The emphasis given by sectoral players to reduce costs and improve efficiencies has lead logistics players to muscle their expansions

Recent meltdown and its after effects saw more than half a dozen logistics companies a lot of developments happening to supply chain segment in India, thanks to the emphasis given by different sectoral players to reduce their costs and improve efficiencies.

The happenings once again underlined the ample opportunities that are there to value-engineer processes to offer value for money and just in time efficiencies. Some of the companies that developed their 3PL (third party logistics) and warehousing strength include Allcargo Global Logistics, Safexpress, Shree Shubham Logistics, Transport Corporation of India, Gati, and AFL.

The emerging retail sector, which is considered to be the next sunrise industry in India, is believed to be the primary mover behind all these developments. The logistics players knew that the success or credibility of a participant of the retail sector depends on ensuring continuous availability of a wide range of products in optimum quantities across a widely spread operational network, which means a high level of control on logistics. The retail segment also demands the highest quality of service from logistics solution providers. Global benchmarks are increasingly being applied to retail operations in India. Not only do the logistic service providers require breadth of transportation network but also strong expertise in storage and value added services to cater to such dynamic market.

As pointed by a recent report ''Transforming Landscapes on Indian Warehousing' by CII - Jones Lang LaSalle Meghraj, logistics costs in India equals 13% of the GDP, which is significantly higher than those of the developed countries, where it equates to only around 10%. "Even a slightest reduction would result in considerably huge savings for the country'', it pointed out.

The report went on to point out that the emergence of outsourcing along with the consolidation of 3PL players would result in improving efficiencies and lowering costs in the supply chain.

The developments also underlined, what, Tushar Jani, chairman of CII western region logistics sub committee and chairman, Blue Sea Shipping Agency implied when he said that there was a need to develop a new kind of confidence on the quality of service where people would start trusting in third party logistics.

For example, leading logistics player, Allcargo Global Logistics has started offering its customers 3PL solutions as a way to add value to their existing supply chain logistics services. With this, Allcargo customers can now benefit from an integrated network of warehouses to ICD/CFS to the closest gateway port. The 3PL division enables Allcargo to offer full service, end-to-end logistics service package comprising in-house expertise and facilities for freight forwarding, customs clearance, transport, warehousing and distribution services.

Safexpress, one of the country's largest supply chain and logistics company has launched its ultra-modern logistics park in Pune. On the occasion of launching the company's ninth facility in the country in the last nine months, Vineet Kanaujia, GM-marketing, that the company 'has taken the ownership of driving a warehousing revolution in India. We are investing Rs 600 crore to develop world-class warehousing at certain strategic locations across the country."

Mr. Kanaujia said, "There is a huge growth opportunity for warehousing business in India. Special Economic Zones (SEZs) are one of the major driving forces for the business in the country. A large number of upcoming SEZs have necessitated the development of logistics parks for the domestic market as well as for global trade."

According to him, Safexpress plans to develop 5 million square feet of additional warehousing space across the country in the next couple of years, adding to the existing warehousing space of 5 million square feet. "In all, we plan to launch 32 logistics parks in the next two years. These parks are all set to revolutionize the way supply chain functions in our country today," he said.

VRL Logistics, the logistics division of the country's largest owner of trucks, is also giving more thrust on giving 3PL & warehousing solutions, which are tailor-made and cater to unique needs of customers. According to company sources, VRL Logistics is expanding its service to reach even the remote locations in the country.

Shree Shubham Logistics, a subsidiary of Kalpataru Power Transmission, is also focused on developing a string of commodity warehousing logistics parks at strategic locations in states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.

Companies like Transport Corporation of India, Gati, and AFL are also developing their 3PL and warehousing muscles to supplement the retail industry.

Originally published in The Economic Times dated: January 11, 2010