Impact of Covid-19 on Indian Logistics Sector

The Re-Beginnan | Volume 2 | Issue 4

Businesses have gone through a lot of turmoil since the beginning of Covid-19 outbreak. First, the suspension of manufacturing units in China impacted international trade creating a domino effect on the global supply chain. Then, the nationwide lockdown and stringent impositions jammed the logistics industry in India. Labour shortages also added to limited availability of transportation facilities.

Logistical Activities
Logistical Activities

Though largely unorganised, the logistics sector is the lifeline of Indian economy.

Stock-outs during rising demand

As per the Shiprocket survey, medicines and food items emerged as the top essential commodities comprising a share of 80% and 16%, respectively, during this period. Comparatively, personal care, supplements, and pet care products held relatively low demand. Meanwhile, the in-transit shipments containing non-essential goods remained stuck in warehouse hubs. In other words, they were absent from the supply-chain landscape.

Shops shut — both physical and web-based

Citing operational constraints, even the renowned e-commerce platforms along with smaller players initially could not cater to the sellers on their platform.

Getting the wheels back on track

The estimated loss as per ICC (Indian Chamber of Commerce) in the logistics sector is as high as 50,000 crores. Inland logistics player’s volume is expected to fall by 10–15% in 2020–21. Viewing the constantly deteriorating state of the economy, reopening the businesses became imperative for the government. But, not without ensuring the precautionary health measures.

  1. Tax concessions — Reduction in interest on delayed payment;
  2. Reduction in EPF Contribution for businesses (i.e. from 12% to 10%);
  3. Reduction in TDS / TCS rate by 25%.

‘The Post-Covid19 World’

Tech-based services have enabled delivery sellers and courier companies to resume business. Automation will be a key facilitator as cashflow takes top priority for logistics companies as manpower optimization will be very important. New-age applications have made ‘contactless solutions’ a reality while minimizing the risk of contracting the contagion for both the delivery agents and the customers. It has served as an antidote to instil confidence among industry-stakeholders and has majorly contributed towards reviving the supply-chain. Tech-based delivery aggregators have created a safe and sanitized environment for logistics to operate. Introduction of technologies like RPA (Robotic Process Automation) and Blockchain shall be critical for transitioning into an Atmanirbhar (Self-reliant) supply chain.

The Silver Lining!

Recovery of the logistics sector might take some time, but shall come back stronger due to the rapid induction of technology in response to the crisis and the vision of the government to streamline and enhance the intricate logistics sector in India. Players in this sector will have to be dynamic in embracing technological advancements and changes. There is a silver lining to this whole Covid19 scenario which can be constructively used to completely modernise and change the landscape of logistics in India. If things are pushed in the right direction, India can be one of the leading countries in the global supply chain of the future.

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