COVID-19 has become a disruptive force in all industries.
India faces many challenges in its own country-wide lockdown: shortages of labour, challenges in cargo capacity, stagnation in production, delays in ordering and stuck shipments, and disruptions in demand and supply. India ‘s real gross domestic product (GDP) is at its poorest in 6 years due to the COVID-19 stalemate which adversely affects consumption and investments in the Indian economy.
The production halt has decreased demand for logistics services, which will likely lead to downward pressure on prices across warehousing, freight, and logistics. With countries around the world implementing lockdowns, the crisis in the logistics room has been exacerbated by limited export-import changes.
Globally, restrictions on air travel and international flights have led to a downturn in the flow of goods and India’s lockdown has taken the first and last miles of goods transport and intermodal flow to a standstill.
A decline in vessel availability and equipment deficiencies has had a significant effect on intra-Asian commercial lanes. A significant drop in freight volumes has caused major carriers to announce cancellations and delays in service, and empty sailing to and from India and the Middle East, Europe and the Mediterranean.
Aviation is one of the categories which is most affected. The Indian Government has halted all passenger flights, allowing cargo flights only to be transferred. Air carriers made the transport of vital cargo and important pharmaceutical / medical equipment a priority. Congestion at airports has resulted in staff shortages and delays in clearing freight.
The logistics sector has observed about 75 percent normalcy as the nation progresses towards ‘COVID Unlock 3.0′ and is heading towards pre-lockdown stages. There are expectations the next few months will be normal.
Also, during the lockout, compared to the airways and rivers, the roads and the railways had been less affected. Owing to the lack of truck drivers, the main impediment was service disruption — a lot of truck drivers had left for their villages during the lockout and did not return quickly. There has also been an effort by transport companies to compensate for driver’s shortfall. This made it especially difficult for full truck load products to be moved.
The logistics market in India is projected to benefit in the coming days, with prospects stemming ironically from a daunting environment brought on by the COVID-19 crisis.
One of the major developments witnessed during the pandemic-induced lockdown was the significant increase in the e-commerce sector, leading market players to reassess their logistics footprint and follow a localised solution that can provide greater versatility and proximity to major urban centres and better isolate their supply chains from such unprecedented events.
The fact that, amid COVID-19 uncertainty, the logistics industry has risen to the occasion of serving customer needs suggests that the industry is sufficiently robust enough to make a fairly quicker rebound and come out stronger. We expect to improve the logistics industry in the wake of a steady improvement in domestic demand and a recovery in the manufacturing sector following the COVID-19 crisis. Presently the government is focusing on a national logistics policy to facilitate seamless transport of goods across the country, the adoption of which is expected to surge investment in the sector. Today, the industry is at the cusp of technology-led technologies, infrastructure and qualified capital that will contribute to greater operational efficiency in the upcoming period, thereby guaranteeing better performance quality and customer service. Dr Shrinivas Rao, CEO of APAC, Vestian Global Workplace Facilities, noted.
A revival of relatively normal demand from fast-moving consumer goods (FMCG) and food sector is observed by many logistics players while other industrial sectors are expected to take longer to recover. In the FMCG and food category, we are seeing a rebound to about 75 per cent of normalcy. Industrial trends, however, remain muted with many of our customers grappling with issues of human power and demand, observed Nikhil Sunil, co-founder and director, FreightX, an on-demand logistics firm.
Furthermore, many experts feel that embracing new technology can also alter the way logistics segment operates in India. The logistics industry is one of the economy’s main pillars, and has played an important role in these COVID-19 years. We faced a turmoil in the month of April with almost everything coming to a halt like any other transport logistics business; however, we rebounded. By May 2020, we had returned to 60% of our earlier numbers, and in July we had nearly 90% of our pre-lockdown estimates.
Since the crisis we have been functional in nearly all pin codes across the world. However, if government lockdowns or quarantine areas are placed, these are tracked and we stop and revive our services in such pin codes as needed. We have now commenced operations at most sites, said Abhik Mitra, MD and CEO of the multimodal transport logistics company Spoton Logistics.
Mitra also said the logistics room offers businesses a huge opportunity to further develop and adapt effectively to the challenges. Enterprises are now better situated with technologies to improve them automate different processes, contributing to operational efficiencies. Embracing digitisation and digital technologies would allow companies to work efficiently in the new normal.
There are several companies that work to provide logistics players with technological know-how to implement emerging technologies in order to expedite their processes and also to preserve social distance in the present circumstances. From our evaluation of logistics service clients, we can clearly see that the effect of COVID-19 on the logistics sector is comparatively less affected by roads and railways compared with airways and waterways, Mitra added.
Because of heavy international transport constraints, roads and railways have emerged very necessary to maintain the maximum supply chain, particularly for critical commodities. Automation innovations have seen quicker acceptance than ever in logistics in the COVID-19 world where contactless communication is the primary concern. Interestingly, in India and South East Asia we are also seeing a huge increase in popularity for IoT smart locks for trucks and warehouses. The possibility that you can unlock the lock in real time from anywhere allows warehouse managers to prevent pilfering in transport or storage while avoiding physical keys that can be COVID-19 carriers and endanger lives while changing hands, said Gotama Gowda, Openapp’s founder and CEO.
COVID-19 will change trends
While the bulk of the trucking industry still operates offline today, within the industry there are 3 large systemic shifts:
Today, because of the instability in their already fractured market, all stakeholders are searching for a greater pool of carriers and shippers. This is encouraging people to follow digital discovery platforms and search for appropriate sources of demand and supply.
The demand-supply dynamics have reset the market benchmarks – people tend to have data-based information about the price of their freight.
Paperwork and transactions in this sector are highly dependent on manual operation-to the point of collecting payments involving hard copy papers. We are now seeing many of the shippers switching to digital payment and e-documentation practices. This has amplified even more now, due to social distancing norms relevant to avoiding interaction with people.
Besides these, we also believe that diverse efforts will be made to democratise the transportation of products in the country for farmers , small-time shopkeepers and distributors – this will allow them to get a better price for their goods.
While GDP development will drop over the next few quarters, everything will soon return to normal.