Contract Logistics A Whole​​​​​​​​​​​​​​ New Game

With increasing globalisation and ease to trade, Indian firms are demanding new logistics capabilities and more complex solutions from their 3PL partners. Greater acceptance of demand driven logistics practices brings forth a plethora of complexities into the supply chain and generate the need for contract logistics providers to deliver more expertise-driven services.

- Surya Kannoth

The contract logistics sector in India is on a constant growth curve. This growth has brought with it a new set of industry challenges, from running more efficient networks and expanding product and service portfolios to gaining control over unpredictable costs.

Here’s an example - CEVA Logistics’ managing director for the Indian subcontinent Vikash Agarwal cites an instance where it offered its solution for one of its client – an auto major. “We have an auto major (a client) who had a challenge to commit to forecast accuracy for volumes – but he wanted to secure a commitment from CEVA on execution timelines and improve year-on-year on the KPIs, excel in quality standards, maintain a high level of employee retention (commit less than 2 percent attrition), pay for productive use, improve on costs YoY with zero disruption. Quite a challenge, but CEVA took on the volume risk, and the intelligent work by keeping tight control on the costs and leveraging our sectoral knowhow which meant we were able to deliver without dilution on any of the auto major’s standards,” he revealed.

Thus, more and more companies are turning towards 3PLs to help them in successful management of supply chain processes. Currently, the contract logistics industry in the country is pegged at around $1.3 billion and the organized players in the segment are growing at about 15-20 percent annually.

And there’s further room to grow within this sector. “There are enough opportunities within the sector to grow as the logistics spend as an overall percentage of GDP is still high (13 to 15 percent),” reasoned Agarwal.