Third party logistics space to reach Rs 58K crore by FY20

Posted by Daily Shipping Times on 05-02-2018        Tweet

NEW DELHI: Mahindra Logistics Ltd (MLL) recently said the domestic third party logistics space is expected grow at a 19-20 per cent CAGR to reach Rs 58,000 crore by 2019-20.

The CAGR of 19-20 per cent has been projected for the period between FY 2017-2020.

There is huge growth opportunity in third party logistics (3PL) is expected to grow at a CAGR (compounded annual growth rate) of 19-20 per cent and reach "Rs 570- 580 billion by FY20 from Rs 325-335 billion in FY17," the company said in a presentation.

"The domestic logistic sector is projected to grow at CAGR 13 per cent to Rs 9.2 trillion by FY20 from Rs 6.4 trillion in FY17," it added.

Goods and services tax (GST) will bring down logistics cost and thereby make the Indian economy more competitive on the global arena. Post GST, the average speed of freight transportation has increased. GST will bring down the cost of taxation compliance in India. With Infra status, there are two distinct benefits coming to the sector. "There is a specific mention of cold chain... the cold chain will get benefited because the overall limit for funding  for cold chain is lesser than the overall limit for funding for the normal warehousing," it said.

Secondly, post-GST India will see a revolution on the whole warehousing side of the business. The small state local warehouses will now move to large regional warehouses and when you need large regional warehouses you need long-term funding at lower cost. And that is exactly what is going to happen with the infrastructure status, it added.