India’s logistics sector faces festive e-commerce surge

Logistics companies in India are preparing for a significant increase in demand as festive e-commerce sales are expected to reach ₹1.50–1.55 trillion in 2026, a 25–29% rise from 2025. This surge will test the capacity of logistics providers as they manage higher order volumes and faster delivery expectations.

According to Datum Intelligence, festive e-commerce order volumes are projected to increase from 760 million in 2025 to 966 million in 2026, a 27.1% rise. Average order values are expected to decline slightly, resulting in more shipments to handle despite smaller average purchases.

The expansion of e-commerce into Tier-2 and Tier-3 towns is creating new challenges for logistics companies. While this growth offers opportunities, it also exposes operational weaknesses that are less apparent during slower periods. Companies must adapt to manage increased delivery destinations and local access issues.

Last-mile delivery is becoming more complex as demand spreads to smaller cities. Companies are using innovative methods, such as waterways in Kerala and mapping technology for address accuracy, to improve delivery efficiency. Logistics providers must also expand their reach beyond metropolitan areas to meet growing demand.

Bulkier parcels are adding pressure on warehouse and transport capacity. According to ET Supply Chain, DTDC expects festive shipment weight to grow faster than volume, with certain product categories like footwear and home goods creating storage challenges. This requires companies to plan for additional space and handling capacity.

To manage the seasonal spike, logistics companies are expanding temporary hiring, adding storage space, and reworking operations. However, rising wages and incentives are increasing costs, with DTDC reporting an 18–20% year-on-year rise in metro areas and 10–12% in non-metro regions. Automation and productivity improvements are helping to offset these costs.