Indian highways are always filled with scores of trucks, filled with goods being transported from one place to another. It is estimated that the Indian logistics market will grow to 380 billion dollars in 2025, with a CAGR of 10-12%.
But the sector is majorly unorganised. It is on the brink of a revolution. At the same time, fintech is reaching far and wide and is soaring across all sectors. When fintech meets logistics, it has the potential to streamline the payment processes for logistics.
Some problem-related areas for logistics companies are insurance, credit management, track and trace, invoices, inventory finances, and so on. Here are a few ways in which start-ups can use fintech to be a part of the ever-booming logistics industry:
Blockchain technology and financing
When fintech started using blockchain technology, it effortlessly fits everywhere. Logistics has also started incorporating blockchain technology. Internationally, start-ups are using this technology for supply chain finance. It leads to easy management (and transparency) of records and facilitates lending to small businesses as well. Logistics industries always need more equipment and inventory. The process and cost of procurement can be exhausting. Moreover, there are several challenges in the supply chain that can lead to a decrease in efficiency. Bottlenecks can occur due to a lack of transparency. And today, the customers need more. The expectations for ethical standards, authenticity, and sustainability have considerably risen in the last few years. Blockchain can make the process easier and help minimize the step between you and productivity. It aids in procuring equipment quickly and with minimum interruption. It can enhance the supply chain transparency, ensure authenticity, reduce complexity and make processes more efficient.
Finance management
Supply chain finance consists of financing processes and technology that lowers costs for all parties involved. It allows suppliers to receive early payment and works as a ‘cash advance’. While this would have been difficult earlier, fintech companies are coming up with innovative ideas to make it easier and improve the company’s working capital. In simple terms, they offer financing options that bypass banks. The costs related to logistics can impact companies significantly. Finance can now play an advisory role in understanding how costs can be lowered and how the supply chain can be made more cost-effective. By providing timely information, fintech empowers managers to make better financial and logistical decisions. This leads to better functioning all around the organization through better profit planning. Financial professionals have evolved to become strategic partners to supply chain managers.
Pay and ship
In logistics, the management of bills and receipts can get difficult. They are unreported or go missing. There are plenty of invoice management services available to help out transportation businesses. Fintech companies can make way for easy functioning by providing an end-to-end service. They can automate the process of creating invoices, acknowledging receipts, and simply digitizing payments for the user. There’s also a pay-as-you-go model, wherein you can track the shipment and know the exact distance your truck has covered and pay accordingly! Fintech can contribute directly to the efficiency of logistics service providers by providing solutions that solve a plethora of problems and challenges faced by them regularly.
LogiFintech – a promising pairing
Fintech is a continuously growing business. And logistics want to mature and change. Using fintech helps logistics companies streamline their processes with financial terms that work the best for them. The logistics industry is all about time – timely pickup, delivery, orders, and payments. Any delay in the same can cause problems in the entire process. Customers are evolving as well and expect better products and services. It is the responsibility of logistics leaders to fulfil these ever-changing needs. They need innovation and technology to move forward. They need the fastest-growing revolution of today – fintech.