Indian logistics tech market blossoming

Indian logistics tech market blossoming

Freight forwarders, technology providers, container lines, and ports officials gathered in Navi Mumbai last week to discuss how technology might make India

MUMBAI — The market for technology to enable India’s shippers and freight forwarders to be more efficient is blossoming, speakers at JOC’s inaugural India Logistics Technology Summit in Mumbai said.

Software models based on those in other regions — like digital freight forwarding, rate marketplaces, and shipment management systems — are flourishing based on service provider fragmentation in the market and a reliance on offline processes.

Speakers said a couple of dynamics are driving broader use of logistics technology in India: a need to digitize the quoting, booking, and payment process for shippers; the relative ease of implementation of such tools at a price point that’s amenable to the market; and the changing of generational leadership at Indian importers, exporters, and forwarders, with younger generations seeking ways to implement browser-based technologies.

Panels at the event focused on how software providers are empowering India’s small and medium forwarders with either customer-facing tools or operating systems, tools enabling India’s importers and exporters to execute shipments digitally, and an exploration of the digital freight forwarding model in India.

Raising the profile of container technology

More than 50 attendees from 36 companies participated in the Thursday summit, which was geared around furthering technology adoption and partnerships in India. The need is clear — India as a whole had throughput of around 16 million TEU in the 2018-19 fiscal year, 60 percent of which was handled at the country’s 12 government-owned major ports

But as a ratio of container volume to population, the country saw only one TEU per 85 people. That compares to one TEU per 5.6 people in China, and around one TEU per 6.4 people in the United States.

India has built sufficient container capacity — currently pegged at 27 million TEU — but what it lacks is an efficient multimodal logistics network to minimize cargo transits to and from gateway ports. Although it is in the early stages of development, an ambitious government program to switch from a point-to-point transport system to a hub-and-spoke model should aid freight movement on low-volume corridors.

India’s technology sector could help the country address a governmental initiative to reduce its cost of logistics as a percentage of GDP — currently pegged at around 14 percent — by improving utilization of assets, reducing waste, and drawing more skilled labor into the industry. The technologies are also designed to reduce a forwarder’s cost of sales, and the amount of internal resources a freight buyer spends managing procurement and shipment execution.

The development of the logistics technology landscape is still in its early stages, though. While trucking, final mile, and intra-city delivery startups have scored hundreds of millions of dollars in venture capital investment, ocean freight logistics startups are still seeking such investment. 

Companies speaking at the event, like the freight marketplace FreightCrate, shipment management software provider Vamaship, container matchback systems provider STEP, and digital freight forwarder Shipwaves, have yet to secure seed funding. Boxnbiz, another digital forwarder, recently completed an incubation program in Singapore affiliated with the Rotterdam technology accelerator PortXL. Others, such as freight forwarding software provider FreightBro, have raised seed rounds and are eyeing future venture investment.

Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.