Logistics cost savings to have big impact on GDP: KPMG

A reduction of the logistics costs by 1 per cent of the GDP means a saving of over $7.5 billion, according to a report on ‘Competitiveness Through Efficient Logistics’ released by KPMG in association with CII Institute of Logistics.

The report, which was released today at Logistics 2009 organised by CII Institute of Logistics, today also stated that investment to the tune of $1 trillion are in the pipeline for the sector.

This covers rail, road, ports, airlines, logistics service providers, warehouses and warehousing zone.

The report further added, logistics costs contribute to around 13 per cent of India’s GDP, while they contribute to only about 8 per cent in developed countries. The size of the distribution and logistics market is expected to be around $125 million by 2012.

“Policies and government regulations to improve the public infrastructure are being instituted and implemented with varying degrees of success, but with the overall effect of improving the efficiency of the logistics sector”

The third party logistics market is still in nascent stages, facing issues like lack of infrastructure (warehouses and cold storage chains), lack of economies of scale due to unorganised private truck operators and lack of efficient processes and automated, technologically advanced monitoring systems, the report said.