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Logistics all set to become the largest infrastructure jobs engine for India

Infrastructure investment and GST implementation will help the logistics industry grow at 10.5% CAGR, says a TeamLease report titled ‘Indian Logistics Revolution – Big Bets, Big Jobs’. According to the report, public investment coupled with consumption and industry evolution will drive the growth of the Rs 14,19,000 crore logistics sector. The impact of each of these factors on the seven sub-sectors 1) Road Freight 2)Rail Freight 3)Warehousing 4)Waterways 5)Air Freight 6)Packaging and 7)Courier Services is likely to result in 3 million new jobs, upping the employment numbers in the sector from 10.9 million (current) to 13.9 million by 2022.

As per the 2018 budget, public investment of Rs 6 lakh crore has been promised to infrastructure, of which 50% i.e. Rs 3 lakh crore will go into building world class roads, rail freight, waterways infrastructure and state-of-the-art multimodal logistics parks. This large scale investment is aimed at bringing down the logistics costs from 14.4% of GDP by about 2% over the next 4 years, hence, stimulating the creation of more jobs in logistics sector.

Economic growth, evolving regulation, rising outsourcing and high infrastructure investment are expected to create 1.89 million incremental jobs in road freight whereas the rail freight sub-sectors will create 40K incremental jobs over the next four years (2018 through 2022). The report also highlighted the fact that air freight will create 400K incremental jobs and waterways will create 450K incremental jobs due to growth of cargo in ports and ease of doing business which is making India a leading emerging market.

IT adoption coupled with packaging innovation, urbanisation, multimode transportation model and fast growing customer segments and incomes will change the packaging, warehousing and courier sub-sector. The warehousing sub-sector will create 120K incremental jobs while the packaging sub-sector is set to create 40K incremental jobs. The courier services sub-sector will see a growth of 60K incremental jobs over the next 4 years (2018 through 2022).

Commenting on the report, Ms Rituparna Chakraborty, Co-founder and EVP, TeamLease Services, said, “Logistics sector is going through an exciting phase with a number of public investments in line. There will be an enormous shift in demand management between transportation modes – the overburdened road network is set to share significant oncoming demand with dedicated railway freight corridors that have superior freight handling capacity. New national waterways being built, a plethora of sophisticated 3PL and 4PL players revolutionising the warehousing sub-sector, increasing consumption and consumer maturity is providing a big fillip to the packaging sub-sector. All of these changes alongside the interplay of sector demand – from manufacturing, FMCG / FMCD retail and e-commerce – and technology will not only create innumerable jobs but also metamorphose the skills landscape for logistics.”

Mr Pranay Prakash, Senior Director, Human Resources, Delhivery elaborated, “It is exciting times ahead for the logistics industry. With the policy initiatives that the government is driving, including according infrastructure status to the industry, implementation of GST and e-Waybills etc, it has opened up the entire sector – both from and investment as well as job creation perspective. While this provides for an immense business potential, it also poses the challenge of availability of skilled manpower across warehousing, trucking and allied service. A PPP model on creating the required infrastructure, the State’s investment on upskilling people and the private sector’s investment on technology are going to be the key drivers of this growth story.”

Key government initiatives like Bharatmala Pariyojana and National Highway Development Project (NHDP) will not only focus on optimising efficiency of freight across the country but will prove to be the catalyst in creating the maximum number of jobs across road freight. Initiatives like Sagarmala Pariyojna and New National Waterways, conceptualised by the government of India, aim to promote port-led development in the country and will be the key factors in creating jobs in water freight. Multimodal logistics parks, logistics clusters, DMIC and DFC are other initiatives taken by the government to create incremental job growth across the seven sub-sectors in logistics. In fact, e-commerce, which has not been awarded infrastructure status, is also aiding in the formalisation of logistics sector.

Mumbai, Delhi-NCR, Pune and Ahmedabad are a few regions that will be benefitted the maximum through these initiatives, thereby creating the maximum number of jobs in road freight, while Allahabad, Ahmedabad, Chennai and Guwahati will create the maximum jobs in waterways.

Mr Dilip Sharma, Senior Vice-President and Country Head – Operations, Ecom Express, said that “E-commerce B2C has been a sunshine segment for India for over 5 years. With GST taking shape and some large consolidation, the e-commerce industry is poised for new matured growth by 35%-40% year on-year from here on. Opportunities in tier 3, tier 4 cities would outbeat the growth in tier 1 and tier 2 cities basis the smartphone and data leverage. Grocery, B2B, e-commerce is the next big thing and would drive the markets ahead, creating bundles of opportunities for new employment and logistics players.”

Commenting on the potential of the sector, Mr MAJ Jeyaseelan, Advisor, Infrastructure Industry and Logistics Federation of India, said, “Everyone knows that successful logistics management is all about having the right product in the right place at the right time. However, doing all these at the right cost is the most critical challenge not only for logistics managers but also for the economic policymakers. Logistics management is being transformed from a cost centre into a profit centre. Cost of logistics is also proving to be a decisive factor in determining the competitiveness of economies. While most businesses are still grappling with third and fourth party logistics, technology infusions and, particularly, the application of artificial intelligence are changing the logistics value chain far beyond one’s imagination. The driving force for this rapid transformation is the need to do logistics management at the right cost.”

Another interesting finding of the survey is the challenges in sourcing the right talent for the right job. Challenges in attracting and retaining talent include perception of logistics as a low-skilled sector, availability of formally trained talent and outdated work processes in the sector. While hazardous and high-stress working conditions, low compensation levels and inadequate benefits, lack of learning and development initiatives make employees leave the sector prematurely.

The study further delves deep into the skill requirements in the logistics sector. Technology and industry knowledge will transform potentially every role in a logistics organisation. According to the survey, there is a dearth of 950K jobs across 8 primary logistics sub-sectors. The survey indicates severe short supply and lack of junior level talent in the sector. While in Ahmedabad, Kolkata and Chennai, junior levels comprise 50% or less of the total skill gap, Bangalore, Delhi and Hyderabad have surplus senior talent. With the creation of 3 million jobs spread across the country, this demand-supply ratio is likely to be met.

Interestingly enough, the proportion of women employees in this sector has risen to 21% (current) from 5% in 2010. It is expected to move upwards to 26% by 2021. Employers are reorienting themselves for a relatively more egalitarian talent management era, encouraging gender diversity and embracing new technologies. While unhygienic working conditions, incompatible life balance, harassment, bullying and violence were some of the workplace inhibitors, preference for male candidates, biased selection criteria in job role descriptions and entrenched gender norms were a few barriers that held back active women participation in this sector. However, the sector now shows promising numbers for women participation and gender diversity.

Source : EXIM NEWS SERVICE

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