India has jumped six places to rank 38th out of 139 countries in the World Bank’s Logistic Performance Index (LPI) 2023. India has significantly improved its logistic index since 2014, when it was 54th. This improvement in the logistic index reflects significant investments in hard and soft infrastructure and technology. This follows the launch of the National Master Plan for multimodal connectivity, the PM Gati Shakti initiative, in October 2021 to reduce logistics costs and boost the economy by 2024-25. The National Logistics Policy (NLP) was launched in 2022.
Improvements in Logistic Index
The report highlights India’s remarkable improvement in various logistics parameters. India’s infrastructure ranking has improved by five positions, moving from 52nd in 2018 to 47th in 2023. India’s rank in international shipments has climbed to 22nd in 2023 from 44th in 2018. India has also witnessed a four-place improvement in logistics competence and equality, reaching 48th place in 2023. India’s rank in tracking and tracing has moved up three places to 38th, and in timelines, India has witnessed a significant 17-place jump in rankings.
Role of Technology
The report emphasizes that technology significantly impacted India’s better Logistic Index performance. Since 2015, the Indian government has invested in physical and soft infrastructure connected to commerce. The infrastructure has been designed to link the economic poles of the hinterland to the port gateways on both coastlines. Implementing a supply chain visibility platform under a public-private partnership was crucial to this investment. This implementation resulted in a significant reduction in delays. NICDC Logistics Data Services Limited has placed radio frequency identification tags on containers. The use of these tags has provided consignees with complete supply chain visibility.
Shorter Dwell Time
The report indicates that between May and October 2022, the average dwell time for containers in India and Singapore was three days, which was comparatively better than in some industrialized countries. The US had a dwell time of seven days, while Germany had a dwell time of 10 days. Some emerging economies have implemented innovative tracking and tracing solutions beyond traditional methods, significantly reducing delays. For instance, India’s implementation of cargo tracking led to a remarkable decrease in dwell time at the Visakhapatnam port from 32.4 days in 2015 to 5.3 days in 2019.
The term “dwell time” refers to a vessel’s duration at a particular port or terminal. A shorter dwell time results in the lower vessel and marine terminal operating costs. Shipping container vessels operate on fixed schedules, and any delays experienced at a particular port or terminal have a ripple effect on the entire service.
Logistics and the Environment
The report indicates that there is a growing demand for environmentally friendly Logistic Index. Specifically, 75% of shippers seek such options when exporting to high-income nations. Furthermore, the report highlights that end-to-end supply chain digitalisation has significantly reduced port delays. This reduction has been observed in developing nations, where the reduction has been up to 70% compared to delays in developed countries.
The Indian government’s efforts to improve logistics performance have yielded positive results. One example of this progress is the country’s improved ranking on the World Bank’s Logistics Performance Index (LPI). To achieve its objectives of reducing logistics costs, improving last-mile delivery, and boosting the economy by 2024-25, the government has implemented two key policy interventions. The first is the National Logistics Policy (NLP). The second is the PM Gati Shakti initiative.
India’s logistics sector has undergone significant modernization and digitization. Technology, such as radio frequency identification tags and supply chain visibility platforms, has greatly supported this modernization. These technological advancements have played a critical role in reducing delays. The average container dwell time between May and October 2022 was three days in India and Singapore. This contrasts with seven days in the US and 10 days in Germany.
The enhanced logistics performance in India has significant implications for the country’s economy. Efficient and dependable Logistic Index are crucial in supply chain management, trade, and economic growth. The report highlights the increasing demand for environmentally friendly logistics. Shippers are seeking sustainable options when exporting to high-income countries.