Vineet Agarwal, Managing Director, Transport Corporation of India Ltd, on the outlook for the Indian logistics sector in 2014.
The logistics sector witnessed slow but sustained growth in the movement of goods across sectors like auto, commercial vehicles, heavy engineering and capital goods. Steady implementation of large infrastructure projects despite tight credit situation and fewer policy reforms also contributed to sector growth.
The sector has benefited from the newly formed regulatory authority to hasten road projects, creation of infrastructure debt fund for large infrastructure projects and allotment of Rs. 5,000 crore to NABARD for agri-storage facilities. It, however, eagerly awaits GST implementation to enable creation of the common market and permit free and unimpeded movement of goods and services across the country.
Despite slow recovery of the economy, TCI has been to deliver stable performance and managed to hold on to market share with improved margins. Our strategy to reduce exposure to high-credit freight business and compensate it with the Express, and SCM business benefitted us. However, low pass through of frequent hike in diesel price to customers impacted our margins.
In 2014, TCI will continue to focus on express and supply chain business and service high growth verticals like pharmaceuticals, retail, auto etc.
We expect a non-conducive policy environment like indirect tax regime, widespread industry fragmentation, high credit cost and lack of adequate and robust infrastructure to remain key challenges in the coming year too. The sector will also remain dependent to a large extent on the improvement in transport infrastructure due to lack of warehousing and cold chain infrastructure.
The year should also see greater cooperation between logistics experts in industry, trade, services and academia to meet this challenge.