Sustainable logistics: Powering the future of India’s industrial sectors

The industrial products sector plays a critical role in the Indian economy, serving industries and consumers by providing essential infrastructure and tools. The country’s industrial growth was 9.5%. For the previous year, according to the Indian Economic Survey 2023-24. The survey found that about 47.5 per cent of the total manufacturing output in the country is used in inter-industry consumption. This is directly linked to the surge in urbanisation and upswing in various infrastructure projects, leading to increased demand for logistics; 66% of cargo freight movement in India depends on road transportation.

However, there are significant environmental costs associated with logistics and distribution such as high fuel consumption, inefficiency in transport routes, and pollution caused by conventional freight systems.

 Addressing these sustainability challenges, particularly in logistics, is critical for reducing carbon emissions and for the long-term growth of the sector. According to the European Environment Agency, the logistics industry alone is responsible for 25% of the global carbon emissions.

Recognising this, two years ago, the Government of India launched the National Logistics Policy (NLP) to complement the PM GatiShakti National Master Plan. The NLP was aimed at streamlining logistics operations and lowering the cost of logistics through an interdisciplinary, cross-sectoral, and multi-jurisdictional framework to develop the entire logistics ecosystem. The policy incentivises businesses to align their distribution methods with sustainability goals, helping them reduce carbon footprints.

The industry itself has begun to recognise the importance of environmental, social, and governance (ESG) as a part of its core goals. Organisations are ranked and rated, with scores from indices such as Sustainalytics, MSCI and Dow Jones Sustainability, among others, on their commitment to ESG.

Amongst other practices, companies are now using biodegradable packing materials and refraining from using SUP (Single Use Plastic) in supply chains. The adoption of such sustainable practices in logistics and distribution will have far-reaching impacts, beyond reducing the carbon footprint and being eco-conscious and friendly. Through sustainable logistics, companies can improve the efficiency of their supply chain and operations, minimise waste, optimise the use of resources, reduce costs, and also improve their brand reputation.

Tackling challenges, unlocking benefits

Logistics and distribution processes face several significant challenges, including India’s electrical and industrial products sector. Traditionally, this sector has relied on road transport for freight movement, contributing significantly to air pollution and high operational costs.

By transitioning to sustainable logistics practices, also known as green logistics, companies can overcome these obstacles and unlock a range of economic and social benefits:

• Economic advantages: Integrating energy-efficient logistics systems can result in substantial cost savings by streamlining operations. Deployment of advanced route optimization technologies and switching to electric vehicles can significantly reduce fuel consumption and minimize emissions.
• Enhanced brand image and customer loyalty: Sustainability has become a vital part of corporate branding that will set a company apart in an increasingly competitive landscape. With audiences becoming increasingly conscious of the environmental impact that their purchases might have, companies that demonstrate a genuine commitment to green practices will be able to attract eco-minded customers, which will help build strong, lasting loyalty.
• Impact on communities and employees: Adoption of green logistics will reduce waste and pollution in local communities, improving the quality of life for the residents. These efforts also translate into a sense of pride for employees, which positively impacts employee retention.

Green practices for success

Adoption of sustainable logistics, thus, is crucial to address the numerous challenges explained earlier. To achieve sustainable logistics, companies need to adopt several key practices:

• Employee awareness and training: Fostering a culture of environmental responsibility starts with employee engagement and training. By educating and training staff on sustainable practices, such as optimizing routes, reducing energy use by adopting energy-efficient practices, and managing waste, companies can ensure their workforce contributes to the organization’s green goals.
• Efficient supply chain management: Advanced inventory management systems can reduce excess stock and minimize waste. Implementing route optimization software improves delivery efficiency, allowing for fewer trips and reduced fuel usage.
• Green transportation options: Moving toward electric and hybrid vehicles for deliveries is a key component of sustainable logistics. Companies can also reduce their reliance on road transport by shifting some of their freight to rail or waterways, which are considerably more environmentally friendly. However, the transition to green transportation does have some financial implications, given that initial investment is required to procure electric vehicles. An additional concern is a recharging infrastructure.
• Sustainable packaging: Another essential practice is the adoption of eco-friendly packaging materials to reduce waste. By using recyclable or biodegradable materials, companies can minimize their environmental footprint and contribute to a circular economy.

Future trends in sustainable logistics

The future of sustainable logistics lies in integrating technology to drive efficiency. Companies must adopt technology, especially Artificial Intelligence, Machine Learning, and Big Data Analytics. These technologies are emerging as powerful tools that enable real-time monitoring and optimization of supply chains, apart from allowing businesses to track the movement of goods, predict maintenance needs, and make informed decisions that reduce waste and improve operational efficiency.

As consumer expectations for sustainability grow, companies in the industrial products sector must evolve to meet these demands. Adopting sustainable logistics practices not only enhances economic performance but also ensures a cleaner, healthier environment for future generations. By committing to a greener future today, companies can create long-term benefits for themselves, their customers, and the planet.