The concept of total logistics, like that of marketing, has been somewhat alien to traditional Indian business ethos. Logistics signifies the integration of two or more activities for the purpose of planning, implementing and controlling efficient flow of raw materials, in-process inventory and finished goods from point of origin to point of consumption. Transportation is often the single largest cost in the logistics process.

Logistics is a source of value addition. By streamlining transport, storage and handling operations, by reducing inventories (and the corresponding financial and storage costs) and by making the most cost-efficient use of available assets, logistics reduces the overall cost of the delivered goods while increasing their time and space utilities (right time, right place).

According to a study commissioned by CONCOR, presently in India there are about 15 players as logistics service providers out of which only 5 to 6 have turnover of Rs. 50 crores plus. Though there are over 1500 transportation companies in India, only about 25 offer third party logistics services. Others offering similar services are courier companies, freight forwarders, brokers and booking agents.

In the market, about 75% of the revenue being generated by this segment is on account of transportation and balance 25% is on account of services. The study further showed that in-house logistics service arrangement is still predominant (80-90%). Major users of 3PL spend about 0.5% to 8% of their turnover on getting these services.

Within the realm of logistics, transportation, customs brokerage, freight consolidation and freight forwarding as services are almost always outsourced, whereas Inventory management is the only key element of the logistics chain that is seldom outsourced.