Factors Influencing Spot and Forward Freight Rates in Indian Logistics Industry

Abstract

Logistics sector plays an important role in the economics of every country. The logistics sector in India is expected to grow to USD 215 billion by 2020, employing more than 22 million people. A separate logistics division has been put in place in the Ministry of Commerce & Industry. The growth in Indian trade and commerce is also anticipated to be equally positive. The logistics sector in India has shown a significant development over the years and has also encouraged the technology enabled start up s which has provided a big opportunity of providing seamless movements of goods across the country. In this sector there are multiple factors which drive it towards its growth and boom. As a result, in movement of freight, freight forwarders and price plays an important role. Price volatility is the most significant issue for logistics market and for the clients using the logistics services. The challenge is to study and identify the various factors influencing the spot and forward freight rates. The questionnaire was developed to carry out the research and data was collected from the freight forwarders in Delhi. Factor analysis method is used in order to identify the key factors. Nine factors were identified as mode of transport, Distance, speed and time, Fuel price and Capacity, technological Advancements, Government Policies, Environmental Issues and Market Structure. To further analyse the data descriptive analysis was done. It was found that these nine factors have a significant impact on spot and forward freight rate which can be considered and implemented in order to maintain, enhance and achieve competitive advantage in domestic and international business.