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India Intra-City Logistics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2022 - 2027)

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  • 120 Pages
  • August 2022
  • Region: India
  • Mordor Intelligence
  • ID: 5572875
The Indian intra-city logistics market is expected to register a CAGR of more than 5.3% during the forecast period (2022-2027).

In India, the last-mile delivery sector is on an upward trend. Despite the country being under lockdown for the previous year, with only critical deliveries permitted, e-commerce shipments increased from 814 million in 2018 to 1.36 billion in 2020. It is estimated that intra-city logistics accounts for approximately 15-20% of the road transport industry.

The COVID-19 pandemic accelerated the widespread adoption of online services. Notably, small and medium firms, which form the backbone of the Indian economy, continue to have a minimal online presence. It is believed that just 20% of small firms presently offer online services, leaving a largely untapped market and limitless opportunities for the logistics sector to flourish. Intra-city logistics providers are becoming important for these small and medium-sized firms to cater to their customers.

Intra-city logistics providers, who typically deal with rapid and on-demand delivery requirements, are highly dedicated to assuring same-day deliveries. As a result, the entire chain of operations is subject to demand variability. Orders may suddenly rise from one area of the city, necessitating swift identification and connection with an available delivery person. Innovative technology is the foundation of a system that efficiently meets the needs of demand and supply to provide flawless function and resource optimization and positive unit economics.

Key Market Trends

Demand for Intra-city Logistics from Tier-2 and Tier- 3 Cities Growing

E-commerce volume growth in India's tier-2 and tier-3 cities is surpassing growth in tier-1 cities. Smaller Indian cities now account for a greater proportion of e-commerce sales. E-commerce growth in India's tier-2 and tier-3 cities is surpassing that in the country's tier-1 cities. The volume share of these smaller cities in India's e-commerce sector climbed to 46% in Q4 CY20, up from 32% in Q4 CY19. Furthermore, online spending per customer in tier-2 and tier-3 cities has increased, with these cities accounting for 43% of e-commerce sales value in Q4 2020, with a Y-o-Y growth from 26%.

During the festival season, all major e-commerce brands saw a considerable increase in new clients from these cities. During its month-long festival sale in 2021, global e-commerce giant Amazon said that 79% of new buyers came from towns such as Ernakulam, Guntur, Krishna, Godavari, and others. During its month-long festival sale, value e-commerce giant Snapdeal reported a 91% increase in demand from tier-3 cities compared to 2020. The company also added that tier-3 cities accounted for 58% of all orders, while tier-2 and tier-1 cities accounted for 15% and 27%, respectively, of all orders.

Growing e-commerce demand in tier-2 and tier-3 markets has more than doubled income for intra-city logistic startups like LetsTransport and Cogos, who provide logistic fleet (trucks, three-wheelers, etc.) to companies like Amazon, Flipkart, Blinkit, and BigBasket. LetsTransport said that an increase in delivery to tier-2 and tier-3 markets contributed significantly to the company's growth. In 2020, the company's revenue increased by more than 2-3x, with tier-2 and tier-3 markets accounting for 50% of this increase.

Companies are capturing this opportunity by expanding their services in the country. For instance, in 2020, LetsTransport announced that it is planning to expand to approximately 35 more cities and grow by 150-200% next year. The company foresees increased demand from Tier-2 and Tier-3 cities in line with increased digital literacy and e-commerce expansion.

Demand From D2C Companies Driving Intra-city Logistics

The D2C model is becoming so popular in India that MamaEarth took only four years to generate an income of INR 100 crore, whereas globally recognized beauty firms have previously required 20 years. Companies such as Sugar and MamaEarth benefited greatly from the digital D2C model, which resulted in exponential development. Established FMCG brands such as Himalaya, ITC, Hindustan Unilever, and others are experiencing severe competition from D2C businesses, such as MamaEarth, Pee Safe, Moms Co., and others.

The holiday season is the most profitable time for small, medium, and large merchants to generate sales and the need to meet growing demand becomes more pressing. Because demand patterns are good and sellers are aware of the items that are certain to see increased customer demand, i.e., seasonal inventory, they concentrate their efforts primarily on segregating inventory for easy order pickup and delivery. Small D2C sellers may lack the resources to manage end-to-end operations on their own, so they turn to third-party logistics and fulfillment companies for effective order administration, streamlined operations, and flawless shipment last-mile delivery. “Last mile,” as the name suggests, refers to the final stage of delivery and continues to remain a challenge. This is where efficient intra-city logistics and last-mile delivery services are gaining prominence.

Owing to the widespread popularity of online shopping, 3PL aggregators in India have come a long way. The majority of these firms provide full-service logistics solutions, such as inventory management, warehousing, shipping, and last-mile delivery. Businesses like Shiprocket, Shipway, Pickrr, and others, often known as D2C enablers, have assisted hundreds of firms in streamlining these procedures in order to scale up quickly. The growing D2C sector is creating more opportunities in intra-city logistics in line with changing customer preferences for shopping and delivery.

Competitive Landscape

The market is relatively competitive, with a large number of local players, including FM Logistic India, Lets Transport, Shadowfax, Cogos Technologies, and Ecom Express. The industry has seen many investments in recent times. In April 2021, third-party logistics service provider FM Logistic India deployed its first batch of electric vehicles (EVs) in Bengaluru for intra-city last-mile delivery. The EVs will be used to carry out intra-city deliveries for WayCool, an Indian agri-commerce company, thus, driving social impact while transforming the food economy.

Additional Benefits:

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Table of Contents

1.1 Study Assumptions and Market Definition
1.2 Scope of the Market
4.1 Market Overview
4.2 Technological Trends
4.3 Government Initiatives and Regulations
4.4 Investment Scenarios
4.5 Industry Supply Chain/Value Chain Analysis
4.6 Insights into the E-commerce Industry
4.7 Insights into Same Day Delivery Market
4.8 Impact of COVID-19 on the Market (Including Short-term and Long-term Effects on the Market as well as Economy)
5.1 Drivers
5.2 Restraints
5.3 Opportunities
5.4 Porter's Five Forces Analysis
5.4.1 Bargaining Power of Suppliers
5.4.2 Bargaining Power of Consumers
5.4.3 Threat of New Entrants
5.4.4 Threat of Substitutes
5.4.5 Intensity of Competitive Rivalry
6.1 By Service
6.1.1 Transportation
6.1.2 Warehousing and Distribution
6.1.3 Value-added Services
6.2 By City
6.2.1 Delhi
6.2.2 Bangalore
6.2.3 Mumbai
6.2.4 Hyderabad
6.2.5 Chennai
6.2.6 Kolkata
7.1 Market Concentration Overview
7.2 Company Profiles
7.2.1 FM Logistic India
7.2.2 Porter
7.2.3 Lets Transport
7.2.4 cityXfer
7.2.5 Shadowfax
7.2.6 Cogos Technologies
7.2.7 Blowhorn
7.2.8 Ecom Express
7.2.9 TruckEasy
7.2.10 DTDC*

Companies Mentioned

A selection of companies mentioned in this report includes:

  • FM Logistic India
  • Porter
  • Lets Transport
  • cityXfer
  • Shadowfax
  • Cogos Technologies
  • Blowhorn
  • Ecom Express
  • TruckEasy
  • DTDC*