Is the Logistics Sector ready for a Second Wave?

covid second wave

The increasing number of COVID cases indicating a second wave of the pandemic is raising concerns regarding yet another disruption in businesses. The logistics industry, which during the first wave of the pandemic witnessed the failure of predictions, resulting in the breaking down of supply chains, has made several efforts over the year to move towards recovery. However, with the second wave of the pandemic and the anticipated lockdowns, the industry is now worrisome if the same could be maintained. This feature brings to the fore industry opinions on the impact that the second wave of COVID-19 pandemic might have, how it can be saved from further disruptions, the segments which are the more vulnerable and much more.

The coronavirus pandemic came knocking on the door early last year, taking a toll on businesses as well as the country’s economy. The logistics sector, which is one of the busiest sectors of India and has a worth of USD 215 billion, also suffered the brunt of the unprecedented circumstances.

However, as time passed, people and businesses across the nation began adjusting to the new normal in the presence of the virus, taking the Indian economy towards recovery, with the logistics industry being a driving force.

Nomura India Business Resistance Index released in February 2021 suggests that the economy is not far away from the pre-covid level. The report suggests that economic activity is currently only ~2 percent below the pandemic level.

While the indicators such as rise in e-way bill collections, increased rail freight activity, positively changed port volumes, etc suggested a strong comeback for the Logistics Industry and the Indian economy, the rising second wave of the pandemic yet again brought in uncertainties.

The rollout of the vaccine and the rise in confidence of people eliminated the fear of the virus, making them irresponsible in regards to taking the necessary precautions. This led to a spike in the spread of the virus with
India registering the most number of COVID cases yet again. Now as we expect several states to go under lockdown once again, concerns regarding the impact of the second wave on the logistics industry have also risen.

While an impact of the second wave of the pandemic is expected to reflect in the business activities, the industry believes that it is strong enough to take the heat without letting the supply chain break yet again.

The logistics industry has stabilised their operations during COVID in a manner where it can withstand the pressure of rebound.”

~ Tushar Jani, Group Chairman, Cargo Service Center

Supporting Mr Jani’s argument, Om Vijayvargiya, Head – SCM & Logistics, Schaeffler India highlights how the industry has made efforts to mitigate the risk posed by the virus. He said, “Industries have changed the approach to managing the risk after the first wave of the pandemic in 2020. Actions taken during that period are still in place and those are not likely to change in the immediate future. They have become the new normal of risk management and part of the regular processes. These are not only adding agility in logistics function but also strengthen the processes to handle such situations.”

The sector throughout the first wave of the pandemic continued its operations and demonstrated the commitment towards the industry and the society at large while making every necessary change.

Ishaan Singh Bedi, CEO, Synchronized Supply Chain feels the year 2021 is another year filled with challenges for the logistics industry.

He said, “The year 2020 was a year of unchartered waters where logistics played its role in the Indian economy. The year 2021 seems to be another year of harsh challenges ahead with the second stage of the virus gradually spreading in India.”

Businesses, no doubt, will be impacted by lockdowns, and logistics is no different. As an industry, the effects of a lockdown will show up in logistics as well.

The rise of the second stage COVID-19 means, drop in manpower for various processes, this will be eliminated to a large extent through the work options being provided to employees, he added.

Wherever necessary, investments have been met to tide over the crisis. There are enough technological interventions that have been made in the first phase. Also, precautions have been taken to tide over the crisis.”

~ Sandeep Chatterjee, Associate Director, Deloitte

These efforts made by the industry have helped companies make exceptional revenue which has indicated growth in the sector. The Trackr app team reveals that despite the challenging economic environment, four leading logistics companies – UPS, DHL, USPS, and FedEx – reported over $300 billion in revenue for the financial year 2020.

At the onset of a second wave of the pandemic, the industry has now geared up to take all necessary precautions. Debashish Debsikdar, AVP and Business Head – Transportation and Logistics, NEC Corporation says, “The industry will continue to take all the necessary precautions advised by the government and medical authorities, and will try the best to keep workers safe to serve the logistics industry, businesses, and society at large.”

Sectors likely to be the most affected

The COVID-19 pandemic has had a different impact on different sectors. While there are a few sectors such as e-commerce that have emerged stronger and better, a few sectors have been affected drastically.

The second wave of the pandemic and the anticipated lockdown in some of the major cities of the nation are expected to give a crippling blow to the sectors that have faced major burns and were fighting tooth and nail to move towards the new normal.

Mr Bedi believes that while there will be some impact of the second wave of the virus, it will not be as harsh as is being predicted. However, he agrees that certain industries will take a huge blow to their normal way of work.

Efficient inventory management is required, while lean manufacturing stays as best practice. Further, focus on strengthening communication with existing suppliers and developing relations with alternate service providers is also imperative.”

~ Mayur Toshniwal, MD, Future Supply Chain

This is an abridged version of the original article published in the April issue of the Logistics Insider magazine. To read the complete article, click here.

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