India’s last-mile delivery market is Rs 20,000 crore and is expected to grow at 16-18% CAGR over the next three years largely on the back of the growing e-commerce industry. Ankur Singhai, Vice President - Ecommerce & Last Mile Delivery Business, Mahindra Logistics Ltd in a conversation with DH’s Lavpreet Kaur delved into the disruptive role played by the gig economy and e-commerce in pushing the last-mile delivery operations to reinvent themselves, vigorously adopt technology and graduate to a more organised sector.
Edited excerpts:
How has e-commerce impacted the logistics sector?
The traditional chain has learned a lot from e-commerce. E-commerce has given people the power of choice. The logistics sector has had to respond to this changed scenario and the challenges posed by e-commerce, such as creating the right set of infrastructure, scaling up and scaling down capacities within a quick time, evolving tech systems - all of which contributed to real take-off for the last-mile delivery sector. The industry will continue to get disrupted in the context of how we operate.
What are the primary challenges for last-mile logistics players today?
There is tremendous scope to improve on the last-mile infrastructure across cities. An important element today in last-mile delivery is actually the micro fulfillment centre. A modern micro-fulfillment centre requires multiple elements- a certain level of automation, floor quality, ventilation, number of docks and with the electric lead coming in - a whole lot of parking and charging infrastructure. Local bodies actually need to devise a policy around last-mile logistics.
Another thing that is going to be a game-changer is the democratisation of platforms and for that scaling up of digital infrastructure.
Third, last-mile delivery has actually become synonymous with the gig economy. The concept of the gig economy is pretty new to India unlike in some other developed economies and therefore, labour laws for the sector is a grey area. The recent incidents in NCR are early signs that the government and industry need to sit together and formulate certain policies around this. If this remains unaddressed over a longer period of time, it has the potential to become a problem.
How far have we come in the zero-emission ambition for the logistics industry?
The total cost of ownership (TCO- a measure of the costs of owning and operating a vehicle over a period of time) curve for electric vehicles for the last mile has started matching the ICE (internal combustion engine) vehicles. The technology will keep evolving the entire TCO curve and it will start becoming favourable as we go towards the higher range of vehicles. From an Indian context, the government is supporting the development of various technologies. Even on the raw material front, there has been some good news with the recent find in lithium reserves across two states.
How is tech helping create more circular, more sustainable approaches in the last mile segment in specific and larger logistics sectors in general?
Technology has been the biggest contributor in driving optimisation, bringing efficiency and therefore bringing reduction- both from a carbon perspective and cost perspective. The other side where technology contributes is in the product itself. The tech that goes into battery sciences, or charging vehicles from renewable sources of energy, significantly helps in cost-cutting and achieving carbon neutrality.
What are some challenges ahead of technology adoption in a largely unorganised sector like logistics?
I see technology adoption has been pretty high in logistics and that has accelerated over the last four or five years. Technology has solved that problem of fragmentation to a great extent. Locating a vehicle is so easy right now and you have full visibility of the load, thanks to GPS systems. Drivers can use the UPI app to make payments. So, while we call the logistics industry unorganised, I think we have crossed that threshold long back.