Logistics Cost - Concern for Automobile Industry

 

Indian Automobile industry is rapidly growing and is expected to grow by 8% by 2020. There are various factors that affect the growth rate which should be controlled in order to accelerate it.

But in current situation, not only the rising fuel prices have made it difficult to control the logistic cost, but there are various other reasons which contribute to high expenditures on logistics.

One of the major hurdles in curbing this expense is India’s poor infrastructure, which is a known fact to all of us.

Every manufacturing industry faces a challenge in keeping prices low because of huge logistics cost, which is a prime parameter for distribution of their product.

 Below are some of the major challenges faced in logistics by automobile Industry: 

1.      Delay In Delivery- due to slow movement and stoppage at multiple checkpoints

2.      Tedious Documentation Process- due to different rules and permissions required in different states

3.      High Expenditure On Tyre Prices, Toll Taxes And Insurance Cost - due to high inflation rate

4.      Cost Of Security And Tracking Equipment - required for avoiding any damage & loss of high value Automobiles

5.      No Alternate Mode Of Transportation - inland waterways and railways,  lack of proper connectivity from plants to ports

6.      Long Idle Time Of Vehicle – due to the reason that vehicles are not allowed in city area during daytime

Despite of all the challenges faced and limitations encountered in Indian automobile industry, many steps are taken in favour of this industry.

With the introduction of GST, there is hope that most of the problems will addressed.

Completion of road projects like Delhi –Mumbai corridor may give some relief to logistics cost.
 In addition to this, completion of Rail projects like dedicated rail network and 6-corridors for high speed rail transit system is also expected to reduce the burden on roads. The new rail network would link industrial clusters with transportation hubs and logistics centres to reduce costs and ensure the hassle-free transportation of goods. 

With the implementation of above mentioned plans we can expect logistics cost to reduce considerably and accelerate the growth of automobile industry.