Quantifying Macro Logistics Cost of India

Abstract

Globalisation has opened up economic opportunities for developing countries in the form of outflow of value-added services, low-cost raw materials , human resource skills, improved market access for their exports, efficiency gains in their economies through technology transfer and spill-over, and resource re-allocations. Consequently, various developing countries, including India, have increasingly begun to position themselves for greater participation in regional and global markets. It goes without saying that India needs to build its capacity for establishing linkages with global and regional markets for deriving the optimal benefits of engaging with the globalised world. This, in turn, depends on the creation of an efficient logistics system. For this purpose, most of the developed and emerging countries estimate logistics costs on a regular basis, and use performance indicators to measure the efficiency levels of logistics activities. Till now, no attempt has been made to estimate logistics cost of India by the official statistical organisation. Two estimate of logistics cost computed by private bodies are usually quoted when one refers to Indian estimate. However, the methodology of the two needs serious introspection. In this context, this paper makes an attempt to estimate logistics cost of India.

Understanding National Level Logistics Costs: Methodological Approach

“…Pratap et al (2020) found estimated LC for India during 2017–2018. The authors considered transportation cost (principal input) and 12 other elements of LC using the supply and use table (SUT) published by the Central Statistical Organisation and prepared symmetrical 64 × 64 input-output transaction table (IOTT) with the base year 2012–2013.…”

“…In addition, regulatory frameworks governing types of transport links (both interfaces and modes) are different in different countries Many countries have no authorised institutions to regulate and control the national logistics sector, so assessments of LC are done by data from survey methods followed by estimations with different assumptions. Pratap et al (2020) found estimated LC for India during 2017-2018. The authors considered transportation cost (principal input) and 12 other elements of LC using the supply and use table (SUT) published by the Central Statistical Organisation and prepared symmetrical 64 �� � × 64 input-output transaction table (IOTT) with the base year 2012-2013.…”

“…Assessment of LC at the national level needs to facilitate monitoring and evaluation the national logistics and finding areas for corrective actions (Santoso et al, 2021). Predictable delivery schedule and punctuality of deliveries are rather absent in developed countries like India where transaction costs are high (Pratap et al, 2020). Components assessed by summative ordinal scores are not additive due to unknown and non-uniform distance between successive categories (Ferrando, 2003; Wu, 2007), and, hence, arithmetic mean (AM) of ordinal scores may not be meaningful (Hand, 1996).…”

The Supply Chain Disruption Framework Post COVID-19: A System Dynamics Model

“…Recently, the leading Indian car manufacturer declared an increase in its price to the extent of 5 per cent (ToI, 2020) and in April 2020, transporters announced an 80 per cent increase in the cost of logistics (ET, 2020). A study shows that machinery transportation is around 18 per cent in India (Pratap et al, 2020). Thus, the model needs to update the changes in supply and demand conditions as one factor counter influences the other.…”

Survey of Literature on Measuring Logistics Cost: A Developing Country’s Perspective

“…Recently, an attempt has been made by Pratap, Gupta, Malik and Pohit (2019) to quantify the logistics cost of India for the year 2017-18. In their paper, they have attempted to capture following logistics cost element in their estimation procedure: The supply and use table (SUT) table has been the fulcrum of their estimation procedure.…”