India's logistics cost 7.97% of GDP for FY24: NCAER

The figure is much below what government officials, cabinet ministers and corporate leaders have flaunted: 13-14 per cent of the GDP for many years.

On an average, freight cost constitutes the majority share, accounting for 81.19 per cent of total cost, the report by the New Delhi-based think tank, titled The ‘Assessment of Logistics Cost in India’, said.

Rail logistics was the cost-efficient mode, with an average cost of ₹1.96 per tonne-km (PTPK), significantly lower than road transport (₹3.78 PTPK), in cases where the first/last mile of the consignment is not taken into consideration.

For wagon-based cargo movement, freight charges account for 89.8 per cent of total costs and comprise basic freight (79.3 per cent) and surcharges (10.5 per cent).

Air transportation is the most expensive mode of freight transportation, averaging ₹72 per tonne per km, which largely limits its use to high-value, time-sensitive commodities.

The average PTPK cost of moving cargo via waterways in India is estimated at ₹2.30, making it a cost-efficient option—just above rail, but significantly lower than road and air transportation.

In this mode, the costs vary sharply between coastal shipping and inland water transport (IWT), with coastal shipping costing ₹1.80 PTPK and inland water transport at ₹3.30 PTPK. This gap is largely driven by differences in cargo volumes and backhaul availability.

The average warehousing cost in India is approximately ₹30 per square foot per month. However, temperature-controlled warehouses cost nearly ₹58.5 per square foot per month, nearly double the standard rate.

Similarly, facilities handling hazardous cargo attract a higher average cost of ₹56 per square foot per month due to additional safety, regulatory and infrastructure requirements.

Manpower, at 30 per cent of total cost, is the largest cost head, covering staff involved in receiving, put-away, picking, packing, inventory checks and general warehouse operations.

Rail logistics face challenges including operational bottlenecks, service availability issues, lack of first-mile/last-mile connectivity, limited connectivity with industry centres and congestion, while road transport suffers from uncontrolled pricing and air transport experiences inadequate cargo infrastructure in regional airports and limited routes and flight schedules.

Water transport by inland waterways suffers from inadequate navigation infrastructure, frequent checks, lack of modern terminals and seasonal variations in river levels.

The NCAER report prescribes dedicated freight corridors to reduce congestion; upgradation and modernisation of railway infrastructure; technological innovation; automation for safety/security and loading/unloading of cargo; adoption of green energy or fuel-efficient vehicles; dedicated truck lanes and freight consolidation centres; and multi-modal logistics parks for significant long-term gains.

ALCHEMPro News Desk (DS)