Logistic outsourcing to touch $90 mn by 2012: Assocham

Logistic outsourcing to touch $90 mn by 2012: Assocham

New Delhi: India’s third party logistics business is likely to grow by 55% reaching the $90 million mark by 2012, a study by industry body Assocham said on Monday.

With globalization, the demand of third party logistics (3PL) business, a western concept, is catching up in the country as Indian firms “which are eager to expand in new markets" are turning towards it for better management of their supply chain processes, the chamber said.

“One of the contributing factors for this is value added tax (VAT) which is expected to drive Indian industry towards using more 3PL services," Assocham secretary general DS Rawat said.

3PL cuts conventional logistics costs and helps tackle more complicated tasks, he said. Currently, the size of the business is estimated at $58 million.

Logistics outsourcing, or third-party logistics, involves the utilization of external organizations to execute logistic activities that have traditionally been performed within an organization itself.

At present about 55% of firms against 10-15% a decade ago, are outsourcing their logistic services like supply chain management and warehousing, the study Building Logistics for Competitive Business said.

The overall Indian logistic business is estimated at $105 billion, which would touch the mark of $125 billion in next two years, it said.

“This indicates that logistic industry is on the verge of an growth in next two years as manufacturing, retail and real estate, which currently are under severe stress will return to their buoyancy for striking expansion of logistics," it added.