Top 10 Challenges Faced By Transportation Companies In India

Challenges Faced By Transportation Companies In India

The Logistics Sector undoubtedly plays the most integral role in any sector’s supply chain. Whatever the industry, be it healthcare, hospitality or manufacturing industries, transportation companies play a key role in connecting the organizations to their clients.

The Global Logistics Sector is estimated to be worth 11.26 Trillion in 2024. In India alone, around 10% to 15% of product cost may be attributed to the logistics sector. This is comparatively significant from other economies like that of USA or China. The Indian Logistics sector is a fast evolving industry. However, this exponential growth is not without challenges. Let us take a look at a few Challenges Faced By Transportation Companies In India.

challenges faced by transportation company

1. Road Infrastructure Challenges

Transportation by road is the primary mode of freight cargo transportation in India. Nearly 60% cargo moves by road. Owing to over-saturated rail networks and high rail tariffs, a mere 32% cargo moves by rail. Although majority of the supply chain moves by road, it is not without a fair amount of hiccups. Road transportation proves to be quite inefficient because of poor road infrastructure, multiple checkpoints, and congestion.

These challenges often lead to delays, increased operational costs, and unpredictable delivery timelines, making it difficult for logistics companies to ensure consistency and efficiency in their services.

2. Bulk Order Bottleneck

Keeping up with bulk order timelines is a herculean task for transportation companies. Every Indian Transportation Company in the Logistic Sector has faced the exhausting issue of keeping up with the supply-chain timeline in the event of receiving bulk load of orders. In the instance of high volume of orders received, it often gets difficult to prioritize and juggle orders and deliveries on an extremely tight timeline.

This challenge gets aggravated when the company has limited resources, owing to the difficult payment cycles. Festival time is the best example of mass delays in delivery schedules, when an overall failure of the ETA mechanism can be observed.

3. Hike In Fuel Cost

Fuel cost is one of the biggest challenges faced by the transportation companies in the Indian logistic sector. The inflation in fuel prices results in increase of transportation costs to the shippers. Rise in fuel prices constantly increase the surcharges added to freight rates. This naturally cuts down the revenue and earnings of truckers, as fuel prices increase.

Additionally, fluctuating fuel rates make it difficult for logistics providers to plan budgets effectively, often leading to inconsistent pricing strategies and strained customer relationships, impacting long-term profitability.

4. Route Uncertainties

The varied terrain and diverse travel and weather conditions in India, create an unreliability in the transportation industry, owing to the high probability of unforeseen conditions. Even when the packaging and drops are conducted on schedule, the transportation industry is often challenged by delays. Mainly because India is a huge country, covering different terrains, subject to different conditions. Also, roads are terrible in the remote, internal parts of the country and Ghats are prone to accidents and landslides.

Traffic congestions, multiple checkpoints, and toll stations add to the woes. This translates into the Logistics companies losing out on a lot of time and money. In a nutshell, even after taking into consideration extra delays, more unforeseen delays cannot be ruled out..

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5. Lack of Skilled Personnel

The Indian Logistics sector faces an alarming lack of skilled manpower and specialized personnel. With the advent of modern technology, there is a keen requirement for technically skilled labor. However, the laborers are under-skilled, over-worked and lack the desired skill-set to make the process efficient.

Also, to save on capital, companies compromise on the training and payment of their logistics staff. Resultantly, these companies face the problem of high labor turnover, increased training costs and under-performing human resource.

6. Warehousing Conditions

Another major challenge is storage. The unfortunate plight of pitiable warehousing facilities in India is no secret. Cargos incur immense damage owing to pest-infested warehouses, damage due to leakages, lack of proper storage space, and much more. This is most predominant in case of low margin goods and cargo. Also, the Governments use the big warehouses to store grains, leaving very little space for cargo storage.

Additionally, lack of temperature-controlled storage for perishable goods and inadequate infrastructure in rural areas further compounds the problem, leading to increased wastage and reduced efficiency in the supply chain.

7. Inadequate and Overstressed Delivery Staff

Overstressed delivery staff is a grave challenge faced by the supply chain of the Indian logistics sector. Every transportation company in India faces the problem of employing and retaining their delivery staff. The industry faces a shortage of delivery personnel, leading to the workloads of multiple time-bound deliveries being placed on the current workers.

This obviously leads to them getting burnt out and discouraged with the pressure and with overwork. Over time, this results in increased absenteeism, high attrition rates, and a decline in service quality, ultimately affecting overall customer satisfaction and delivery performance.

8. Complex Regulatory Landscape

The complex regulations that emerge continually poses a major challenge to reaching business goals. Companies engaged in transportation need to work through various state-specific authorization standards as well as toll fee guidelines and tax adjustments that frequently change. Different regions implement a varied set of rules in transportation, which costs time and money to maintain.

The workflow slows down and delays frequently occur because of frequent tax slab changes along with delayed approvals and mandatory documentation. The bureaucratic processing causes operational problems and disrupts the consistent timelines of supply chain operations.

9. Poor Technological Adoption

The global logistics sector experiences digital transformation but numerous Indian transportation businesses continue to operate with traditional manual operations. The absence of automation combined with inadequate technology adoption creates negative effects on all aspects including order tracking as well as route optimization and fleet management operations.

Real-time tracking and data analysis as well as load consolidation become impossible to achieve which results in slower operations and higher expenses. The importance of fast delivery in this industry makes lack of technological advancements create substantial business challenges.

10. Delayed Payments and Cash Flow

Transportation companies in India face two primary challenges because of delayed payments and short payment cycles. Transporters incur initial expenses for fuel and toll fees and driver compensation, but clients usually pay their bills late within a period of 60 to 90 days.

The financial gap between payments and costs puts severe pressure on the working capital of the transportation company, which prevents investments in better infrastructure, staff, and technology upgrades. The problem intensifies when demand peaks during holiday seasons or promotional periods, thus restricting operational growth for the company.

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