2023 Logistics Outlook: India's Top 7 Predictions By Industry Experts

Throughout 2020-21, it has not been a smooth ride for the logistics sector with the pandemic and the consequent downturn of the economy. In 2022, we saw successful efforts to revive the industry to its former glory, as companies left no stones unturned to recover their losses. More or less, 2022 was dubbed a good year for the global supply chain industry.

In India too, the year was quite promising with the government unveiling path-breaking initiatives like the National Logistics Policy, ONDC, while keeping an increased focus on sustainable logistics. But, with the unpredictable nature of the world economy at present, there is always the fear of a setback. Some experts feel 2023 might be a bumpy ride for Indian logistics, yet again, with the threat of a global recession looming overhead.

However, there are still certain areas of logistics and supply chain that can grow surprisingly well this year. Here are some of the logistics predictions for 2023 our experts want you to look out for:

1. Increasing use of technology

With the advent of technologies such as Artificial Intelligence and the Internet of Things, we can expect logistics companies in India to increasingly rely on data and automation to optimize their operations and improve efficiency. As a fulfillment company using AI-powered route optimization to supercharge deliveries, we can only expect to see more growth in this area as AI continues to evolve rapidly.

Following examples of Europe and South Asia, blockchain can also be deployed categorically to optimize particular stages of the supply chain. It can be used effectively to secure invoicing and payments, track high-value inventory, improve transparency, and even promote a fair freight marketplace.

2. Growth in D2C commerce

As more and more Indians come online and begin shopping online, we can expect to see a significant increase in demand for logistics and delivery services, particularly for D2C and small businesses. India’s Retail and E-commerce Trends Report 2022 revealed that D2C and digital-first brands clocked over 80.4% growth in order volume last year. Tier-II and Tier-III cities contributed to 61.3% of the market share in the eCommerce sales, which can be attributed to increased internet penetration and changing consumer behavior.

3. Rising demand for cold chain logistics

With the growing awareness of the importance of fresh and perishable goods and the Indian government's focus on the agriculture sector, we can expect to see a rise in demand for cold chain logistics services to transport temperature-sensitive goods. As more retail chains venture into the grocery delivery space, we might see a sharp increase in refrigerated trucks plying the city — even some bearing the Blowhorn logo!

4. Growing use of drones

In 2021, the Indian government released the draft of The Drone Rules, 2021, aiming to liberalize drone delivery while fulfilling the safety regulations. Last year, Jyotiraditya Scindia, the Union Minister for Civil Aviation, asserted the administration’s goal to turn India into a major drone hub by 2030.

Major logistics companies, including Blowhorn, have already started experimenting with drone delivery of food, medicines, and grocery in Tier-1 cities. This can extend into everyday reality in 2023 itself!

In fact, Gartner predicts that by 2026, more than one million drones will be carrying out retail deliveries, up from 20,000 today. Adoption of drone deliveries would also be a safe and environment-friendly way to fast-track last-mile logistics in India.

5. More focus on sustainability

As the world becomes more environmentally conscious, we can expect to see logistics companies in India putting a greater emphasis on sustainability, from reducing emissions to using more eco-friendly packaging materials. Fulfillment companies are setting sustainability goals with the adoption of eco-friendly packaging, paperless supply chain operations and green logistics practices like milk run or micro-warehousing.

On the bigger picture, we can expect to see Electric Vehicles and clean-fuel fleets in charge of goods transportation; replacing the age-old Indian trucks that gurgle out toxic gray fumes every minute.

6. Greater emphasis on safety and security

With the increased use of technology, we can expect to see logistics companies in India placing a greater emphasis on safety and security, both in terms of the physical safety of their workers and the protection of sensitive data.

As mentioned before, blockchain technology can be a great way to kickstart a supply chain system that is foolproof, secure, and saves hours of paperwork.

7. Increased use of rail and sea transportation

In order to reduce costs and dependence on road transportation, we can expect to see an increased use of rail and sea transportation for logistics in India. In fact, at a recent summit, Blowhorn CEO Mithun Srivatsa highlighted how the National Logistics Policy can be a stepping stone to leverage India’s inland and coastal shipping to bring down logistics costs in terms of GDP.

“In India, we are a peninsular country, so coastal shipping should take off in a big way if we have to come from 13% to 8%. If the government is able to unlock the potential that is currently constrained by the archaic laws of coastal shipping and focus on river movement, then rail and finally road, together this will help bring us close to our target," he revealed at the Entrepreneur Summit 2022.

All in all, 2023 can be another good year for Indian logistics if the potential growth areas are nurtured carefully and logistics startups continue to receive more patronage from the government. It remains to be seen whether the logistics industry can thwart the threat of global recession and establish its foothold in India’s commercial landscape by the end of this year.