Trends

INDIA

  • E commerce in India in 2020 at $30B, Projected to grow to $200B by 2027.

  • Online penetration of retail is expected to reach 10.7% by 2024,
    versus 4.7% in 2019.

  • The online retail market in India is estimated to be 25% of the total organized retail market and is expected to reach 37% by 2030.

  • Internet penetration on the rise due to increase in mobiles and lower data charges.

  • Digital payment wallets making online shopping more accessible.

  • Ninety eight per cent of sample firms in that survey have a contract with trucking companies for making dispatches and only 11 per cent own their own fleet of trucks. While 36 per cent of these firms use third party logistics (3PL) service providers for making dispatches, about 30 per cent use 3PL service providers for procuring their material from their suppliers.

  • Goods are transported predominantly by road and rail in India. Whereas road transport is controlled by private players, rail transport is handled by the central government.

  • Government policies have been another driver of change in the logistics industry. The trend towards a higher road cargo traffic as compared to rail is going to require better logistics control and coordination.

GCC

  • Use of big data, IOT, Blockchain is on the rise.

  • The need for middle men is going down in transport contracts. 

  • In UAE, more than 30 Free Zones have been established. These free zones facilitates easy setting up of manufacturing plants along with other benefits on custom duties for import and export of goods.

  • Investments relating to the economic diversification efforts of the Emirates are driven by Abu Dhabi’s Economic Vision 2030 and the United Arab Emirates (UAE) Vision 2021.

  • Within MENA, Saudi Arabia represents the largest transportation and logistics market. The market was worth USD17 billion in 2013. The KSA was followed by Egypt (USD11.1)

  • MENA exports mainly comprise hydrocarbon and mining products, which account for over 80% of the exports. Other products exported by MENA are plastics, organic chemicals, and fertilizers. Export diversification remains low in the region; however, it is intensifying for some GCC countries, particularly the non-oil exporting ones.

  • Within MENA, Saudi Arabia accounts for about 45% of the exports on value terms, followed by Qatar and Kuwait at 17% and 14%, respectively.

Challenges

UAE

  • The issues of infrastructure and integration of the nation’s logistics network remain the two most critical areas that require attention.

  • In privatizing the operations of container traffic through rails, new entrants are expected to face serious problems. Because of limited manufacturing capacity for producing wagons, these firms will have to import wagons at high cost.

  • Some issues that confront the sector include high cost
    pressures, high returns and inadequate physical
    infrastructure

  • Recent trends have shown an increase in large size shipment categories like large appliances and furniture. E-retailers are
    focusing on growth in large shipments, which is
    expected to increase average weight per parcel.

  • India faces high logistics cost as compared to
    developed countries like USA, Japan and many of the
    European countries.

  • Today, logistics cost in India accounts for 13-17% of the Gross Domestic Product (GDP) which is nearly double (6-9%) the logistics cost to GDP ratio in developed countries such as the
    US, Hong Kong and France Much of the higher cost could be attributed to an absence of efficient intermodal
    and multimodal transport systems.

GCC

  • The rest of the world is leading and changing itself faster in terms of usage of technology. Rethinking of business objectives and strategies is needed quickly.

  •  MENA’s transportation and logistics industry faces various challenges. Currently, the transportation and logistics industry is highly fragmented, which leads to inconsistent market regulations, poor service quality, and unskilled manpower, among others.

  • Operational gaps such as inefficient clearance process, clearance/regulatory problems with customs and other government bodies, and high non-tariff-related trading costs exist.