CHENNAI: The 30-35 per cent increase in the price of diesel in 2020-21 has contributed to a 25-30 per cent increase in freight rates, as per a study by the Confederation of Indian Industry (CII) Institute of Logistics. “Transportation accounts for nearly 50 per cent of the total logistics costs, which is 14 per cent of the GDP,” says the compendium of the logistics sector released in the presence of Additional Secretary, Logistics, Ministry of Commerce & industry, Amrit Lal Meena.
The diesel-price rise has increased the cost of doing business, says Federation of Indian Exporters Organisation (FIEO) regional chairman Israr Ahmed, adding that the cost of logistics is the highest in India. While the global average is eight per cent, it is 12-13 per cent in India, and would have risen further with the hike in fuel prices.
Presently, India ranks 44th on the Logistics Performance Index. This is due to high cost of logistics, skewed modal mix, high over-heads due to lack of last-mile connectivity, and shortage of skilled manpower. India needs to improve its warehousing and logistics to connect its manufacturers and sellers to domestic and international markets, states the report.
The CII Centre of Excellence in Logistics and Supply Chain (CII Institute of Logistics) has documented a compendium of logistics policies after facilitating five stakeholder roundtables in Maharashtra, Uttar Pradesh, Tamil Nadu, Assam, and Haryana. The compendium highlights how States are looking at incentivising and promoting logistics and warehousing.
Shankar R, executive director-India, at TVS Supply Chain Solutions Limited, says that if one takes into account long-distance truck travel, 50 per cent of the cost goes towards fuel. This cost has to be taken from the customer and passed on to the supplier, he says.