How E-Commerce Has Changed The Demographics Of The Trucking Industry?

Sachin Haritash Mar 26, 2020

One needs no proof to know that as the country enters the second decade of the millennium, the growth of e-commerce has had a massive impact on the economy of India.

The industry, which has transformed the very definitions of how trade and business operate in the country, is now estimated to grow to $ 200 billion by 2026, as per a report by IBEF. Currently, the Indian logistics sector is growing at a CAGR of 10.5 percent and expected to reach $215 billion by 2020.

However not many could foresee the impact the rise of digitising the marketplace would lead to on India’s two primary sources of employment and forex earnings, viz. the Auto and IT industries.

Given this, the symbiosis of both was inevitable. Together, technological innovation, specifically the arrival of e-commerce, has been transforming the landscape of logistical operations in the country.

For instance, previously, there had been few factors on which Indian logistics invariably depended on. Firstly, this included a heavy reliance on the automotive industry for operative viability. Moreover, logistics were usually integrally dependant on proximity to industrial hubs such as metro and tier-1 cities like NCR, Chennai and Pune.

In terms of vehicles, heavier vehicular types such as large open trucks, 20 feet single and multi-axel vehicles with 10-12 tyres were preferred. In addition, logistical operations were subject to festivals like Diwali, Ganesh Chaturthi, Pongal, Durga Pooja, wedding seasons and regional festivals.

Previously, perishable goods and food items like seasonal fruits and vegetables, would force demand prices for open vehicles to shoot up, since they could only be transported in such vehicles. This in turn, also led to an inflation in the price of containers as their supply in comparison to open trucks, was limited.

For instance, during summer mango harvest seasons prices for open trucks would shoot up in South India. Similarly, prices would tend to hike up during seasonal onion harvest in the western part of the country, apple harvests in the northern or wool in states like Punjab.

Even a decade ago, it would have been incomprehensible to conceive that the Indian logistics industry could possibly stop relying on such aforementioned variables.

Yet, since the emergence of e-commerce- road movements, and largely the logistics industry, has witnessed changes in matrixes on all factors.

It is obvious that e-commerce is shaping the trucking and logistics industry dynamically. For instance, the volumes of product to be transported has also witnessed an exponential increase. With an internet user base reaching 627 million (IMRB), the volume of gross e-commerce shipments is only expected to grow. This has also led to the consolidation of all small scale and unorganised markets into a singular larger online market place.

With the implementation of GST and the widespread penetration of internet services and smartphones, previously offline and marginalised markets have now been brought into the ambit of the digital market space- further bringing together and connecting the entire geography of India intimately, at the click of a smartphone. Accessibility is now no longer dependent on the variable of being in or around industrial hubs. This has led to the establishment of logistics hubs which cater to different zones such as NCR, Bangalore, Mumbai, Lucknow, Kolkata, Guwahati, Chandigarh, Indore, Surat, Ahmedabad, and Hyderabad.

Furthermore, with the increase of e-commerce commodities, demand for 32 feet single axel vehicles has increased due to the abundance of volumetric consignments with lower weights. While demand for 12 tyre vehicles increased during the short period 2012-2015, due to driver shortages and low operating costs, since 2015, demand for 32 axel vehicles has risen up again. This has brought about an overall change in requirements as well.

Demand for vehicles has increased to brace for peak sales demands during sales periods of e-commerce companies instead of holidays and festivals, usually when huge discounts are offered to consumers.

Similarly, price fluctuation has also been stabilised, especially during seasonality, as ration and supply of the containers have increased in number, in proportion to open vehicles. In fact, shippers are now preferring to send goods through containerisation to preserve safety, quality and security of goods. Whereas open trucks are primarily being used for perishable items, bulk movements and less expensive commodities.

As evident, e-commerce has changed the entire supply chain of the Indian logistics industry drastically. Since the advent of e-commerce many variables have altered business operations, rendering historical data and studies, irrelevant for future predictions.