Saturday, June 15, 2024

How is 2023 looking for logistics?

Indepth

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The pandemic time has changed the game for many economic activities and logistics is no different. Consumer demands are always on the rise. During the pandemic, there has been a hike in demand for goods with a shortage of supply.

Thus, we can say that logistics is one sector that has the potential to see a substantial increase in 2023.

India is one of the countries with the largest population and an expansive geographical coverage which contributes to many of the factors that influence logistics in the country. The pandemic has seen a shift with countless challenges unique to each region. The logistics industry is seeing its fair share of ups and downs but trends suggest better growth for this sector in the coming year.

The year 2022 was a hit-and-miss for many of the key players in the industry. ICRA’s reports suggested a growth rate of 14-17 % for the 21-22 fiscal year. Moreover, around 14.4 % of the GDP is accounted for by the logistics industry. A substantial amount of the population that are employed work in this sector.

The value of the logistics industry stands at $250 billion as of 2021 and is expected to reach $380 billion by 2025. This suggests there’s a good potential for this industry to see robust growth if challenges are well handled.

Here are a few crucial factors and trends that would shape the logistics industry in 2023:

Digitisation

Since the pandemic has transformed the world of technology tremendously, logistics has seen its roots spread out in the digital world. It helps streamline the process through well-rounded operations. According to the CAGR, digitization of this sector is expected to grow at 8.5% by the year 2027. Moreover, the Indian Government has shifted its focus to AI and Big Data to accelerate the demand for digital logistics as per Mordor Intelligence’s report. This coupled with the advancement of technology with better cloud-based systems is a boon for this sector.

Sustainable supply chain

Freight transport is responsible for the most amount of energy consumption. According to the Council on Energy, Environment and Water, freight service will see an increase in demand from 2,000 tkm in 2020 to 10,000 tkm by 2050. Moreover, the logistics sector is expected to contribute the highest amount of carbon emissions by 2050. Thus, many market players are on the lookout for adopting sustainable means to reduce carbon emissions.

With a boost in the digitization of the logistics industry, it can be helpful in driving a shift towards using sustainable transport while keeping transportation smooth. Green logistics is the key term to remember here and is quite a trend. It seeks to reduce the ecological impact and promotes the use of sustainable solutions in this sector.

Increase in cloud-based systems

The era of the internet has brought better security, storage and data encryption that smoothens the process of logistics. As a result, there is an expectation to see more use of cloud-based systems by organizations for ease in regulating the supply chain. It helps improve visibility across multiple networks and works on creating scalable options that meet market demands. Besides, data-driven decision-making can be used to implement healthy strategies.

Use of blockchain

A lot of businesses have been using blockchain to transform their supply chain management. Blockchain tools help improve customer service by integrating automation to ensure customer needs are met with minimal hindrance. It helps with inventory management, creates better transparency with the customer and improves freight transportation.

It makes use of several methods to analyze data and generate better reports that can be used to see the manufacturing and shipping process and eventually the shipping of the product to the customer.

All in all, the logistics industry has a tremendous growth set for 2023 and in the coming years. With AI, Big Data, IoT and other advance solutions available to help create excellent strategies to provide great solutions to customers, many businesses are turning to invest more in logistics.

With an evolution of multiple trends in the market, companies need to keep up with tech advancements to navigate through the challenges and adapt to the changing times.

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