Logistics sector to touch $125 bn by 2010: Assocham

The Indian logistics industry is poised to become a $125 billion industry by 2010, an increase of around 17 per cent, from the current level, according to Assocham.

The knowledge chamber also said that the outsourcing of 3rd Party Logistics business (3PL) in India is set to become $ 90 million size by 2012.

According to the knowledge chamber the concept which was introduced in US and Europe is fast catching up the pace to increase the efficiency of domestic corporates through efficient logistic functions.

Assocham projected that Indian logistics industry is expected to touch $125 billion by 2010 from $105 billion, an increase of around 16-17 per cent in the next two years.

The 3PL industry is expected to become a $90 million industry from the current $58 million, as around 55 per cent of Indian companies are outsourcing logistic services like supply chain management and warehousing, which used to be between 10-15 per cent, ten years ago.

“This indicates that logistic industry is in the brink of exciting growth in the next two years as manufacturing, retail and real estate, which currently are under severe stress will return to their buoyancy for striking expansion of logistics,” said the Paper 'Building Logistics for Competitive Business’.

“One of the contributing factors for this is Value Added Tax (VAT) which is expected to drive Indian industry towards using more 3PL services”, said D S Rawat, Assocham Secretary General who released the paper.

He added future consolidation will attract many companies under the umbrella of 3PL. Value added services are currently the most driving factor which hopes to increases in future.

With the expansion of globalisation, Indian firms are demanding new logistics capabilities and more complex solutions from their 3PL partner. Greater acceptance of demand driven logistics practices introduces complexities into the supply chain and generate the need for contract logistics providers to deliver more expertise services.

More companies are turning towards 3PL to help them in successful management of supply chain processes. 3PL provides illustrate their ability to bring down conventional logistics costs and handle more complicated tasks.

Therefore, customers continue to give their 3PLs more responsibility and input into their business process. Companies are eager to expand into new market which is creating more logistics challenges. This is driving more companies to partner with providers who are already operating in global market. These 3PL providers can provide beneficial for the companies.