Paul Rajaratnam, Co-founder & Director, SurgePort Logistics shares his opinion on the impact of Covid-19 on the logistics industry and what are the possibilities for coming out of this.
As a highly fragmented and mostly unorganized industry, India’s logistics industry is in disarray because of the nationwide lockdown situation due Covid-19 pandemic. A significant economic fallout of the virus is the resulting inefficiencies across the country’s already overburdened logistics landscape, which, according to market sources employs more than 40 million people and contributes USD200 billion plus to the economy.
The vast segment, considered to be the lifeline of the country, holds critical importance as it connects various markets, suppliers and customers dotted across the country. Although ports and airports are functioning for the movement of cargo and essential commodities, there are serious challenges posed due to the restrictions on interstate trucking and haulage. Manufacturing has been largely halted and the absence of daily wage labour has added to the disruptions in cargo handling. Due to the fact that this is a largely unorganized sector, there are no structured or modernized plans for disinfecting goods and supply. India still follows a traditional approach to trucking, loading, unloading and material handling which needs huge human involvement. However, in India’s long list of overcoming peculiar issues in the logistics industry and the capability of the Indian logistics industry to quickly adapt to changes in the operating environment, most logistics players have found ways and means to deal with the extreme challenges faced by the industry due to the Covid-19 pandemic.
Inventory management by suppliers, advance planning by logistics professionals, faster clearances at airport and ports and the recognition by the authorities for logistics as an essential service to keep critical supply chains up and running have all helped the Indian logistics industry function under these extreme circumstances. It will take several weeks or months after the lockdown for the industry to stabilize and for manufacturing to return to normalcy. With the exit China mantra mulled over by overseas companies especially from USA and Japan, India may benefit by being an alternate manufacturing hub for the world. This in turn will have a big impact on the supply chain from India and the Indian logistics industry will have to ramp up to the dynamic changes that will be required to deal with the demand shock. Careful and meticulous planning of air and ocean capacity will be a big contributor. Airports and Ports will need to improve infrastructure planning to reduce turnaround times and supply chain disruptions. Rail freight and road freight operations will have to be structured better to enhance cargo movement.