“Hyderabad emerging as logistics hub”
City ideal for companies to set up manufacturing base to supply products nationally, says LogisticsNow founder
Hyderabad: Hyderabad is becoming one of the largest logistics hubs nationally with over 340 logistics companies and over 100 major manufacturing companies spanning FMCG, pharmaceuticals, defence and other sectors. The city holds a lot of potential in outbound shipments because of its cost-arbitrage, demand and supply factors, says an industry expert, who runs a logistics intelligence platform.
The freight market in Hyderabad is mature with several large logistics players including some of the country’s largest fleet owners having their base and workshops in the greater Hyderabad region.
LogisticsNow founder & CEO Raj Saxena told Telangana Today, “There is a need for greater synchronisation in inbound and outbound flows to enable efficient trucking and rail capacity utilisation for logistics companies in Hyderabad. The city needs to emerge as a larger distribution centre in future. With the cost-arbitrage, the city can have a lot more inflows and outflows, to become the distribution hub for the entire southern India. This also requires Hyderabad to have bulk manufacturing.”
Land, low-cost logistics infrastructure and skilled manpower can be leveraged to make the city a manufacturing hub, which will further drive logistics in the long-term. Hyderabad is the epicentre of India connecting north and south. It also has become a major consumption centre over the last few years.
“Realising the potential of Hyderabad and Telangana, LogisticNow covers the entire Telangana and has onboarded 250 large and medium transporters in the State. Our platform aims to create a State-level logistics grid for Telangana to benefit the truckers and other stakeholders,” he added.
Cost-arbitrage
The cost variance that Hyderabad offers in transportation is a big plus for the city. Transport costs are typically determined by ‘to’ and ‘fro’ costs as the transporter considers the round trip. There is currently no demand-supply equilibrium in Hyderabad as a lot of load comes from west to Hyderabad than the load that goes from Hyderabad to the west. This means there is a huge untapped outflow from the city that the logistics industry can cater to.
There is a clear cost advantage for Hyderabad. For instance, if a multi-axle truck has to move from Ahmedabad to Hyderabad, it may cost Rs 60,000-65,000, but it costs less than Rs 45,000-50,000 for backhaul (return trip), because of the imbalance of cargo. This imbalance has been there for a long time as Hyderabad has more inflow than outflow, particularly to the western part of India.
“While many may see it as a challenge for Hyderabad, I see it as an opportunity. This scenario makes Hyderabad an ideal location for companies to set up manufacturing base to distribute/supply heavy products nationally, as the city offers competitive advantage to manufacturers in multiple ways,” he noted.
Hyderabad has good warehousing space and it is a distribution hub in the northern part of southern India, and for long-haul transportation, the city has significant inflows as it is a regional hub for distribution. Round-tripping or return load is the reason for the lower cost in Hyderabad for long-haul, which the city can leverage. Outflows from Hyderabad too can improve further, backed by manufacturing, observes Saxena.
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