While the center of gravity of the world economy shifts to Asia, India plays a diminishing role in this move as its economic growth has tapered down from a high of 10% in 2010 to under 5% in the last two years, especially in the aftermath of the global crisis (World Bank, 2016). After a hiatus, the new government in India is busy in formulating plans for the country’s economic revival. The policy planners understand that only an increase in trade, i.e., regional, national and especially international, can translate into a high rate of growth. Beyond this, they fail to appreciate that trade is about moving goods and providing services, and movement, ipso facto, entails logistics. To facilitate trade, the governments may reduce tariff barriers, join regional trading blocs and manufacture at a lower cost than their competitors can, but logistical barriers can often negate these attempts (Chandra and Jain, 2007). The logistics costs in India are almost 13% of the total costs compared to 9% in the US and reducing these costs would lend a competitive advantage to Indian exports (Maitra, 2017). A saving of 5% in India’s $1.877 tn economy can lead to savings of $94 bn (KPMG, 2016). In India, the logistical barriers do not pertain to cost alone but range from timeliness, visibility, reliability to transparency, which cover the entire gamut of activities performed in the logistics network (Ramchandran and Nakhava, 2015). Logistics operations are conducted by service providers while operating in a given logistics network and they can maximize their performance only up to a point by optimizing the constraints imposed by the network (Viswanadham and Gaonkar, 2003). Transportation is the core of logistics management and it comprises movement of people/products between any two locations via single or multiple modes of transport, including land, water and air. It includes transporter, transport infrastructure and vehicles (Short and Kopp, 2005). From a trade logistics perspective, the logistics network will encompass the sub-networks of transportation, facilities, institutions and Information and Communications Technology (ICT), all of them distinct but interdependent networks (Viswanadham, 2014). The logistics service providers operate within this network.
The transportation network is the hard infrastructure providing connectivity on which the movement of goods takes place. The facilities consist primarily of warehouses and container depots interspersed alongside the transportation network (Newman, 2015). The institutions comprise the government, regulatory bodies, inspection agencies, banks, insurers, logistics industry, freight forwarders, shippers, clearance agents and private bodies such as trade associations (Lakshmanan, 2011). The ICT network underpins the other three sub-networks ensuring information flow to facilitate higher volumes, velocity and visibility in the entire logistics network (Rao, 2007). The four components of the logistics network carry out the functions of movement, storage and delivery in a unified manner. The developed countries, which feature as top rank holders in the World Bank’s Logistics Performance Index (LPI) 2014, export and import in larger magnitudes, have a highly developed trade logistics network that is the cause of their superior logistics performance and in turn acts as an enabler for further trade (PwC, 2011). Thus, trade and logistics form a worthy cause and effect cycle in an upward spiral, each reinforcing the other (Arvis et al., 2012).
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