To gauge the viability of electric vehicles in the logistics business, France-headquartered FM Logistic is experimenting with EVs with several of its clients. In a conversation with Mobility Outlook, Ajit Jangle, Managing Director, FM Logistic India, noted that the company has deployed several EVs at its clients' locations and will prepare a plan for deploying EVs based on these “pilots” findings.
“At the moment, secondary distribution and last-mile logistics seem to be the best-suited areas for EVs,” he said.
Stéphane Descarpentries, Managing Director, Asia Region Asia and Strategic Projects, FM Logistic, added that while the company is already deploying EVs in Europe, they started working with the same in India some time ago.
The company currently operates over 500 vehicles per day via the asset-light model and has recently inaugurated its first supply chain control tower in Pune, Maharashtra. It has already increased its focus on 4PL and sees the trend of 4PL in logistics as “going North from here.”
Under a 4PL logistics model, manufacturers assign one outside supplier with the whole management and organisation of their supply chain and logistics. On the other hand, a 3PL (third-party logistics) provider offers outsourced logistics services, which involve the management of one or more facets of procurement and fulfilment activities.
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Electric Three Wheelers, India & Europe
Descarpentries believes that Europe and India will lead EV adoption in logistics. Many European countries have banned the entry of internal combustion-powered engine vehicles on certain streets, and in India, sustainability and ESG goals are making organisations adopt more EVs.
“I think we will see the deployment of at least 1,000 electric three-wheelers (E3Ws) under the FM Logistic banner via the asset-light model in the next three to five years”, Descarpentries said.
He is also confident that electric vehicles of other categories will also see adoption in the logistics domain as these are available in higher tonnage capabilities. FM Logistic does not mandate its partners to use vehicles of a certain OEM but “can help introduce OEMs to partners, whose EVs it finds a merit in”.
He explained, “We are also actively exploring the deployment of E3Ws in Europe, and are trying to introduce our delivery partners there with E2W OEMs.”
As per the company, India’s logistics sector is expected to grow from a $200 billion market in 2020 to $320 billion by 2025. Backed by the Indian Government to further strengthen supply chains with the introduction of the National Logistics Policy announced in September 2022, India continues to draw attention as a major logistics hub in Asia.
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CAPEX For EVs
To help delivery partners with CAPEX required for investing in EVs and other vehicles, the company is also currently gauging to create a financing model based on the “factoring method.” While it may or may not see the light of day, Descarpentries and Jangle shared that the company will do everything possible to help its delivery partners keep up with the changing dynamics of mobility in India and the rest of the world.
“Long-term contracts are another example of the commitment we make with our delivery partners and clients. Via these we tell them that their investments in new-age vehicles will be safe,” Jangle said.
Reskilling and upskilling its employees and service partners is one more area that Jangle sees the focus on. For instance, to enable smooth data flow and operations of the recently inaugurated control tower, he explained, the company is reskilling not only its employees but also its service partners.
It is also looking at driving sustainability via solar power and energy-efficient devices at its warehouses in India. FM Logistic has invested $100 million in India during the last eight years and will invest $20 million more in the upcoming 12 months.