Performance analysis of India’s Transportation and Logistics

Maritime Transport

In recent years, India’s maritime transport contributed about 95% and 70% of trading by volume and value. India has 12 major ports and 205 notified minor and intermediate ports. In India, the cargo capacity at major ports remained underutilised over the period. Major ports handled more than half of India’s maritime transport, which declined by 10.5%—414 million tonnes (MT) during April to November 2020 compared with 2019. The cargo traffic at non-major ports has declined by 10.8%—310 MT during April-October 2020. During the national lockdown period of April-May 2020, there has been a sharp decline in cargo traffic at both the major ports and non-major ports followed by a gradual improvement in cargo traffic since June 2020 due to a pickup in economic activity and trade both domestically and globally.

The growth in container traffic at major ports in India reached 9.98 twenty-foot equivalent units (TEUs) in FY2020 at a growth of 1.12% year-on-year basis but declined to 4.93 TEUs during April-October 2020 due to the COVID-19-induced restrictions.

Massive investment in India’s ports sector has been planned to improve maritime transport infrastructure. India’s ports have received a cumulative foreign direct investment (FDI) of US$1.63 billion between 2000 to 2020 and US$1.9 billion were allocated for the upgrade of major ports from 2016 to 2019. Between 2020 to 2021, US$257.22 million has been allocated for the development of the ports sector in India. The turnaround time at major ports stood at 64.69 hrs in 2019-2020.

India’s cargo traffic at ports is likely to reach 1695 MT in 2021-2022. Additional port capacity is expected to reach 275 to 325 MT at a compound annual growth rate (CAGR) of 5 to 6% by 2022.

Rail Freight

India’s rail network consists of 123,236 kms, which caters for 9,146 freight trains, transporting 3 MT of freight per day. Overall rail freight traffic increased to 1208.34 MT in FY2020 from 1104.2 MT in FY2016, growing at a CAGR of 2.28%. The COVID-19 pandemic has provided an opportunity for India railways to improve their freight capacity. In FY2021, rail freight traffic has increased to 1145.68 MT and likely to achieve the 2024 MT mark by FY2024.

The revenue growth of Indian Railways remained robust over the years. The rail freight revenue has increased up to FY2019 and then declined modestly in FY2020 and accounted for 65.1% of total rail revenue. In FY2020, the share of freight earnings stood at US$16.24 billion. Rail freight movement has increased significantly due to enhanced carrying capacity, cost-effectiveness, and improved service quality.

The COVID-19-induced road transport restrictions have led to an increase in rail freight loading, which stood at 108.16 MT in October 2020 compared to 93.75 MT and contributed US$1.40 billion of freight earnings, higher by US$117.41 million compared to US$1.28 billion in October 2019.

Investment in rail infrastructure has increased considerably from US$31.03 billion during 2008-2012 to US$58.96 billion during 2013-2018 and planned investments are US$124.13 billion from 2018-2022.

Railways require US$545.26 billion by 2032 for capacity addition and modernisation. The dedicated freight corridors are expected to transport 182 MT in FY2021 from 140 MT in 2016-2017. Railways already planned to increase its freight traffic from 1.1 billion tonnes (BT) in 2017 to 3.3 BT by 2030.

Air Cargo

The air cargo volumes handled in India has increased substantially from 703,000 MT in FY2000 to 3,328,296 in FY2020. In FY2020, the share of domestic and international airfreight traffic was 39.8 and 60.2%, respectively. In India, total air freight traffic increased from 2.7 to 3.33 MT at a CAGR of 5.32% from FY2016 to FY2020. However, air freight traffic has declined sharply to 0.99 MT during April–September 2020 due to the lockdown restrictions. Overall, air freight traffic is likely to reach 4.14 MT in FY2023 and 17 MT in FY2040.

India’s air transport sector (including air freight) has received an FDI inflow of US$2.79 billion between FY2000 and FY2020 and is expected to receive an investment of US$4.99 billion by FY2024. Airport infrastructure is expected to receive an additional investment of US$1.83 billion by FY2026. The National Air Cargo Policy Outline 2019 envisaged making India’s cargo and logistics the most efficient and effective globally by 2030.

Road Freight

India’s road network has consisted of 5.89 million kms, which catered for transportation of 64.5% of goods traffic. Highway construction increased substantially at 21.44% CAGR between FY2016–FY2019.

Investment in road infrastructure has remained unstable since FY2017. India has planned to construct 65,000 km of national highways for US$741.51 billion by 2022. The roads sector is expected to receive 18% of capital expenditure during 2019–2025 from the US$1.4 trillion worth National Infrastructure Pipeline.

India envisaged an investment of US$545.26 billion by 2032 for capacity addition and modernisation of road infrastructure. What’s more? The National Highway Authority of India (NHAI) became fully digital using a cloud-based and artificial intelligence (AI)-powered big data analytics platform in mid-2020.


Indian roadways have been the second largest and one of the busiest transport networks in the world, which covers over 5.23 million kms and carries 65% of domestic freight. The National Highways of India carry about 40% of total road traffic and contribute just 2% of the total road network. But, the Indian ports have facilitated 96 and 70%, respectively, in terms of quantity and value of foreign trade.

In India, the manufacturing sector has been estimated to contribute 25-30% of the GDP by 2025, which will drive the growth of the warehousing or industrial property segment. Meanwhile, port capacity is likely to grow at a CAGR of 5-6% by 2022 with substantial additional capacity.

Indian Railways have also planned to increase their freight volume from 1.1 BT in 2017 to 3.3 BT by 2030, whereas air freight traffic has been estimated to reach 17 MT by 2040, despite lack of supporting infrastructure, and automated material handling systems.

In brief, the COVID-19-induced lockdowns has led to a slowdown in trade, which has reduced the growth performance of all types of freight in India. India’s capacity growth of different freight segments is likely to exceed demand due to lower consumer confidence.

Going forward, India’s logistics sector is expected to improve operational efficiencies with significant investments in technology adoption. This can increase India’s exports substantially. The application of AI in designing transport route optimisation can enable optimum utilisation of freight assets. Real-time global positioning system (GPS)based vehicle tracking can improve the transparency and reliability of India’s transportation and logistics substantially. Application of the Internet of Things (IoT), data assessment, and automation can ease the moving and tracking of cargo and help businesses smoothly operate their distribution networks. Besides, the make use of digital GPS and radio-frequency identification (RFID) systems can minimise the cost of identification and location of the products along the supply chain and improve profitability.

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