India sees logistics industry to bounce back first
The Coronavirus pandemic shook India at its core with a lockdown that ended the movement of more than 1.3 billion people, the largest in the world.
Covid-19 cases are rising amid more tests being done. The lockdown may have averted a tragic pandemic crisis but it has also caused massive exodus of migrant workers from India’s major cities, unprecedented job losses and never before seen hunger among the poorest of the poor.
Whatever measures governments may take to contain the virus, there is no doubt whatsoever that it is going to take months and months for the economy to get going. Almost all sectors have collapsed but there’s one sector that experts say is likely to bounce back ahead of the other industries—logistics.
The logistics sector in India is tottering and there is going to be a lot of operational re-jigs when life gets back to normalcy and no one can forecast when that is likely to happen. However, the logistics sector will bounce back earlier than most other sectors. Transportation (air, land and sea), storage, warehousing and allied sectors will swing into intensified operations once the lockdown is lifted.
There is an urgent need for the movement of goods, particularly essentials and medical supplies. The movement of people, however, is likely not to be a priority with social distancing now the new normal.
Over 29 million jobs lost
The International Air Transport Association (IATA) said its latest estimates indicate a worsening impact from the COVID-19 crisis in the Asia-Pacific region.
About India, IATA said the pandemic is expected to potentially impact 29,32,900 jobs in the country’s aviation and its dependent industries. Passenger traffic has declined 47 per cent, while cargo operations are happening for medical and other essential supplies. However, there seems to be a huge gap.
The airline industry in India used to clock over 3,000 flights per day, has seen only 490 flights operate since the lockdown came into place. The 490 flights as of May 8 is thanks to the government’s initiative called ‘Lifeline Udan’ which allows air carriers to fly to deliver medical and other essential supplies within the country and overseas too.
Lifeline Udan, an initiative of the Government of India, to make available healthcare and other essential supplies to battle Covid-19, has been doing a great job and that is likely to continue with increased intensity. Under Lifeline Udan, airlines such as Air India, Alliance Air, Indian Air Force and private carriers, have been operating flights carrying medical and other goods. As of May 8, as many as 490 flights have been deployed by the carriers (289 of these by Air India and Alliance Air).
Cargo transported on May 8 was 6.32 tons taking the total amount of cargo transported to around 848.42 tons. Aerial distance covered by Lifeline Udan flights till date is over 4,73,609 km.
Helicopter services including Pawan Hans Ltd have been operating in Jammu &Kashmir, Ladakh, Islands and North East region transporting critical medical cargo and patients. Pawan Hans till 8th May2020 have carried 2.32 tons of
cargo covering a distance of 8,001kms.
Domestic cargo operators SpiceJet, Blue Dart, Indigo and Vistara are operating cargo flights on a commercial basis. SpiceJet operated 916 cargo flights during March 24 to May 8 carrying 6,587 tons of cargo. Out of these, 337 were international cargo flights.
Blue Dart operated 311 cargo flights carrying 5,231 tons of cargo. Out of these, 16 were international cargo flights.
Indigo has operated 121 cargo flights during April 3 to May 8 carrying around 585 tons of cargo and including 46 international flights. This also includes medical supplies carried free of cost for the government. Vistara has operated 23 cargo flights since April 19, carrying around 150 tons of cargo.
Air bridge established
Under the initiative, a cargo air-bridge was established with East Asia for transportation of pharmaceuticals, medical equipment and Covid-19 relief material.
The total quantity of medical cargo brought in by Air India is 1,075 tons. Blue Dart has uplifted medical supplies of around 131 tons from Guangzhou and Shanghai and 24 tons from Hong Kong.
The Centre for Asia Pacific Aviation (CAPA) said that the combination of Covid-19 related travel restrictions and an economic downturn would result in a virtual washout for Indian aviation in the first quarter of FY21. “With FY2021 set to be an exceptionally challenging year, all segments of the aviation value chain will need to immediately start planning for much smaller scale operations, supported by serious enterprise-wide restructuring,” CAPA said in its report.
Despite these efforts, the economic fall-out of an economy hit by the virus has been inconceivable as the sector is
both organised and unorganised, leaving millions of people unemployed.
According to India Brand Equity Foundation (IBEF), the sector employs over 40 million people and contributes $200 billion plus to the national economy.
The government did not have a foolproof plan (no government would have had any plan for the virus has been unprecedented in both magnitude and its deadly spread) to keep the essential supplies going, even while containing the spread of the virus. E-commerce players such as Amazon and Flipkart had to suspend their logistics services for sellers on its platform.
Logistics depends on manufacturing
As people were not allowed to move (till guidelines started evolving on who can and who cannot), the supply chain of about 25,000 to 30,000 supermarkets were adversely affected, according to the Retailers Association of India.
When supplies started moving with hurdles (permits, non-availability of vehicles or drivers, blockades etc), there have been delays in deliveries, shipments lying in the warehouses etc. And we are talking of essential supplies and not even talking about other goods which may be in different stages of transit.
As manufacturing came to a halt, the requirement for transport has come down drastically, creating an unimaginable scenario to deal with. As manufacturing and logistics sectors go hand in glove, their coming back on track, first depends on manufacturing to commence and that is not going to happen in full flow for quite some months.
Going forward, one of the things that nations are learning is how to evolve in such a crisis and one of the answers is by using of technology.
Harpreet Singh, Partner at KPMG states that the Indian logistics sector is largely unorganised and most of the players do not have a backup, recovery plan or intermitted operation plan. India is majorly driven by a traditional approach of trucking, loading and unloading and material handling.
Lack of modernised tool and equipment to disinfecting the goods/supplies before delivery are going to be additional investments that they have to put in place and it is not going to be an easy proposition. But this will happen and become the new norm.
$234 billion losses during lockdown
A Barclays research estimates India’s loss of economic activity could be as high as $234 billion in the lockdown period, resulting in zero per cent GDP growth this fiscal.
In a media interaction, R.S. Subramanian, Senior Vice President and Managing Director, DHL Express has said
“Ensuring nationwide access to essential commodities and medical supplies can only happen with a strong logistics and supply chain backbone. It is imperative that regulators and law enforcement authorities recognize logistics industry as essential services to keep critical supply chains up and running.”
In almost all countries where there is a lockdown, in the USA, Europe, New Zealand, Australia, South Africa, Middle East and Far East, express and logistics companies like are given the status of an essential services sector, and are able to manage and sustain the supply chain of manufacturers,. healthcare and pharmaceuticals sectors. This is the need of the hour. “Deployment of additional customs personnel, faster clearances at airport courier and cargo terminals to move out the on-hold shipments will help clean up the channel for critical shipments to flow faster.”
The Indian government says it’s doing its bit, but the situation is such that no amount of effort is enough as this pandemic is not just unprecedented but also a great lesson for all sectors, to be prepared for the worst and this appears to be the worst.