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Economic Factors Affecting Logistics Industry

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Economic Factors The growth rate of the Indian economy has been a good 9% over the last couple of years as compared to the world GDP growth rate of about 3% only. Given such significant improvement in the economy, the country looks more favorable for the Logistics industry with the opening of more services and manufacturing plants. Following are the few factors that affect the Indian Logistics industry: • The logistics cost – The logistics cost in the industry which includes warehousing, transportation, packaging, losses, inventory holding, inventory management and other related managements costs are estimated at around 13% of the gross domestic product and seems like a large number when compared to the corresponding figures for major economies …show more content…

Infrastructural issues like poor connectivity, bad road conditions to drive in, inadequate sea ports or air capacities and lack of development of modes of transport like the railways and alternates like inland water transport and the domestic air transport have also been a constant irritant to the sector. Because of some of these infrastructural bottlenecks, costs per transaction present in the sector is relatively very much higher when it is compared to those in the developed markets. The poor infrastructure has severely crippled the smooth functioning of logistics operations in the …show more content…

Strength • The MTO business has shown a growth of 13% • The company is ranked as the 2nd largest Logistics firm in India within the sector. • The company has a scale of operations over 4000 ports which is distributed across 62 countries. • LCL consolidation market with a strong network across 62 countries and 142 own offices covering over 4000 port pairs with nearly 200 agents and franchisees. • The distribution network of the company is quite robust. • The performance of Allcargo logistics has been relatively superior as compared to other firms inside the same sector and the company boasts of innovative ideas for application. Opportunities • They can diversify and produce a new product portfolio to enter in to new services provided by the company. • Since the company is high on funds, it can use these funds for further expansion inside the industry. • The company can move from traditional logistics company and into third party logistics (3PL) to provide competitive

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