Four Takeaways From The National Logistics Policy & What It Means For India’s Supply Chain Leaders

I am excited to share that Shipsy was invited to witness Prime Minister Narendra Modi unveil the National Logistics Policy (NLP) 2022.  Dhruv Agrawal , Himanshu Gupta and Rajat Girdhar were representing Shipsy at Vigyan Bhawan on Saturday 17th September.

Interestingly, Shipsy's logistics optimization strategies and capabilities are already aligned with some of the core announcements made by the PM. Let's summarize and analyze the key takeaways of the NLP.

There are four critical pillars of the NLP. These include:

• Reduction in Logistics Costs To Boost Competitiveness
• Enhanced Collaboration of Key Logistics Stakeholders 
• Improved Container Movement and Warehouse Standardization
• Ensuring India Joins The top 25 Logistics Performers

Reduction in Logistics Costs To Boost Competitiveness

This is perhaps one of the most awaited announcements. Logistics costs account for 13-14% of India's GDP, and the Center plans to cap it at 8%. In China, the figure stands at 10%, and it's 8% in America and Europe. High logistics costs are a barrier to the competitiveness of India's products in the international market. 

As the policy rightly mentioned, one of the key ways by which costs can be reduced is by ensuring greater dependency on multimodal transportation. The government envisions that greater levels of cost efficiency can be delivered if 25-30% of freight movement is done by roads, 50-55% by railways and 20-25% via water routes. But multimodal freight movement comes with its own challenges like inability to gain visibility of goods/packages across road, rail, ocean and air. Smart logistics management platforms empower logistics stakeholders to ensure real-time visibility of such goods movement, significantly eliminate ETA and SLA breaches and drastically reduce intermodal transportation costs. 

Logistics costs account for 13-14% of India's GDP, and the Center plans to cap it at 8%.

A leading auto parts manufacturer is ensuring a 10% reduction in freight procurement costs and 50% lesser incidental changes by using real-time shipment tracking capabilities. Greater usage of multimodal shipping will also enable businesses to ensure sustainable logistics. 

Enhanced Collaboration of Key Logistics Stakeholders

India's logistics infrastructure is complex. Broadly, it's divided into 20 government agencies, 40 partner government agencies, 37 export promotion councils, 200 shipping agencies, 36 logistics services, 168 container freight stations, 500 certifications and over 10,000 commodities. The challenge is that most of these entities work in silos resulting in massive collaboration and visibility issues. 

PM's Gati Shakti National Master Plan and the focus on building a Unified Logistics Interface Platform (ULIP) will play a winning role in addressing this challenge. 

ULIP aims to bring together disparate entities from the Ministry of Road Transport, Civil Aviation, Directorate General of Foreign Trade, startups, manufacturers, CHAs, 3/4PLs and more on the same platform. The primary aim here will be to ensure faster resolution of logistics issues by using eLogs. 

A smart logistics management platform today enables a multinational conglomerate to save 40% in freight costs via flawless collaboration and automated negotiations.

Seamless collaboration is an excellent way not just to expedite decision-making and enhance productivity but also to reduce international shipping costs. A smart logistics management platform today enables a multinational conglomerate to save 40% in freight costs via flawless collaboration and automated negotiations across shipping lines and freight forwarders. By integrating such a platform with the ULIP, the government will significantly improve the efficiency of India's supply chain network.

Improved Container Movement and Warehouse Standardization

With the rapid growth in online deliveries across the globe, container traffic has intensified, resulting in expensive delays. But thanks to robust strategies, the PM highlighted that the turnaround time of container vessels at the port was reduced to 26 hours from 44 hours. It's a significant improvement, especially concerning the arrival of a ship and its departure. But the overall journey of a container can be further optimized by employing advanced real-time container tracking solutions. 

India ranks 35th on the World Bank Logistics Performance Index.

Businesses can automate freight procurement based on the type of container load they seek (LCL, FCL) and drastically reduce the number of days spent negotiating freight rates. Real-time tracking improves first-mile trucking operations by enabling logistics providers to gain accurate insights on container ETAs to drive on-time pickups. Real-time shipment visibility also reduces the cost of managing containers by sending timely alerts on detention and demurrage days. A global Fortune 100 retailer is using real-time shipment visibility to eliminate incidental charges by 80% and ensure a five days faster plan to ship time. 

Focus on warehouse standardization will be equally important. India's Grade A warehouses are at par with international standards, but the number of such facilities is still few. Even though there has been a 10% increase in Grade A warehouses, businesses and local governments must work on upgrading Grade B and C warehouses to Grade A facilities.

Ensuring India Joins The top 25 Logistics Performers

Currently, India ranks 35th on the World Bank Logistics Performance Index. The National Logistics Policy will play a pivotal role in reducing international shipping costs, driving digital transformation and ensuring greater ease of executing logistics operations. When these efficiencies are achieved, we are sure India will find its place among the top 25 Logistics Performers.