Adoption of Electric vehicles to reduce logistics costs

1. Electric vehicles in last mile
delivery to reduce logistics
costs in India
Dr.M.Bina Celine Dorathy
Professor
School of Commerce and Management Studies
Jain University, Bangalore

2. LOGISTICS – THE BACKBONE OF INDIA’S ECONOMY
 India's logistics sector is one of the largest in the
world.
 The industry with a size of $215 billion is growing
at a CAGR of 10.5 per cent and is expected to
reach $255 billion in 2022
 The surge in e commerce activities is playing the
catalyst role in fueling the growth of the logistics
industry in India.

3. PANDEMIC BOOSTS E COMMERCE IN INDIA
 The Indian e-commerce market has become one of the biggest
beneficiaries of the pandemic
 The E commerce segment is projected to grow at the rate of
21% annually over the next four years
 Emergence of FTUs(First Time Users) is a new development –
flipkart witnessed 50% growth in its new user segment
 E commerce has initiated a shift in shopping pattern- more
demand for essentials such as grocery, food and medicines -
Grofers reported 64% increase in first time grocery shoppers
out of which 20% were new to e commerce.This new trend has
triggered even small retailers to sell products online

4. Logistics Costs in India
 The Ministry of Commerce & Industry, estimates that
presently the country spends about 14% of its GDP on
logistics which is much higher than Japan (11%) and the
USA (9-10%). It is also much high compared to the global
average of 8%
 There is a competitive gap of $180 billion which is
expected to reach $500 billion by 2030. It is suggested that
India needs to half its logistics cost from 14 % to 7 % to
bridge this gap.
 The Finance Minister has announced the National Policy for
Logistics which aims to bring down the logistics cost to 10%

5.  Transportation, Inventory and warehousing are the three major
cost components in logistics
 Out of the three, transportation is the key element in logistics
and constitutes 75% of this industry, and it also accounts for the
highest percentage of logistics costs.
 Currently, freight transport in India is road-dominated—
accounting for 59% of freight movement. 35% of freight demand
is met by rail, 6% by waterways and less than 1% by air
 The cost of freight movement by road is INR 2.58/ton–km as
compared to INR 1.41/ton–km for rail and INR 1.06/ton–km for
waterways

6. LAST MILE DELIVERY COST
 Road transport plays a key role in last mile delivery
 The last mile delivery is concerned with delivering goods
from the warehouse to the end customers or to the shelves
of stores
 Mostly trucks are used to cover this distance. In China and
the US, the share of trucks are as low as 40% and 30% of
total ton per kilometer, compared to 60% in India
 The final mile accounts for approximately
53% of total logistics costs
 Besides high cost of operations they also contribute to high
levels of congestion and air pollution.

7. MOVE TOWARDS ELECTRIC VEHICLES
 The Walmart-owned Flipkart has partnered with Mahindra
logistics to accelerate the use of EVs in last mile delivery
and is planning to deploy over 25,000 EVs in the fleet by
2030
 Amazon is committed to bring 10,000EVs on Indian roads
by 2025. This is a part of its global pledge to have
1,00,000EVs in its fleet by 2030
 DHL plans to convert a quarter of its two-wheeler fleet to
electric by the end of 2021 and completely by 2023

8. Adoption of EV in last mile delivery
The benefits of EVs are many fold
 Cost effective alternative to the petrol/diesel driven vehicles
 Cost of maintenance is quite low as they have fewer auto parts
compared to regular vehicles
 They can be easily recharged and have a mileage of 80- 100
miles and can last upto 12 hours
 The operational cost of a electric three wheeler is 3.3 times
lower than a conventional three wheeler
 ABOVE ALL IT IS ECO FRIENDLY

9. Thank You