Road logistics market to hit $330b milestone in India by 2025: report

India’s road logistics market is expected to grow at a compound annual growth rate of 8% in the next five years to become a US$330 billion industry, according to a new report from RedCore, the early-stage research arm of consulting firm RedSeer.

Titled “Inter-city Logistics Market Study,” the report said that the increase in demand for goods movement is tied to several key factors such as the growth in income levels, exports, ecommerce, and retail sales, as well as a projected gross domestic product growth of 7% to 8% for the country.

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In 2021, inter-city road logistics spend amounted to US$209 billion, which accounted for around 87% of the total market spend. Of the US$209 billion spent in inter-city road logistics, 63% went to the on-demand or spot market, which the report describes as “movement of goods on immediate basis with prompt payments,” while the remaining 37% went to the contract logistics market.

This mix illustrates how the growing demand for ecommerce and social commerce services is powering the Indian logistics sector.

The report also takes a special note of the “open marketplace” business model, which leverages technology to help connect stakeholders. Focused on the on-demand or spot market, the model allows truck owners to benefit from instant booking from verified transporters without worrying about the commission, noted the report.

RedCore’s research further detailed that India’s Tier 1 cities saw US$84 billion in transport vehicle revenue for the year. Trucks accounted for 61% of this figure, while the remaining revenue was split between four-wheeler, three-wheeler, and multi-axle vehicles.

The report also hailed local logistics startups trying to disrupt the space with “innovative business models” and solving key supply-related pain points in the industry.

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“These startups are operating across the value chain ranging from discovery and booking, value-add services, and execution. Further, their target clientele includes consignors as well as truck owners,” the report said.