Top Logistics Challenges Faced By The Cement Industry

Top Logistics Challenges faced by the Cement Industry

India is the world’s second-largest producer of cement. It accounts for more than 7% of the global installed capacity. Currently, India is producing 278 million tonnes of cement per annum. The industry is expected to reach 550-600 million tonnes per annum by 2025. The industry experts consider government programs such as Housing for all by 2022, Make in India, Creation of 100 Smart Cities, Swachh Bharat Abhiyan, and concrete road projects as the major factors behind the flourishing of India’s cement market. 

With such vast growth roadmaps, naturally multinational companies are at the forefront to invest in the cement sector. Lafarge-Holcim, Vicat, Heidelberg Cement are some of the major players who invested in the recent past. But with huge opportunities comes huge challenges that cement manufacturers are currently dealing with. Of the total 210 large cement plants and over 350 mini cement plants, manufacturers deem ‘logistics and supply chain’ as the major contributor to the overall cement cost, from manufacturing to transporting it to consumer markets. Though considered a logistics-intensive industry, cement manufacturers invest 50-55% in power & fuel and freight expenses of the total cost. It is also noted that the transportation cost of bulk cement depends on the location as well. The freight cost in the Northeast part of the country is much higher as it is hilly terrain and constitutes more than 40% of the total cement price. In a popular interview, M Ravindra Reddy, Director Marketing of Bharati Cement Corporation Pvt Ltd, said 

“If we combine both inward and outward logistics, it contributes to more than 35 percent of total cement cost.” 

With a high impact of logistics and supply chain on the cement manufacturers, let’s first understand which parameters decide the freight cost of cement. Here are the major elements associated with the supply chain of the cement industry; 

  • Power and Fuel Costs
  • Tax Duties
  • Transportation Costs
  • Other Infrastructure Expenses

Logistics Challenges in Cement Industry 

From the inward movement of raw materials such as coal, limestone, gypsum to the outward movement of finished cement to the market, manufacturers face a wide range of challenges. 

Did you know that to produce 1 tonne of cement, manufacturers require 180-250 kg of coal and 1.5 tonnes of limestone. 

Here are the challenges involved in the transportation of these bulk raw materials and bulk cement; 

High Logistics Cost 

As mentioned earlier in this article, logistics cost for the cement industry imposes revenue-related challenges for cement manufacturers. The major expense of logistics consists of transport activities, non-physical handling activities such as inventory, and related time costs. As cement is transported in bulk, its weight adds up to total freight costs. Higher freight cost and inefficient logistics resulted in an idle capacity of cement plants in the recent past as cement plants that were situated far from limestone plants impacted the cost of inward logistics. Most of the limestone plants are situated in Madhya Pradesh, Rajasthan, Andhra Pradesh, Gujarat, Chhattisgarh, Tamil Nadu, and Karnataka. 

As per data recorded in 2019, the idle capacity of cement production was around 170 million tonnes, which comes to around one-third of the total cement-making capacity. 

The inward movement of raw materials like limestone, coal, gypsum & others, outbound transportation of clinker to the grinding units, and movement of finished cement to market are critical for cement manufacturers and companies. 

Poor Logistics Infrastructure

The freight cost for cement increases due to the commodity nature as items like cement, steel are transported in bulk, and the preferred mode of transport for bulk commodities is railways as roadways are not feasible. But railways have their own set of challenges for freight transport. 

Despite the Covid19 restrictions in May 2021, 5.36 million tonnes of cement was transported by Indian Railways. The freight loading was 114.8 MT which is 9.7 percent more than the freight loading of 2019. 

Though an economical mode of freight transport, rail freight rates tariff in India is four times higher than the US. The worst among these challenges is the lack of reliability and trackability. The major problem reported by cement industry players especially mini plant manufacturers is difficulty in procuring railway rakes or wagons, especially in peak/seasonal times. This makes manufacturers turn to an uneconomical mode – roadways. The fluctuation in power, fuel, and diesel highly impact the freight cost. 

The roadway freights are often considered uneconomical due to the long transit times involved in the process. Stoppage of trucks at State border checkpoints adds up to 40% delay in time. Poor road quality and network connectivity further deteriorate the challenges for cement manufacturers. Vehicle movement restrictions add to logistics assets under utilisation. Roadway freight is crowded with unorganized players controlled by transport brokers, agents, and single truck owners. The intrusion of local unions doubles the complications faced by cement manufacturers. 

Due to all these challenges, India’s logistics cost accounts for 13-14 percent of the total GDP as compared to 7-8 percent in developed countries. 

Low Investment in Technology 

Lack of technology and automation adds to the pain in the cement manufacturing sector. India is a labor surplus country and there is a popular belief in investing in labor rather than in advanced automation solutions that reduce half of the manual operations and human intervention. This is the only reason that investment in India’s logistics sector is much lower than that of developed countries. Inaccessibility to new and advanced resources that deal in data science, operations automation, technical trackability is a huge challenge for cement manufacturers. 

Lack of integrated end-to-end supply chain planning and optimisation creates major operational challenges for cement manufacturers. 

Initiatives to Improve Cement Logistics 

With the change in customer expectations and especially the pressure put by Covid19 on cement manufacturers, the sector is taking the right steps to transport at the right time. Here are some major initiatives in progress to improve the logistics in the cement industry; 

  • To integrate technology in the logistics and supply chain industry to improve the operations of manufacturers, the government is pushing new-age startups to build tech-enabled solutions to solve complex world challenges through AatmaNirbhar Bharat. The government is pushing manufacturers and logistics managers towards digitisation through E-way bills, Fast tags, E-voicing, and GPS-based tolls. Small, medium and large enterprises are moving towards tech-based software to streamline their logistics and supply chain operations. The reasonable cost of technologies such as cloud computing, IoT sensors, and GPS trackers makes it easily accessible to manufacturers of all sizes. 
  • The government is improving the logistics infrastructure to help manufacturers in the timely delivery of raw materials, semi & finished goods. The National Highways Development Projects aims to expand India’s existing express network of 2000 km and plans to add 18,637 km of greenfield expressways by 2022. 
  • Automation and digitisation solutions are also helping cement manufacturers in Green logistics and reducing the carbon footprint. For instance, GPS-enabled Toll helps in zero wastage of fuel and power. 

A Case Study to Consider

A large cement manufacturing firm was overburdened with information and data metrics coming from varied sources. There was no single platform of contact between vendors and suppliers. The database of their transporters and vendors was stored in notebooks, excel sheets, email accounts, and finding the contact details of a specific transporter was a challenge for a firm. Similarly, order management and tracking were done via ERP and it was a huge problem for a manufacturer. 

How Technology Solved the challenges 

By analyzing the challenges faced by the manufacturer, TMS was implemented that offered a control tower that served as a single point of contact for the firm. This centralized control tower helped the manufacturer to set a standard communication model for its vendors, suppliers, and internal teams. With advanced technology solutions, it was easier for the manufacturer to manage and track orders and to understand the operational drawbacks of the firm. 


With TMS, the cement manufacturer is able to produce more capacity and enjoys the benefit of generating instant reports without worrying about data privacy as cloud-based technology ensures the manufacturer about the data security and does not interfere with the firm’s internal metrics. Smart solutions help in streamlining the supply chain processes and visibly reduce distribution transport time and improve overall efficiency by 20-25%. 


Though the cement industry is full of operational and logistics challenges, new tech-based startups/solutions along with government initiatives are helping cement manufacturers to reduce logistics and freight costs and increase the gross profit margin. With the high demand for cement in different infrastructure and road projects, manufacturers are burdened with pressure but mutual efforts of cement manufacturers and logistics companies along with technology will help in contributing to societal projects. 




Author Bio: 

Gurleen Sethi: Gurleen Sethi , a logophile from the national capital of the country – Delhi. is a Content Lead at Fretron. Over 4 years of content & marketing career, she has honed the expertise in creating high-quality content with special focus on maintaining the brand’s authenticity & originality. 

“The devil is in the detail”, is the philosophy she follows and defines pretty much everything she does. She loves to innovate & experiment with her style of writing. Apart from writing, she is focused on ideating marketing strategi

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