Why Does the Logistics Industry Pay Less Than Banking and Insurance? Seeking Insights

Hi,

I am a student doing my MBA. At present, I am conducting a compensation survey across three industries: logistics, insurance, and banking. Based on the survey results, I realized that the logistics industry pays significantly less compared to the other two industries.

Can anyone explain the reason for this difference? Why does the logistics industry have lower pay rates?

Regards,
Joan

Logistics do pay on par with banking and insurance. I think you are mixing up logistics with the transportation sector/companies. As a logistics solution provider provides end-to-end solutions including documentation, warehousing, transportation, invoicing, etc., it becomes a supply chain management company in itself.

If you go through the entire history of all three sectors, you would come to know that while banking and insurance were basically managed by the government/PSUs, the transportation sector was managed by the private sector.

Furthermore, with the banking and insurance sector, you need to have that extra knowledge, so mostly graduates/postgraduates [and now for insurance, you require special qualifications]. Qualified people with the required qualifications are in shortage. So the law of economics plays a role here in terms of demand, supply, and price.

As for the logistics sector, it grew virtually from one single company, Transport Corporation of India Limited, which is a closely held company of the Agrawal Family [now the company has been divided into GATI Ltd., TCI Ltd, Bhoruka, and other such firms]. They initially appointed people basically from their village, who were hardly 4th or 5th class pass. These people were able to join for a much lower salary than others [though the intention was to help their fellow villagers]. Some of the 4th or 5th class people performed well and were promoted to higher levels. Later, TCI started recruiting graduates and postgraduates. These employees needed to be paid higher, but at the same time, TCI had fixed pay grades, so the salary was not increased.

Almost all major Indian transportation companies have grown out of TCI, [either relatives of Mr. Agrawal or ex-employees of TCI], and they followed a similar pay structure.

Since the late 1990s, the salaries in these sectors have substantially increased with new players [such as Safe Express, TNT Worldwide] coming in to attract the available talent.

If you are really interested in further information, please inform me. I have worked for logistics people for nearly 5 years.

That's good input, Ajmal. Even I think TVS Logistics is one of the booming companies in this field, paying a good salary. The company is also going through a great expansion. I have also heard of a company called Bux Global India, which pays at a good level. If you opt for general personal insurance, the rates they offer may be less.

We had conducted a COMPENSATION SURVEY. We just realized that the logistics industry cannot be compared to the insurance industry. Of course, the logistics industry has begun paying much better salaries, but when compared to the insurance industry, the variations are vast.

Joan

Hi Ajmal,

Yes, I am currently in my second year of MBA. My focus was on the first point, not on the second and third points. In my previous post, I did not imply that he was incorrect in any of my sentences. Regarding the third point, I asked Joan a question, and you provided an answer. If I may add, it seems like you are also aiming to enhance your grade through your posts. Having experience does not necessarily make one better at judging others easily. It's possible that I am a bit slow and have forgotten some aspects from my first year, hence why I am asking. You seem to have a good memory to recall it.

I inquired to learn more about his approach to the survey. Hopefully, this provides a clearer picture of whether he used a calculator, other ratio methods, or took samples. I believe I have expressed my intentions to you clearly.

Okay, see you. Have a nice time.