24 April
One of the most affected industries at this time has been the Logistics and Transportation Industry. With so much happening all across, there will be visible changes post this lockdown all across.Indian logistics is largely an unorganized sector. This unorganized sector got severely hit as they didn’t have any backup plans, intermittent operations plan specifically the transportation segment. The scale of Covid- 19 has ballooned multifold in the past few weeks. Few industries like the micro, small and medium enterprises were already facing economic difficulties and Covid-19 has only added to the problem which will have a direct effect on logistics. Few of the ones, which i think will be there as under will be the Post Lockdown effect.
Exit China
More than 1000 foreign firms mull production in India. India is being looked at as an alternate manufacturing hub. Proposals have already started coming in at various levels in the central government departments, Indian Missions abroad, State Industry departments. This is a great signal as this will not only help India to generate foreign exchange but also help for economic growth and employment in India.
Crash of WTI Crude/Oil Prices
Oil prices have always been a worry for most of the Airlines and other Industries as this was always a substantial cost to their operations and its volatility and prices going up was always affecting the ops and the bottom line. With a situation where things have come to a point that oil producers may find it cheaper to pay consumers to take delivery rather than pay high rates for storage. With Oil prices no more being a concern, we may have industries able to cut down cost, prices and have more profitability. This will be a sure shot boost to the logistics sector of the country.
Recovery of Air Cargo Market
Recovery and normalisation of the movement of the freight through air will not be ‘ V ‘ shaped and rather be ‘U’ shape. This will take more time as the domestic sectors are affected to the core. It’s going to take time for many industries to restart their manufacturing and services. The pandemic has broken down every industry and there is a huge loss of sales all across. With uncertainty to live for a few more months all across the globe, the trade will take a slower pace of growth.
Huge backlog of Cargo at the Airports
There has been a huge backlog at the airports post lockdown. This has resulted in levy of huge demurrage charges and blockages.The Airport authorities are coming up with innovative,proactive solutions and also looking at waiver of part of the demurrage charges, so that the cargo moves and there is space to store the imports and free movement of freight.
Hyperlocal & E-Commerce growth
Many of the retail, FMCG and other industries have realised that eCommerce is the future for any goods and they will have to build up on the same. More and more companies have already started tying up with companies like Delhivery, Shadowfax,Swiggy, Zomato, Justmyroots & Uber etc. New dimension emerging channels will become mainstream post pandemic.eCommerce as well as home delivery , both by normal retail and by e-tail companies would see a spike.
Change in Consumer Behaviour:
The fear of transmitting and contracting Covid-19 will also see a change in consumer preferences.There will be a sea change in consumer behaviour as the corona virus effect will continue for sometime. This will result in more focus of consumers on health,wellness, safety products,. Online shopping, Piling up inventory in their homes, restricted living etc. This will obviously result in logistics strategic changes in various industries. Post Covid, many more companies would need to re-look at their product strategies.
Challenges will continue to be faced by the Supply Chain Industry
The supply chain fraternity will be busy reworking on new strategies because of unseen supply chain and mobility issues, Sourcing issues of raw materials, Customer engagement bottlenecks, Cash flows ,Labor issues, Shift in consumer behaviour on buying especially for luxury products, fashion, alcohol etc. They will work on reviewing distribution strategies, new initiatives, find new ways of cutting costs, and defer any further manpower requirements. Logistics related to Pharma, medical & health equipment, digital companies may see a jump in their business. The is a pent-up demand for essentials and the logistics would improve. Transportation , Storage, warehousing would come back once the lockdown is lifted. Logistics in relation to Travel, Tourism and Hotel would get affected overall as this would depend more on people behavior and they would not like to risk. The unorganized sector in logistics will be forced to work on technological developments, modernized tools, disinfecting the goods & supplies post lockdown to sustain and survive in the logistics business. Companies would have to seek new methodologies to dispose of inventories. People deployment on the shop floor of the manufacturing units will be significantly cut. Adoption of automation will be needed. This will be true from Auto,Heavy Engineering,Consumer durables,FMCG have already started strategizing on securing raw materials, social distancing , managing costs, up-skilling their workforce,ands most importantly getting back workers who have migrated back to their villages.Thd whole planning process is going to change to daily , weekly rather than monthly and quarterly plannings.
This time will pass soon. However as per the past studies of SARS, MERS , the normalcy will certainly come but will take a little time in these uncertain times. The supply Chain will see a shift of focus and. planning for better strategies on cutting cost, low inventory & manpower cost, and get more inclined towards online shifts. Social distancing, sanitizing goods and cargo, hygienic conditions in the warehouse, operations area, trucks and aircrafts will become a norm. Let’s pray normalcy comes soon and things are stabilised. CII has already begun. dialogues with unions of units super the industry body which essentially will mean setting up accommodation, access to food and medical facilities for migrant workers,The way I see we will start to see the uptrends in the early last quarter onwards in this calendar year of 2020.
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