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Determinants of profitability in the Indian logistics industry

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  • Saripalle, Madhuri

Abstract

The Indian economy has one of the highest transportation and logistics cost as a percentage of gross domestic product (13%) globally. This paper analyses trends in profitability and discusses some key macro and micro level factors influencing the Indian logistics industry comprising road transport logistics, storage and distribution. It discusses the role of macroeconomic factors such as tax policy in influencing the logistics network complexity, which in turn increase logistics costs. At a micro level, the paper uses firm-level data of 201 companies from Prowess database and estimates an econometric model to analyse major determinants of profitability in the logistics sector. The study finds that liquidity, market share, debt-equity, and age are significant determinants of profitability in the logistics sector.

Suggested Citation

  • Saripalle, Madhuri, 2018. "Determinants of profitability in the Indian logistics industry," MPRA Paper 95022, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95022
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    References listed on IDEAS

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    1. Peter Wanke & Henrique Correa, 2012. "Supply chain management and logistics complexity: a contingency approach," International Journal of Logistics Economics and Globalisation, Inderscience Enterprises Ltd, vol. 4(4), pages 239-271.
    2. Song, Jiongjiong & Regan, A C, 2001. "An Industry in Transition: Third Party Logistics in the Information Age," University of California Transportation Center, Working Papers qt9n79z4x5, University of California Transportation Center.
    3. Paulo Ma�ãs Nunes & Z�lia Serrasqueiro, 2015. "Profitability determinants of Portuguese knowledge-intensive business services: empirical evidence using panel data models," Applied Economics Letters, Taylor & Francis Journals, vol. 22(1), pages 51-56, January.
    4. Marasco, Alessandra, 2008. "Third-party logistics: A literature review," International Journal of Production Economics, Elsevier, vol. 113(1), pages 127-147, May.
    5. A.K. Sharma & Satish Kumar, 2011. "Effect of Working Capital Management on Firm Profitability," Global Business Review, International Management Institute, vol. 12(1), pages 159-173, February.
    6. John Goddard & Manouche Tavakoli & John Wilson, 2005. "Determinants of profitability in European manufacturing and services: evidence from a dynamic panel model," Applied Financial Economics, Taylor & Francis Journals, vol. 15(18), pages 1269-1282.
    7. Avittathur, Balram & Shah, Janat & Gupta, Omprakash K., 2005. "Distribution centre location modelling for differential sales tax structure," European Journal of Operational Research, Elsevier, vol. 162(1), pages 191-205, April.
    8. Kelly Weeks, 2011. "Reverse logistics strategies as a means to improve profitability," International Journal of Logistics Economics and Globalisation, Inderscience Enterprises Ltd, vol. 3(1), pages 17-41.
    9. Kavilal, E.G. & Prasanna Venkatesan, S. & Harsh Kumar, K.D., 2017. "An integrated fuzzy approach for prioritizing supply chain complexity drivers of an Indian mining equipment manufacturer," Resources Policy, Elsevier, vol. 51(C), pages 204-218.
    10. Carbone, Valentina & Stone, Marilyn A., 2005. "Growth and relational strategies used by the European logistics service providers: Rationale and outcomes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 41(6), pages 495-510, November.
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    Cited by:

    1. Kaodui Li & Mohammed Musah & Yusheng Kong & Isaac Adjei Mensah & Stephen Kwadwo Antwi & Jonas Bawuah & Mary Donkor & Cephas Paa Kwasi Coffie & Agyemang Andrew Osei, 2020. "Liquidity and Firms’ Financial Performance Nexus: Panel Evidence From Non-Financial Firms Listed on the Ghana Stock Exchange," SAGE Open, , vol. 10(3), pages 21582440209, August.
    2. Sarthak Sahu & Saket Shanker & Aditya Kamat & Akhilesh Barve, 2023. "India’s public transportation system: the repercussions of COVID-19," Public Transport, Springer, vol. 15(2), pages 435-478, June.
    3. Ning Wu & Jingyi Zhao & Mohammed Musah & Zhiqiang Ma & Lijuan Zhang & Yutong Zhou & Yongzheng Su & Joseph Kwasi Agyemang & Juliana Anyei Asiamah & Siqi Cao & Linnan Yao & Kaodui Li, 2023. "Do Liquidity and Capital Structure Predict Firms’ Financial Sustainability? A Panel Data Analysis on Quoted Non-Financial Establishments in Ghana," Sustainability, MDPI, vol. 15(3), pages 1-21, January.

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    More about this item

    Keywords

    profitability; transportation; supply chain; logistics; third party logistics; 3PL; India;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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