Post Date : September 15, 2020
COVID-19 has proved to be not only the humanitarian crisis but also, a big dent to economic and social conditions of the country. Its impact on the business environment is worldwide and manifold. Due to the rapid spread of coronavirus, several entities are bound to limit their business operations leading to disruption in the economic activities of several industries that drive growth.
Being into manufacturing industry this is being noticed that most of the manufacturing companies are bearing the brunt of coronavirus as it has terminated its production at such short notice. The value of the inventories that are held up in the production centres or RDCs/DCs of such companies have gone down and the machinery are lying idle for a long time. Major hindrances encountered by these companies are cash flow constraints and supply chain disruption.
COVID-19 crisis escalated to unprecedented levels & during the lockdown period, supply chains have been badly affected. The impact is very much visible & trade has been severely impacted. Container movements across India irrespective of seaports or dry ports were also significantly impacted with major ports and container terminals facing challenges in evacuating import container as well as empty container pickup for stuffing, stuffed container from ICD/CFSs to port by road/train and factory stuffing loaded containers moves to ports, which in turn lead to delays and major congestion and import cargo pileup of containers at ICD/CFSs.
While economic activity is opening up after major lockdown disruptions, there has not been a major boost in demand and due to this as a shipper, we are continuously facing a severe capacity crunch. During lockdown and so on we are experiencing two to three weeks delays for first available vessels. On top of this delay, carriers are set to add to their misery with freight rises and charging a premium in comparison to earlier days. Nowadays, shipper situated at ICD locations are really struggling to get boxes due to inventory shortages. Disruptions in the continuity of container availability will definitely going to damage vital supply chains and add to the disruptions that the manufacturing sector is already experiencing a big hit. The high rates and additional lead time to ship by container are pushing some time-sensitive shippers from ocean to air.
Container shipping is considered to be one of the drivers of international trade and it is heavily reliant on the smooth operation of maritime transport. Approx. 80% of global trade is transported by sea, resulting in the world’s food, energy, raw materials, finish goods including medicine movement’s dependent upon shipping trade. In this time of pandemic across the globe have noticed somewhere that WTO has recently suggested that world trade may decline 13% in 2020 so it is very important than ever for global supply chains to operate efficiently.
If we look at the domestic trucking & road transportation industry which is unquestionably the backbone of the Indian economy having reached a value of approx. US$ 10000 Million in 2019 as per market estimates. Industry has gone down under massive financial strain. Most of the long-haul movements are depending upon close body truck so role of this box has become very crucial in domestic supplies too. India’s entire capacity is approx. 5 million trucks of varying types. The Indian trucking industry positions more than 8 million drivers and 12 million helpers. Around 30 million individuals are directly employed by the trucking industry. Lack of health security and protection for drivers is a major concern and this causes drivers to refuse trips many times.
Along with that, small transporters and fleet owners face cash flow issues as large parts of the economy were on a standstill for long time. To ensure the smooth running of the trucking wheels , the industry body AIMTC & others while declaring that truck drivers are also frontline warriors risking their lives , have been pushing for Covid health insurance for drivers and coworkers to provide them social security. The industry body has asked for a bailout package from the government for the sector, it also believes there should also be a reduction of diesel prices in light of the steep slide in crude oil prices.
In the same connection another way to look at the current scenario where the focus of policymakers right now is on controlling Covid-19 in the short term and then starting to re-open the economy in a controlled way. Once economy will start operating in full swing then some longer-term and possibly irreversible damage may become visible. The entire world is in the grip of a vicious cycle of coronavirus. Among all this chaos, Indian Economy really needs to be proactive and should build up strategies to combat the effect of coronavirus in order to sustain during this tough time. It needs to apprehend probable impending changes in the business environment and should be able to identify the opportunities in order to strive and thrive to excellence.
This article has been authored by Bhupendra Kumar, Head – Logistics, IOL Chemicals & Pharmaceuticals Ltd. All views expressed are of the author’s own.