India’s Logistics Industry Remains Heavily Dependent On Road Transport: Transport Corp Of India

[0:02]Welcome back to Midcap Radar. Well, we're now shifting focus to the logistics and warehousing sector. We are now joined by Vineet Agarwal, who's the MD at Transport Corporation of India. Thank you so much Vineet for joining us. Well, first up, you know, we'll have a look at the macro picture. Uh, last couple of years, what has been the growth rate as far as India's logistics industry is concerned? Next four to five years, what is it that we're envisaging and for your own company, can you outdo the growth that the industry sees? Hi, it's always good to be back. Uh, you see the logistics sector typically grows at one, one and a half times GDP growth. So as we've seen the last few years, GDP growth has been quite good and hence we've seen that we've been able to, the sector has grown quite a lot as well. Um, it is now employing more than 22 million people across uh, whether it is from the trucking side to uh, warehousing to uh, ships to railways. So it's a large, large sector, large services sector which is really the backbone of the economy in many ways. Uh, the sector will continue to grow. I think there are lots of very strong tailwinds, clearly GDP growth is one of them. But there's also a lot of other changes that we are seeing for example, the growth of quick commerce, the growth of certain sectors as consumption trends uh change. Um, as India gets a China plus one strategy where more manufacturing shifts to India as well. So with all of those, there are massive amount of opportunities in the logistics sector definitely for the next decade if not longer. Uh as a company we are very focused on uh creating an integrated multi-modal logistics uh solutions company and uh we've gone a long way ahead in doing that. Uh see, I think the factor here, the most important factor is how are we able to reduce the logistics costs for the country as a whole. And uh that makes us very competitive not just domestically, but also uh internationally when we are exporting. And for that, one of the main reasons would be to move to multimodal as much as possible, that is use less trucking, but more Railways or more coastal shipping and so on. So, um, we as a company have uh made a strategy where we move towards multimodal lot. And a third of our revenues from virtually zero a few years ago is now coming from multimodal logistics. We tend, we intend to strengthen this uh, going forward as well as ensuring that we are building all the other capabilities around it, be it warehousing, be it cold chain logistics, uh, be it any kind of specialized logistics. Sure, Mr. Agarwal. Good afternoon. This is Vaamakshi joining in. Uh, so you, you mentioned that, you know, the goal of the government is to bring down logistics cost as a percentage of the GDP. So, uh, currently for India, it's somewhere around 11 to 13% of the GDP. Uh, what is the kind of gap with the other countries and uh, when do you think this will narrow down? There are several factors, I think uh, in terms of the logistics costs as I said, one of the more important factors is how do we move from something that is very highly intensive, uh in terms of cost uh road to other modes of transport. That's one. Uh, the second is productivity improvement. I think that's an area where not just government but even the private sector or everyone needs to do work. Now today if you uh send a truck to a factory, it actually sometimes is waiting for hours to be loaded or unloaded. Um, if we see the throughput uh at the ports, uh it's uh improved substantially, but there's a lot of work that needs to be done if you compare to the other countries of the world. If you look at our railway loading and unloading, it's extremely slow, even the average speed of a rail uh movement is about 20 odd kilometers an hour. So once we look at cost, we have to look at all the parameters, shift to multi-modal, improved productivity, look at standardization. Today if you see that you know, trucks are not standardized or even the pallets are not standardized, that would be go up big way. And last, of course importantly is digitization. So uh, today at uh, we are the uh, we are at the World Bank comes out with a report called the LPI, logistics performance index and we are at 38 numbered out in the world. This number needs to go up uh substantially. We made substantial improvements, but we still need to a lot of work more to move up that ladder. Mr. Vineet, today we'll keep the conversation very short. Uh, we wish you all the best for FY26. We hope to bring you on the channel once again after the Q1 results are announced. But uh, you know, very interesting developments coming in as far as the logistics space is concerned and this is one particular sector we need to keep a close eye on. But we last slip into a short break. We'll get you more on the markets and focus in on Induston Bank as sources suggest that the bank may get a new CEO soon. Stay tuned.