Logistics is a crucial aspect of any economy and it plays a vital role in the growth and development of businesses. India is a vast country with a diverse set of industries, and logistics is an integral part of each of them. The logistics industry in India is estimated to be worth $160 billion and is expected to grow at a CAGR of 10.5% to reach $215 billion by 2025. The industry is rapidly growing, and there is scope for new players to enter the market.
If you are planning to start a logistics business in India, here are some tips and checklists to help you get started. But first, here’s an overview of the types of logistics businesses that you can venture into.
6 Types of Logistics Business in India
The logistics industry in India offers various types of business setups, catering to different segments of the market. Understanding the different types of logistics businesses can help you choose the right business model that aligns with your strengths, experience, and resources.
Here are some of the common types of logistics businesses in India:
A freight forwarding business is responsible for managing the transportation of goods from one place to another. Freight forwarders act as intermediaries between shippers and carriers, managing the entire logistics process, including documentation, customs clearance, and insurance.
A warehousing business involves the storage and management of goods in a warehouse or distribution center. The business provides a secure and controlled environment for storing and managing goods before they are transported to their destination. Some businesses also offer end-to-end fulfillment services along with warehousing services.
A transportation business involves the movement of goods from one place to another, usually using trucks, trains, or ships. The business can offer different types of transportation services, such as Full Truckload (FTL), Less than Truckload (LTL), and Intermodal.
A distribution business involves the management of the entire logistics process, from storing goods in a warehouse to delivering them to their final destination. The business can offer different types of distribution services, such as last-mile delivery, cross-docking, and reverse logistics.
Third-Party Logistics (3PL)
A 3PL business provides logistics services to other companies, such as warehousing, transportation, and distribution. The business acts as an outsourced logistics department for its clients, providing end-to-end logistics solutions.
E-commerce logistics businesses are specialized logistics providers that cater to the needs of e-commerce companies. The business provides services such as order fulfillment, inventory management, and last-mile delivery.
Steps to Setup a Logistics Business
Step 1: Conduct Market Research
Market research is the first and most crucial step in starting a logistics business in India. It helps you understand the demand and supply of logistics services in your area, identify the competition and their strengths and weaknesses, and determine your unique selling proposition.
To conduct market research, start by gathering information about the logistics industry in India, such as its size, growth rate, and trends. Also, conduct surveys or interviews with potential customers to understand their needs, preferences, and pain points. All of this information will help you identify gaps in the market, if any, determine the services you should offer, the pricing strategy you should adopt, and the marketing channels you should use.
Step 2: Choose the Right Business Model
The logistics industry in India offers several business models, and choosing the right one is essential. Some of the common business models in the logistics industry include freight forwarding, warehousing, transportation, and distribution.
You need to choose a business model that aligns with your strengths, experience, and resources. For example, if you have access to warehouses, you can start a warehousing business. Meanwhile, it is also essential to consider the competition in your area, their strengths and weaknesses when choosing a business model.
Step 3: Get the Necessary Licenses and Permits
As mandatory with any other business, starting a logistics business in India also requires obtaining certain licenses and permits from the government. You need to register your business under the Goods and Services Tax (GST), get a Permanent Account Number (PAN), and obtain an Import-Export (IE) code if you plan to provide international logistics services. You also need to get a commercial vehicle permit if you plan to operate a fleet of trucks. It is essential to comply with all the legal requirements and regulations to avoid legal issues and penalties in the future.
Step 4: Build a Strong Network of Suppliers and Partners
Logistics is a collaborative industry with every cog in the wheel working seamlessly to ensure smooth operations. And thus, building a strong network of suppliers and partners is crucial. You need to identify reliable partners, such as freight forwarders, shipping companies, and trucking companies, to provide end-to-end logistics services to your clients.
Establishing good working relationships with local authorities, such as port authorities and customs officials, is crucial to ensure smooth operations. Remember, having a strong network of partners will help you expand your service offerings and provide efficient logistics solutions to your clients.
Step 5: Invest in Technology and Infrastructure
Investing in technology and infrastructure is crucial to the success of any logistics business. You need to have a robust IT system that can track and manage shipments, provide real-time updates to clients, and optimize routes to reduce costs.
Additionally, you need to have a network of warehouses and distribution centers located strategically to serve your clients efficiently. Investing in technology and infrastructure will help you provide high-quality services to your clients, differentiate your business from the competition, and improve your operational efficiency.
Step 6: Hire the Right Talent
Logistics is a people-intensive industry, and hiring the right talent is crucial. You need to hire skilled and experienced professionals, such as logistics managers, operations managers, and supply chain analysts.
You also need to invest in training and development programs to enhance the skills and knowledge of your employees. Having the right talent will help you deliver high-quality services to your clients, improve your operational efficiency, and differentiate your services from the competition.
Step 7: Focus on Customer Service
Customer service is a critical aspect of any business, and logistics is no exception. You need to provide exceptional customer service to your clients by responding promptly to their inquiries, providing accurate and timely information about their shipments, and resolving any issues they may have.
In the logistics industry, it is crucial to maintain pick-up and delivery times. In case the delivery timeline is breached, you should also have a customer service team that is available 24/7 to handle any such emergencies or urgent situations.
Starting a logistics business in India can be a lucrative opportunity for entrepreneurs willing to invest time, effort, and resources into building a sustainable and profitable business. With a growing demand for logistics services across various industries, there is immense potential for new entrants to establish themselves in the market.
However, it’s important to keep in mind that the logistics industry in India is highly competitive and dynamic, with constantly evolving trends and technologies. Therefore, it’s crucial to stay updated with the latest developments and innovations in the industry and adapt your business accordingly.