Steep Road Ahead for Pandemic-Hit Indian Logistics Industry
As the manufacturing sector slowly resumes operation after the lockdown, the allied sectors like logistics are also trying to get back on feet. Logistics sector was severely hit by the lockdown as except essential services all other activities were put on halt.
Difficult Situation for Transportation Sector
After completion of the first lockdown some industries started resuming operations in a limited manner from 20th April onward. Logistics companies also turned their wheels to support this restart.
According to a study by financial consulting firm KPMG published on 16th April 2020, out of the 90 Lakh trucks in the country currently only 4.5 Lakh trucks were operational. Before Covid-19 pandemic on any given day 59 % of the total goods and commodities, or freight, in India was moved by road using trucks as mentioned in a September 2018 Niti Aayog report. Although Railways is trying to extend its support to some more sectors in this time of crisis, but its door to door unavailability is a major hindrance.
Several manufacturing units are resuming operations, but in a limited manner. This limited production generates even lesser demand for logistics and transportation companies due to various factors such as uncertainty of return trips, clearances and unavailability of labour at various project sites. These are discussed further.
Expressing his views exclusively with CableCommunity.com Director of VP Logistics Pvt. Ltd. Mr. Dipak Goyal said, ”Our majority clients are of manufacturing sector (non-essential goods) which led to total pause of operations during lockdown. Although now we are resuming operations but due to very low demand operations are very limited”.
Post-Lockdown Tariffs and Rates
Logistics companies that have resumed operations are struggling to book orders. This is partly because the old tariff structures are unviable due to low demand. The rates are non-uniform across the sectors as well as regions.
On the promise of anonymity one senior Industry source told us “Rates should have been low due to decrease in demand, but it is not so. For some routes fares have increased whereas it has decreased for some others in comparison to pre-lockdown rates”
“The routes which have pick up and destination both in green zones have generally decreased rates, while routes having either pickup or drop in Red Zone have seen some spike in tariff” he added. This is so because commuting to red zones is time consuming due to security checks as well as there are very low chances of booking freight for return journey from red zones.
Roadblocks in Normalcy for Road Transportation
The biggest challenge is order booking itself. Logistics Industry depends largely on manufacturing industry for orders. With manufacturing sector being under stress and slow on recovery, there is lack of enough orders.
As per a senior executive at a technology driven transport aggregator mentioned that, “the current load is only about 20% or less in comparison to normal times”.
Another problem faced by Logistics Industry is severe man-power shortage. Many drivers have gone back to their homes in remote areas of the country and now stuck in lockdown. Those available are reluctant to travel long distances during the pandemic, especially to red zones.
Answering a question by CableCommunity.com on the subject, Logistics Industry Veteran Mr. C.V. Kumar, CEO, CCI Logistics Limited said, “From a transport industry perspective driver availability is the biggest challenge. Drivers have gone home and are not ready to come back immediately due to their family pressure. Another challenge is the need for regular sanitisation of the vehicle, inside and outside, curbs on Dhabas (hence food not available enroute), repair shops (in case of mechanical failures) etc, which makes a driver think multiple times before accepting a long distance load”.
Unavailability of labour at loading and unloading sites is also hampering operations. There have been reports across the country of trucks being stuck due to unavailability of labour for unloading.
Truckers were expanding before the Corona Virus pandemic hit India. Thus many have debts on account of purchase of new vehicles. Vehicle loams, regular banking interest coupled with lack of sufficient income is something every business is facing right now, logistics industry being no exception.
Payment delays are also a big issue haunting logistics industry as old payments are being delayed or not being cleared by clients. Clients are prioritizing right now on resuming operations by procuring raw material and arranging labour.
Road ahead for Indian Logistics Industry
As for any other sector in India logistics will also have to put in lot of extra effort and atleast around 6 months time to get back to somewhat normalcy.
Agreeing to the view Mr. C.V. Kumar, CEO, CCI Logistics Ltd. said, “By then (in around 6 months) the drivers would be mentally prepared to be back on the wheels, the return load factor (no empty runs) would improve. But the new normal would be increased stress on sanitisation and personal hygiene, restrictions in socialising at Dhabas, widespread use of masks, increased awareness and usage of PPE’s etc”.
Other safety practices like use of EDockets and EBilling would also need to be adopted both by transporters as well as clients to reduce contact as much as possible.