National Logistics Policy (NLP) – Can this be the game changer?

India’s logistics industry is estimated to be to be more than USD 250Bn+ and is currently ranked 44 across the world based on the Logistics Performance Index (LPI). While the industry has a significant potential to grow, it is riddled with many structural challenges such as high fragmentation (many small players), sharp skew toward road transportation, poor asset utilization and low adoption of technology amongst many others.

The recently published National Logistics Policy (NLP) intends to bring down the logistics costs from the current ~15% to ~8% (% of GDP) and make India globally amongst top 25 countries, according to LPI, by 2030.

NLP took 8 years to develop because of it being an extremely comprehensive effort to address cost and inefficiency by issues lying down an overarching interdisciplinary, cross-sectoral, multi-jurisdictional framework for the developing entire logistics ecosystem.

There are eight key action areas laid out in the policy and the details around the same can be read from the Government website. However, we believe the following as some key implications of NLP.

NLP impact across key sectors

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Agriculture: Food security (~30% wastages) and fragmented sellers are some of the key challenges here. NLP would help in ramping up the cold chain facilities, providing access of the same to the retail farmers and real time tracking through Unified Logistics Integrated Platform (ULIP). These will help in reduced wastages, & better turnaround time.

Commodities: Rail being the dominant mode of logistics here, first and last mile have been the key challenges –primarily due to inadequate multi-modal logistics infrastructure. NLP’s focus on Multi-modal Logistics Parks (MMLP) and e-Logs to address the queries in real time can help in boosting the sector’s revenue, profitability and efficiency.

E-commerce: Delays across state borders and lower truck utilization are some of the key challenges. Logistics Ease Across Different States (LEADS) is aimed to reduce delays across state borders. End to end visibility will support transparency thereby improving utilization. Higher sale velocity, lower inventories and reduced logistics costs can be potential outcomes.

NLP impact across key sellers

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Truck owners: NLP’s leverage with GatiShakti with allow faster turnaround with better infrastructure support, while LEADs & Driver Capability development sessions can help in driver retention, provide lower costs through backhaul improvement.

3PLs / 4PLs: Limited access to logistics data has been a major issue here. Standardization of Material Handling equipment, benchmarking of services and MMLPs would be a great boon to 3PLs / 4PLs and would help accelerate the consolidation of the logistics industry.

Railways: Dedicated Freight Corridors, standardization of containers and logistics parks would help in lowering handling damages, which has been a key challenge here.

How can we accelerate NLP implementation

A. Leveraging learning from global best practices

One of the crucial elements of NLP is ULIP. ULIP envisages the integration of 1600 data fields from 30 logistic systems of 7 Ministries through 120 APIs.

There are many large-scale digital logistics platforms globally such as Project 44, GSBN, Egypt’s Nafeza, Uber Freight, and Tradelens (recently closed) to name a few. While these platforms can be studied in detail, there are a few common principles, which can be examined deeply.

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Data aggregation and standardization

From digitizing a truck to building the platform, data should follow a consistent format to ensure scalability, ease of operations and interoperability across the platform and external agencies. 

Public-private partnerships

Partnering with 4PLs / 3PLs players, the start-up ecosystem, besides Govt agencies, can aid in faster and better adoption of ULIP (including truck drivers).

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Building a model of trust

Trust can be driven across the lifecycle through data transparency, win-win commercial models and a collaborative solution building process. Consider key lessons from platforms like Tradelens, GSBN.

Green logistics and packaging

Digitization should help in reducing the overall paper trail. The ULIP platform also needs to encourage usage of returnable packaging and natural fuels (EV/CNG).

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B. Make use of the already existing digital solutions

Our research shows 1 in 5 Freight and Logistics companies are way ahead of the industry in digitalization. Going with the trend, leveraging ULIP theme-wise capabilities can be a step in the right direction.

Increase visibility and timelines

• Logistics Control Tower: Integrates process across value chain to provide visibility, on demand analytics and aid in execution
  • Track and Trace (alerts and GPS-based analytics)
  • Pilferage Detection and Cargo Safety (image analytics for automated detection)
  • In-Plant Logistics (vehicle tracking and control)
  • Warehouse Analytics (for warehouse efficiency and process handling)

Improve process efficiency 

• Transportation Management System: System-driven approach for efficient utilization of vehicles
• Network and Route Optimization: Dynamic load allocation capability considering service times, working hours and restricted access to areas
• Digital Twins: End-to-end solution for optimizing shop-floor activities
• Blockchain-Warehouse: Shared ledger for secure, automated P2P transactions
• Digital Freight Marketplaces: Online market platforms / aggregators

Multi-modal integration

• Blockchain-Truck Digitization: Real-time tracking with harmonized label, no paperwork and built on the philosophy of One Nation, One Permit

All the above capabilities mentioned exist with Accenture. 

Co-innovation through partnerships

Two types of partnerships can be explored here:

Between Govt and tech companies: This is primarily to evaluate Pay-as-you-use models. For example, today TMS and WMS solutions are sold as licenses. Can they be converted to a subscription model which can enable many small-scale transporters (which contribute 95% of the industry) to adopt the ULIP platform faster?

Between enterprises and consulting companies / start-ups: This is to build industry-specific capabilities necessary to take full advantage of NLP. Examples include streamlining the supply chain, aligning the data architecture, network optimization, right contracting and so on. Accenture’s latest thinking on Total Enterprise Reinvention is a deliberate strategy that aims to set a new performance frontier for companies and, in most cases, the industries in which they operate.

Conclusion

NLP has significant potential to positively impact the Indian logistics Industry. Learning from the global best practices, leveraging the already created assets and capabilities, and co-innovation through collaboration can help accelerate the execution of NLP and prepare for more holistic outcomes.

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