Overcoming Challenges to Accelerate Growth of Logistics Industry
The road transport in India emerged as a dominant part of the transport system and is now occupies a pivotal role for the growth in the logistics industry as well. Many factors have helped the growth of logistics industry that includes changing tax system, rapid growth in large-scale industries such as automobile, pharmaceuticals, FMCG and retail and the emergence of eCommerce in the India. But as no industry works without obstacles, and logistics Industry has its share of woes, too.
The challenges of the logistics sector are numerous, the prime being the lack of developed physical infrastructure. The physical infrastructure is not growing at the speed at which business especially eCommerce is expanding; which ultimately puts a damper on the growth. Another challenge that impedes the industry is high “last mile” cost. To put it in the context, suppose you ordered an item through an eCommerce site where the merchandize is stocked in Delhi and it has to be delivered in Bangalore. The package starts its journey in the eCommerce vendor’s local warehouse in Delhi, makes it onward trip to the Delhi airport and is flown to Bangalore. From Bangalore airport it goes to a processing centre in your locality and then is carried by a field executive, typically a young man who drives a motor cycle, to your house. In this entire journey spanning over 1500 km, 25-30 percent of the cost is associated with the “last mile”, i.e., the last 2-5km from your local processing center to your house. There are few factors behind the high last mile cost, the prime being one being non-standardized addresses in India as well as traffic congestion, delays due to weather etc.
There are multiple challenges with addresses. In some cities in India, up to 30-40 percent of the addresses do not have the correct pin codes. Also, since standard addresses do not exist in many places, people often use landmarks such banks, shops, ATMs etc., this making it time-consuming to find exact locations.
We have developed our own in-house artificial intelligence (AI) to enable us to locate the addresses better. Based on human input, this system learns over a period, this system gets better and better in locating addresses. Today, we can locate over 95 percent address within a locality correctly in most major India cities, a 2-3 times improvement in the past 18 months.
The eCommerce industry grew 2.5-3 times in 2015 and will likely maintain its high growth rate in the coming years. A plethora of technologies including AI would help us resolve address ambiguity, traffic navigation and weather related issues to scale the logistics business, enhance efficiencies significantly and reduce cost to enable eCommerce maintain its high growth rates in India.