By Anish Jha, Managing Director, Kuehne+Nagel India, Sri Lanka and the Maldives
India’s logistics sector is undergoing a significant transformation with the advent of Logistics 4.0—a technology-driven revolution fuelled by the integration of Artificial Intelligence (AI), the Internet of Things (IoT), and automation. This shift has the potential to enhance resilience and efficiency across the entire supply chain, positioning India as a global logistics hub. As the country moves toward becoming a global manufacturing and technology leader, embracing these advanced tools is crucial for streamlining supply chains, improving resilience, and supporting national initiatives such as Digital India and Atmanirbhar Bharat.
However, realising the full potential of Logistics 4.0 will require a collaborative effort, combining supportive government policies with active participation from industry stakeholders.
Enhancing efficiency with AI and IoT
AI and IoT are central to Logistics 4.0, transforming logistics operations by enabling accurate demand forecasting, optimal route planning, and efficient inventory management. These technologies can significantly reduce delays, enhance control, and improve overall efficiency. In India, where over 64% of goods are transported by road, IoT’s real-time visibility minimises inefficiencies and builds consumer trust with reliable tracking. However, leveraging these advancements requires vast amounts of well-structured, actionable data—a challenge underscored by a recent Gartner report stating that only 4% of organisations feel their data is ready for AI. Generative AI helps bridge this gap by cleaning and organising data, ensuring a reliable foundation for predictive models. These technologies can also accurately predict arrival times, boosting efficiency across carriers, warehouses, last-mile operators, and improving the experience for end users with greater reliability and speed.
Automation is another key element of Logistics 4.0, with the potential to streamline operations, minimise human error, and reduce costs. Robotic process automation (RPA) and autonomous material handling systems are increasingly meeting the demands of India’s booming e-commerce market. With the Indian e-commerce market expected to reach $200 billion by 2026, the adoption of AI and automation is set to rise. Automated warehouses, autonomous vehicles, and RPA are transforming logistics from a manual, labour-intensive field to one that prioritises efficiency and speed.
Digital transformation: Building resilient supply chains
The logistics industry in India has become more focused on building resilience, particularly in the wake of disruptions like COVID-19. Digital transformation plays a crucial role in creating more flexible and efficient supply chains. Technologies such as cloud computing, blockchain, and big data analytics are helping companies improve operations and better manage risks. For example, blockchain ensures secure and transparent transactions, reducing the risk of fraud, which is vital for maintaining trust in logistics processes. Meanwhile, cloud computing and big data analytics allow companies to consolidate and analyse large amounts of data in real time, enabling better decision-making and resource allocation.
In India, digital transformation has been further accelerated by initiatives like the National Logistics Policy (NLP). This policy is driving the digital shift by focusing on building infrastructure to support Logistics 4.0, which includes the adoption of advanced technologies like ERP systems and smart warehouses. The goal is to improve India’s Logistics Performance Index (LPI) by 2030, enhancing efficiency and transparency. These efforts are helping overcome challenges such as fragmented logistics systems and limited connectivity in rural areas, with cloud computing facilitating real-time decision-making and data access from anywhere.
Indian logistics companies, both established players and startups, are at the forefront of automation and AI innovations. However, for these technologies to reach their full potential, broader industry collaboration is needed.
Sustainability in logistics: A green shift
Sustainability is a key driver of the logistics 4.0 transformation. AI-powered route optimisation and the growing adoption of electric vehicles (EVs) are helping reduce emissions and fuel consumption. By identifying shorter, less congested delivery routes, AI minimises fuel use, which is especially important in urban areas where pollution is a major concern. India’s urban centres present significant opportunities to implement eco-friendly logistics practices, and Logistics 4.0 can further advance these sustainable solutions.
The Indian government’s Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme is accelerating the adoption of EVs, playing a critical role in optimising last-mile deliveries while reducing carbon emissions. This shift aligns with India’s goal to reduce transportation-related carbon emissions by 30% by 2030.
Moreover, beyond environmental benefits, sustainability in logistics also lowers operational costs and meets the growing demand from eco-conscious customers, creating a win-win for both business and the environment.
Challenges to overcome for widespread adoption
While the benefits of Logistics 4.0 are significant, several challenges must be addressed, especially due to India’s fragmented domestic logistics sector. Approximately 90% of India’s logistics market is made up of small, independent operators, making it difficult to integrate advanced technologies across the industry. Therefore, collaborative platforms and government support are crucial to overcoming these barriers and fostering integration within the sector.
Cybersecurity is another critical challenge. As logistics companies embrace digital tools, they become more vulnerable to cyber threats. It’s essential to implement strong cybersecurity measures to protect data and maintain customer trust. The government is actively addressing this issue with initiatives like Cyber Surakshit Bharat, which aims to secure the nation’s digital infrastructure. More such policies and actions are needed at the organisations levels to protect against growing cyber risks.
Additionally, the successful transition to digital operations relies heavily on workforce training. As technologies like AI, machine learning, and automation become integral to the industry, it is essential for India’s logistics professionals to acquire new skills. Government initiatives such as the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) play a crucial role in equipping the workforce with the tools and knowledge needed to embrace these advancements. However, it is equally important for logistics companies to invest in upskilling their employees, as this is a critical factor for driving growth and ensuring the industry’s long-term success.
India’s path to becoming a global logistics powerhouse
The integration of Logistics 4.0 technologies is central to India’s ambition to become a global logistics leader. Embracing these transformative technologies will not only improve operational efficiency but also drive sustainability and strengthen the resilience of supply chains. To fully unlock the potential of Logistics 4.0, India needs a holistic approach that includes strong policy support, infrastructure investment, robust cybersecurity measures, and a skilled workforce. By seizing these opportunities, India can solidify its position as a trusted, tech-enabled logistics hub and make a significant impact on the global supply chain ecosystem.