Logistics Sector To Grow At 11% CAGR, Reaching $468 Bn By 2027: Report

The logistics industry is one of the country’s largest employers and currently provides a livelihood to over 22 million (2.2 crore) people. It is projected to add ten million (1 crore) new jobs by 2027. The industry is expected to grow at a compound annual growth rate (CAGR) of 11 per cent, reaching a size of USD 468 billion by FY  2027, Rubix Data Sciences stated in a report.

The report also highlighted sectoral development in the logistics arena. Roads account for more than 60 per cent share of logistics transportation; there has been a 500 per cent increase in the road transport and highway budget allocation since 2014. Road infrastructure has seen remarkable improvements, potentially saving up to Rs 4.8 trillion annually in logistics costs.

Railway freight loading grew at five per cent CAGR from FY 2018 to FY 2024 and stood at 1,591 million tonne (159.1 crore tonne) in FY  2043. Dedicated freight corridors are expected to play a critical role in operational efficiency.

Air logistics also gained momentum due to infrastructure development. The Indian air cargo industry has overcome the challenges of the pandemic period and recorded a robust CAGR of 23 per cent from FY2021 to FY2023, the report added. 

Shipping has also grown, and in FY 2024, major ports, which account for nearly 55 per cent of port traffic, handled 819 million (81.9 crores) metric tonnes of cargo traffic, recording seven per cent CAGR between FY 2021 and FY 2024. 

The low share of infrastructure spending as a percentage of Gross Domestic Product (GDP) (3.2 per cent) and the high logistics expenditure (13 per cent to 14 per cent of the GDP) are the two major challenges for the logistics industry in India, the report stated.

Digitalisation, improved connectivity, and the increased adoption of technologies like Radio Frequency Identification (RFID), Global Positioning System (GPS), Internet of Things (IoT), Artificial Intelligence (AI), etc., are enhancing operational efficiency and reducing costs. The e-commerce boom and growth in international trade are also driving the need for more efficient logistics solutions. 

India’s rank in the World Bank’s global logistics performance Index improved to 38 in 2023 from 54 in 2014. The government aims to break into the top 25 ranks by 2030.

Despite challenges such as infrastructure shortcomings and regulatory complexities, the industry is primed for substantial growth, offering domestic and international logistics companies the opportunities to thrive in India’s expanding market.