India's Logistics Rank Jumps 6 Places: Uncovering The Contributing Factors

In the recently released Logistic Performance Index (LPI) 2023 by the World Bank, India’s rank has jumped six places to 38, up from 44 in 2018. The index, which covers 139 countries, is a benchmarking tool to adjudge a nation’s growth and progress in the logistics sector. The 2023 edition of the LPI takes into account the speed of trade with data obtained from tracking shipments across the world. It offers a distinct viewpoint to measure the performances of global supply chains in a highly digitalized and technologically advanced service industry. With the highest rank in LPI this year, Singapore and Finland have been dubbed the most efficient in world logistics.

India’s significant improvement in ranking can be attributed to a number of key factors. From sizable investments in technology, to the Indian government's continued efforts to improve trade infrastructure — several factors have helped boost Indian logistics in the last half a decade. Simultaneously, there has been a steady growth in multimodal connectivity, in a bid to reduce logistics costs and increase India’s GDP share from logistics. The rapid rise in eCommerce and internet networks across the country’s rural hinterlands has also driven the growth in multimodal logistics.

The push from government

In the post-pandemic years, several initiatives undertaken by the Indian government have helped put the logistics sector on an upward trajectory. The PM GatiShakti National Master Plan (PMGS-NMP) launched in October 2021 promoted collaboration among Central and State agencies — to ensure first and last-mile connectivity, streamline processes, and reduce overall logistics costs. The coordinated approach leverages technology to transform the logistics landscape and develop more efficient supply chains.

In September 2022, the government also unveiled the National Logistics Policy (NLP), a guiding document to upgrade and digitize logistics infrastructure and services while focusing on bringing efficiency in processes. Alongside energy-efficient modes of cargo transportation, the NLP also focuses on the building of multimodal logistics parks. In fact, India’s first International Multimodal Logistics Park is soon coming up in Jogighopa, Assam.

Additionally, projects like Sagarmala and Bharatmala corridor positively impacted India’s logistics scenario by improving connectivity and reducing dwell time.

The role of technology

India’s very low dwell time (2.6 days) is one example of how the advanced incorporation of technology in every aspect of logistics has paid off. Dwell time is defined as the time duration a shipping vessel spends at a specific port or terminal. The LPI 2023 report specifically states, “End-to-end supply chain digitalisation, especially in emerging economies, is allowing countries to shorten port delays by up to 70 per cent compared to those in developed countries.”

India has implemented better tracking algorithms to combat not only port delays, but also at other phases of the supply chain. For instance, premium logistics operators in the country, including Blowhorn, are deploying AI-powered routing softwares, live order mapping and other technological solutions to improve transparency in the supply chain. This, in turn, helped move India’s rank in ‘tracking and tracing’ up by three places to 38th.

In the coming days, we can surely hope to see further adoption of AI, blockchain or IoT in logistics as technology continues to get more and more advanced.

Other contributing factors

One of the major contributors to India’s success is the enhanced focus on international trade. In terms of international shipments, the country has moved up from 44 in 2018 to 22 in 2023, demonstrating a remarkable jump of 22 places in just five years. Increased governmental infrastructure on trade routes has helped connect ports on both coasts to major economic hubs — thereby increasing the amount of international cargo.

Additionally, India has also improved four places to rank 48 in logistics competence and equality, showcasing the country's efforts towards ensuring a level playing field for all logistics players.

Furthermore, the report highlights the growing demand for green logistics, with 75% of shippers looking for environmentally friendly options when exporting to high-income countries. The report also highlights the significance of end-to-end supply chain digitalisation, which has allowed countries to shorten port delays by up to 70% compared to those in developed countries.

In conclusion, India's jump in rank in the Logistic Performance Index 2023 is a testament to the country's continued efforts towards improving its logistics infrastructure and leveraging technology to streamline logistics operations. However, there is still considerable room for improvement, and policymakers need to focus on addressing the remaining challenges to ensure that India continues to improve its logistics performance in the future.