thereby enhancing the customer experience throughout the shipment journey.
This has helped the MOVIN to carve a niche for itself and be the best in class logistics brand in India backed by its four pillars of people, partners, technology and excellence. Presently the company has 14 hubs across major cities and by March next we plan to build more hubs. In the coming year, we aim to extend its presence into more tier II and III cities supporting logistics requirements of large enterprises, new age businesses as well as SMEs. Aligning our goals with the government’s vision of net zero carbon emissions, we have recently launched our second phase of EVs for the first and last-mile delivery purpose in in Delhi earlier this year. We also plan to deploy these vehicles in Mumbai, Chennai, Hyderabad, Kolkata, Pune by this year-end. We believe tech adoption is key to success and a tool to reach a wider audience.
Tier II, III cities key drivers of growth
In 2023, our key learnings stem from online shopping carrying a good year. Notably, during the recent festive season, we witnessed a substantial 40-50 per cent surge compared to regular months. The hinterlands, particularly tier II and beyond, have emerged as key drivers of this growth. In categories such as fashion, apparel, general merchandise and wellness, the outsourced segment of 3PL has played a pivotal role, enabling D2C brands and online sellers to grow multifold in 2023. These D2C segments within these categories may grow at 30-40 per cent CAGR in next 24-36 months. The hinterlands, tier II and beyond, are contributing 60 per cent new online shoppers and we are seeing demand arising from towns and cities. To capture that, we operate 3,000 branch offices serving 27,000 pin codes in the country.
