Intracity logistics is a significant part of the Indian logistics industry as it's responsible for the movement of goods within the urban areas of different cities. Intracity delivery plays a pivotal role, especially when it comes to same-day, last-mile, and emergency transportation of goods. Despite being under the impact of lockdowns and restrictions due to COVID for a few years, this sector has shown continuous upward growth which shows its resiliency and massive business potential. This article focuses on the analysis of recent intracity logistics market indicators along with the trends expected to shape its present and future. We will start with some important statistics regarding the growth and performance of the market.
Insights From Recent Market Research On Intracity Logistics
The size and volume of the intracity logistics market are persistently increasing and are expected to stay like that in upcoming years, too. The reasons for such fast growth of intracity logistics market are rapid e-commerce growth and urbanization.
As per market research, India’s logistics market is of USD 320 billion and out of that, the market of intracity logistics is worth around USD 32 billion as of March 2020.The CAGR (compound annual growth rate) of the intracity logistics sector is expected to be more than 8% this year. That rate is expected to go even higher during the forecast period (2024-2029). Currently, intracity logistics makes up around 10% of the Indian logistics industry (320 billion USD), which is a massive percentage.
The trend of upward growth in intracity logistics is mostly due to the persistently rising adoption of online delivery services by businesses. Thousands of businesses working in Indian cities that rely on intracity courier services to deliver goods to their customers. Yet, these businesses are only 20% of all businesses in the country, leaving a largely untapped market with countless opportunities.
Intracity logistics can be segmented based on the type of service and the city it serves. Based on service, intracity logistics can have the following segments:
o Transportation
o Warehousing
o Distribution
o Value-added services
Some major cities that use intracity logistics as a key part of their quick delivery service system include Delhi, Gurgaon, Pune, Hyderabad, Bangalore, Chennai, Mumbai.
All of these are tier-1 cities of the country. The demand for intracity courier services is consistently increasing in tier-2 and tier-3 cities as well due to rising e-commerce trends.
The intracity logistics industry can also be segmented based on the industries it serves for example manufacturing, chemicals, fast-moving consumer goods, 3PL, healthcare, pharmaceuticals and others.
From a thorough market research, we can summarize the following key insights:
o The Indian intracity logistics sector is set to register substantial growth during the forecast period (2024-2029). One of the major reasons behind this growth is the e-commerce boom and rise in demand for quick delivery services.
o The sector has a complex framework in which various logistics players play their roles. For example, traditional transporters, parcel delivery apps, and same-day delivery service providers.
o Leading intracity logistics companies are keen on investing in adopting the latest logistics technologies that can help them keep their operations in line with the rising demand for goods by customers.
o Urbanization is another contributor to the rising growth of intracity logistics. People prefer to move to cities for residential and commercial purposes, increasing the population densities of cities. As a result of that, the demand for timely, swift movement of goods is also rising in cities, paving the way for the growth of intracity logistics.
o Government policies are also in favor of this sector, making it easier for it to procure skilled manpower and required infrastructure to make its operations more efficient.
Trends in intracity logistics in India
Now, we will discuss some significant trends that are expected to shape the present and future of intracity logistics in India.
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Growth of intracity logistics in Tier-2 and Tier-3 cities
E-commerce is a highly contributing factor to the growth of intracity logistics in tier-2 and tier-3 cities. The time when intracity logistics is only a thing of tier-1 cities is long gone. Now, cities like Amritsar, Bhopal, Jamshedpur, Kochi, Etawah, Udaipur, and Cuttack, also have well-established intracity logistics sectors. In fact, small Indian cities are registering more growth in e-commerce deliveries.
In 2024, the total contribution of smaller cities to e-commerce sales is expected to be around 46%. These numbers are for normal seasons. During the festival season, this contribution is significantly higher.
The shopping habits of residents of small cities are also constantly changing. Now, they prefer to use an intracity same-day delivery app or parcel delivery app to get their goods delivered to their doorsteps instead of visiting shops physically.
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Rising use of EVs (Electric Vehicles)
The use of electric vehicles by intracity logistics is a part of the electric revolution in India. More and more businesses are investing in EVs, making their shipping operation more sustainable and eco-friendlier. EVs use electricity, which is not only renewable but also cost-effective compared to traditional fuel. They also have lower gas emissions and a carbon footprint on the environment. EVs are a critical part of sustainable logistics initiatives by the Government.
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Technological Developments
In terms of technology, intracity logistics have registered a significant development. Delivery drones, efficient small-sized vehicles, the truck rental app, GPS technology, real-time tracking, and the use of modern logistics software are excellent examples of that trend. These advancements are helping companies to streamline their operation and boost their capacity to meet the ever-growing needs of customers.
In the future, only those logistics companies will survive in the market that have adopted these technological advancements. Companies that have realized that fact are largely investing to become innovative, and technology-driven. This trend is expected to remain forever in the intracity logistics sector of India.
The sector is also adopting IoT (Internet of Things) and AI (Artificial Intelligence) technologies. These technologies can help logistics businesses to better optimize their routes, delivery channels, and vehicle utilization, offering them a competitive advantage.
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Amazonification
The adoption of the Amazon model is one of the key trends in the intracity logistics of India nowadays. As this model is unique, efficient, and highly successful in meeting the growing demands of same-day, timely delivery of goods, more and more logistics businesses are considering adopting it. It will allow them to be multi-service providers; they will not only take care of goods delivery but also manage warehousing and inventory. It will make the logistics business a complete fulfillment solution provider.
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Digitalization and automation
It wouldn't be wrong to say that Indian intracity logistics is undergoing a digital transformation nowadays. Thanks to robotics and modern logistics technologies, all those operations are being automated that were used to be manual a few years ago. This trend has significantly contributed to the increasing efficiency and flexibility of the sector.
Automation has also made it easier for the customer to access delivery services. For example, a few years ago, customers had to visit the office of the logistics company to order a truck to get their goods delivered. Now, they can do it simply by accessing a truck booking app via their smartphone.
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Improved Delivery Forecasting
As intracity logistics is immensely streamlined and efficient, it can forecast the exact time and date and delivery way much better than traditional logistics. In fact, delivery forecasting has become a key element of the services provided by logistics companies.
Challenges Facing Intracity Logistics In India
The rising growth of intracity logistics in India doesn't mean that it doesn't face any challenges. Infrastructural issues, traffic bottlenecks, and cost pressures are some of the major factors impacting the performance of intracity logistics. The traditional regulatory framework also creates challenges for the sector, such as no-entry restriction to commercial trucks in morning and evening hours although the government is taking the initiative to change the regulatory system to favor the intracity logistics sector, still a lot needs to be done in this regard.
Conclusion
The trends discussed above are playing a critical role in redefining the intracity logistics of India. As these trends are developing persistently, they are believed to be integral elements of the efforts to optimize intracity supply chains. There are many companies in the market that are actively adopting these trends, one of the best of them is MOVER.
We’re striving to adopt new logistics technologies to elevate and expand our service level. The key aspect of our service is to provide seamless, on-demand goods transport to our customers. Our on demand deliveries are equipped with the latest and real-time tracking, enabling us to keep our customers updated about the whereabouts of their products. Our persistent efforts to stay upgraded as per the recent technological developments make us an emerging player in the industry. Our services are equally efficient for small-sized businesses as they are for enterprises.
