The Indian logistics industry has traditionally been a fragmented one with a lot of inefficiencies. The cost of logistics in India today amounts to approximately 15 per cent of the nation's GDP, as compared with developed countries where it's around 7-8 per cent of their respective GDPs. This is certainly a significant drain on the economy and negatively impacts sectors such as agriculture and manufacturing, as most Indian companies have had limited visibility into their respective supply chains. However, since 2015, we have noticed a paradigm shift in the government's policies and approach towards this sector, which is enabling seamless integration of operations to make it more organized.
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Beyond the policy push, today new-age technology is playing a huge role in redefining and revolutionizing various industries in our country, and the logistics industry is no exception. With an increased penetration and adoption of 5G networks as well as emerging technologies like artificial intelligence (AI) and Internet-of-Things (IOT) in our country presently, logistics operators and users now can access and analyze tremendous amounts of data in real-time from their transportation assets, supply chains, warehouses, fleets and remote locations.
Fleet operators meet logistics and cargo operations driving the need for technology integration
Indian logistics sector has been growing at an unprecedented rate. As the market evolves and consolidates, cargo vehicles are increasingly being owned by fleet operators, and also the retail cargo vehicle owners have been placing their vehicles with aggregators and logistics service providers. This trend has increased the need for fleet operators to add IOT-enabled devices to track, locate and improve their assets' utilization.
While 4G networks have given the ability to logistics and fleet operators to monitor certain key parameters of their assets, 5G offers them improved bandwidth and connectivity to engage with the assets in order to optimize the route based on traffic and weather conditions in real time. By getting visibility into the shipping process and supply chains, manufacturers are enabled towards efficient planning of resources. With decreasing hardware costs of sensors, telematics and IOT enabled devices, more and more assets including containers and cargo vehicles are being equipped with such devices. This enables logistics operators to access data related to the precise location of goods, temperature and other ambient conditions. In addition, fleet managers can also monitor vehicle health, driver behavior, payload, traffic conditions, route profiles, etc., using technology to the fullest. This data can be used not only to improve logistics operations, but also make supply chains much more efficient. AI-based systems can further process the data to improve cargo load optimization, route optimization and re-routing by analyzing traffic and weather patterns in real time.
Increased customer expectations for EVs to offer on-board technology
Electric vehicles have always been equipped with sensors to monitor key parameters to assess overall vehicle and battery health; these sensors gather inputs from various other sensors in the battery pack and motor controller. EVs have been able to relay this information through 4G networks to fleet managers, thus enabling efficient tracking and monitoring of vehicle health. Therefore, EVs have always raised the bar of customers' expectations, since they are perceived to be more technologically advanced.
With increased thrust on fleet electrification, penetration of electric cargo vehicles in the logistics sector and blossoming of 5G networks, EVs shall lead the way forward in helping customers integrate real-time data with AI based systems. This will improve tracking and monitoring of assets, efficient route planning by integrating data with battery range, offering real-time feedback on driver behavior and delivering live instructions to drivers, providing over-the-air software updates and even enabling diagnostics and in-field repairs through enhanced Virtual Reality (VR) integration, thus minimizing downtimes. Furthermore, 5G networks can also enable integration of AR technology into vehicles for end-point recognition and enhanced driver safety.
In conclusion
As the Indian logistics sector matures and becomes more efficient, the cost of logistics must be reduced significantly for India to become competitive in global manufacturing context. With the recent explosion of e-commerce and just-in-time delivery, share of road logistics and transport is expected to grow at a CAGR of 8 per cent by 2025. Cargo EVs have the potential to reduce road transportation costs, which currently accounts for 60 per cent of our overall logistics spend, while also reducing the nation's carbon footprint significantly.
With the increased penetration of 5G networks, cargo EVs are bound to take the lead by integrating the data gathered from on-board IOT devices along with real-time analysis using AI based systems to provide smarter location services, route optimization, minimal downtimes, enhanced driver safety and efficient utilization of transportation assets. In addition, logistics operators and fleet managers can provide increased visibility into the supply chains with more efficient planning of resources and capital, thereby reducing overall cost of logistics.