Logistics: Opportunities galore for jobs creation, but challenges exist

With logistics becoming all-encompassing from SCM at the back end to last mile deliveries at the front end, companies have to equip employees with modern skillsets, says S Narayan

Ever since trade and commerce became a part of human evolution, logistics has become an integral part of human activity. In the early stages, logistics involved just packaging and delivering of goods in the neighbourhood and as the world started getting smaller and distances started shrinking integrating markets, logistics sector has constantly been changing to meet the demands of the industry. 

Traditionally, logistics indicated transportation of goods but today logistics is all encompassing from supply chain management (SCM) at the back end to last mile deliveries (LMD) at the front end. It has got so intricately woven into the overall system of production, storage and delivery that it is almost an indistinguishable part of the system to a large extent.

Logistics service providers now operate from the client premises to ensure just-in-time delivery of supplies to the assembly line to immediate evacuation of the finished goods. They, therefore, become a part of the manufacturing process and distribution network. Their processes and systems have to not only be efficient and cost effective but also need to integrate with the client systems.

Modern retailing and E-tailing industry has added another dimension to the logistics sector with its large warehouses and extensive delivery mechanisms. The convenience of door delivery which was hereto restricted to couriers has expanded to all categories from food to provisions to furniture and everything else. Technology is being developed to achieve deliveries without even a human being to deliver!

The information technology (IT) boom brought with it another opportunity for the sector. Large number of people had to commute to their work places, the IT parks and the public transportation systems were found to be inadequate. People moving solutions had to be evolved that provide safe and secure transportation all through the day and night with most of the IT companies working around the clock.

The above shows how the logistic sector demands are so wide that the traditional view of it being just truck drivers and freight forwarding agents has become obsolete. The Logistics Sector Skills Council of the National Skills Development Corporation (NSDC) lists 33 skills required by the industry and these are not comprehensive. There are many more skills that are required and are not listed.

With such a vast demand for a wide range of skills required by the sector the question arises as to spread and depth of jobs required by the sector. It is estimated that the sector demands about 11 million jobs and the demand is expected to rise to 20 million by the year 2020. 

Various segments

Broadly, the sector can be segmented into transportation, warehousing and other value added services (VAS). Transportation includes road, rail, sea, air and pipelines. Warehousing would include all types of storage from bulk cargo, containers, organised shelving and stacking, liquid bulk, silos, cold chains etc. VAS would encompass any and all other value additions that can happen like packaging, labelling, aggregating and disaggregating, assembling, tracking and monitoring, billing and collection, delivery and collection, MIS and statistical analysis etc.

While each of these segments are evolving in its own way incorporating the latest technologies and systems, the sector as a whole has evolved from being just a storage and physical distribution service provider to third party logistics provider (3PL) and would further evolve to fourth party logistics provider (4PL) as more and more organised players both national and international enter this space. International practices will come into play and slowly but surely the Indian logistics sector will merge into the global logistics sector.

Herein lies the challenge, maturing from an unorganised sector to an organised sector. A large part of the transportation and storage segment is in the unorganised sector and still predominantly labour dependent. Investment in logistics infrastructure is still happening and most of the sector is dependent on historical infrastructure. Technology is slowly being infused and is yet to make a substantial impact across the sector although a few players are racing ahead. 

Skills required

It can be seen that the skills required by the sector, given the substantial differences across the segments, are varied and that provides both an opportunity and a challenge. A report by NSDC indicates the following:

Distribution of human resources in the transport and warehousing segments

	Transport	Warehousing
Senior management	1-2%	1-2%
Middle management	3-5%	5-8%
Supervisory staff	10-13%
Workers	70-80%	85-90%*

* Includes operational front line supervisors

Another finding of the study as reported in the report:

Distribution of human resources by education level

Educational qualifications	Road transport	Rail transport	Ship transport	warehousing	3PL providers
Graduate	0-5%	20-30%	40-50%	5-10%	50-60%
Matriculate	10-15%	50-60%	30-35%	35-40%	20-25%
Literate but non-matriculate	50-55%	10-15%*	10-15%	25-30%	10-15%
Very minimally educated	20-25%			15-20%

*Includes very minimally educated

Probably the distribution indicates the predominant presence of government organisations in the rail and shipping industry with their recruitment norms. The road transport being predominantly in the private unorganised sector use less educated manpower and get by. As is to be expected, at the higher end of the value chain like 3PL more educated and trained manpower is required.

S Narayan, founder & managing partner, Lift Academy

The emerging trends in the sector is more of integration, both forward and backward, infusion of technology in systems and controls, use of better facilities and equipment and ultimately a single point responsibility to the client. This along with investments, both foreign and local, is making a change in the demands of the job. More and more skills are expected at all levels. Efficiencies are being demanded. Service standards are going up. The big entities are taking control and soon consolidation and specialisation will emerge. 

In this context, it is no surprise that the sector is creating more and more jobs and seeking more and more skilled people. In the immediate future, the demand will remain for the bottom of the pyramid jobs at both the transportation and warehousing segments. 

The transportation needs for goods and people, for supply and delivery, for storage and distribution requires many drivers, helpers, loaders, mechanics etc. The warehouses need pickers, packers, binners, inventory clerks, operators etc. The real challenge is to find these people - from mobilisation to training to placement, from employment to motivation to retention. 

Industry stakeholders need to understand gravity of the situation and find appropriate solutions to these challenges. One way to cope with the problem is creating a unique model to meet the job requirements and create a pool of trained manpower suited to the client’s needs and then deploy them through a structured entity that follows ethical process of staffing and provides holistic solutions.
________________________________________________________________________________________________

S Narayan is the founder & managing partner of Lift Academy