The recently released ‘Inter-City Logistics Market Study’ has estimated a buoyant growth in the road logistics market in India in the next five years. The report by RedSeer’s early-stage research arm, RedCore, assesses a compounded annual growth rate (CAGR) of 8 percent, taking the inter-city road logistics to spend from USD 209 billion in 2021 to USD 330 billion by 2025.
Inter-city Road Logistics
Today inter-city road logistics accounts for nearly 87% of the total road logistics spend. The study indicates that the swiftly growing e-commerce market and retail sales sector have fueled an upswing in road logistics. The on-demand/spot market currently accounts for nearly 63 percent of the total inter-city road logistics spend, and the contract market takes up the rest of the market share. On-demand/spot cargo transport caters to unfulfilled and urgent demands, such as freight associated with defense, agriculture, food, building material, FMCG, PSUs. Such clients usually engage in moving goods immediately and prompt settlements.
According to the RedCore study, metros bring in approximately USD 84 billion, nearly 40 percent of the total inter-city logistic market. Road logistics today make up for a sizeable 60 percent of the overall logistics spend, which accounts for nearly 14 percent of GDP in India. The research notes that the relation between logistics cost and GDP is a direct indicator of the business competitiveness of India concerning transport infrastructure, freight management, and ease of doing business.
Starts-up Rule the Roost
This sector that is ripe for the picking has seen an upsurge in the number of startups that are consciously addressing industry pain points and changing the rules of the game. Innovative business models have sprouted, disrupting the sector and delivering value throughout the operating cycle. From discovery and booking to value-added services and delivery, new businesses engage with consignors, freight carrier owners, and truck owners to take this massive economic opportunity.
According to the study, the basis of most of these new enterprises is leveraging technology to build an accessible marketplace connecting stakeholders. Startups are making the on-demand/spot freight market direct and easy to engage in, such as connecting truck owners with verified transporters with commission-free, instant bookings. Regulatory changes, and policy improvements such as Logistic Efficient Enhancement Program (LEEP), Digital India, and Make in India, among others, have also propelled growth in the sector, the study notes.