Logistics industry braces for impact amidst rising cases of the new COVID-19 variant

logistics brace for impact

The initial phase of the pandemic threw the much needed spotlight on the short-comings and grave importance of the Indian logistics sector. Yet, the industry managed to get back on its feet rather swiftly in comparison to other sectors of the economy and was pivotal in delivering medical supplies, equipment, medicines, oxygen cylinders and, eventually, vaccines to every nook and corner of the nation, and beyond. Realizing the severity of the situation and the preponderance of the logistics industry, the Indian government has – in these couple of years – made a vast number of introductions as well as changes to the policy framework pertaining to the sector. These new policies and policy changes have been aimed at developing appropriate infrastructure for the sector’s development – more like creating new runways and repairing the old ones for an aircraft’s smooth take-off – and the resultant overall development of the economy.

As consumer demand caused manufacturing capacity to increase in 2021, the need for efficient and effective logistics services also saw a boom. Though the Indian consumer market has seen a significant rise in better adoption of technology and increasing use of e-commerce, these factors along with the integration of green logistics are expected to continue shaping the industry even in the current year. And there are, obviously, the take-aways from the last couple of years. The logistics sector in India reported a strong recovery in H2 FY2021, with a growth of 9% sequentially in Q4 FY2021 – a stark contrast to low revenue reportings of Q1FY2021. It is also predicted that the global supply chain disruptions will start to ease out soon. This will turn out to be even more favourable considering the huge investments being made on infrastructure in the form of Gati Shakti Yojna & its likes, the increasing emphasis of public private partnership and government’s support in facilitating the ‘ease of doing business’. The newer models of e-commerce (quick commerce, on-demand delivery) are also expected to blow in favour of the industry’s growth.

The initial phase of COVID-19 gave the Indian economy a much needed boost in terms of technology. Digitization, automation, IoT, Robotics, AI, ML etc. are no longer new concepts and the Indian logistics industry has adopted these new technologies faster than ever. With the new COVID-19 variant already here and spreading like wildfire, it is imperative that the industry shall continue following this trend of technological development in order to sustain through the upcoming phase of the pandemic. After all, the new technologies are the key for creating more efficient logistics systems, thereby, also ensuring minimum operational and overhead costs.

Newer supply chain models are being explored and developed each day in order to excel at customer service & retention and ace the fastest delivery game. The trend of next day and same day deliveries is here to stay and will rather evolve further. The most recent example being Grofers turning into Blinkit and promising under 10 minute delivery at customer’s doorstep. This sensational concept requires and will require a gigantic network of ‘dark-stores’ throughout a city and the need for express logistics service providers. Another focal point in purview of this concept is the advent of electric vehicles (EV) in the supply chain, and the note-worthy buzz around turning the entire last mile delivery network, well, electric! Many logistics service providers are also opting for turning even their first mile fleet completely electric. Not only will this be beneficial in terms of the environment, but will bring perks throughout the supply chain. Thus, it is without doubt that the Indian logistics industry will continue on this course even in the year to come.

When talking about the immediate future, the next 5 months maybe, Omicron is suspected to affect the global supply chains, however, the revival trajectory of logistics sector in India should, hopefully, remain largely unaffected. The new Omicron variant, although much more contagious, does not show much symptoms in the affected and has registered considerably lower hospitalization, especially for people who have been double vaccinated. Plus, though this is a new variant, but the global health organizations have been sharing ample information about it on a regular basis. The combination of knowledge about the current situation and experience from the initial phases of the pandemic will help the sector to stay buoyant in times of peril as it is now better prepared.

It is appropriate to end with the fact that the quality and quantity of logistics infrastructure & services need to improve, and this time, with a more permanent outlook. India’s logistics cost needs to be reduced to 9-10% from 13.5% now, if the Indian economy dreams of competing as with a favorable result in the international market and become a global logistics hub — factors that will stimulate economic growth.

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