No one has ever thought that they will have to stay indoors for days or weeks to fight against the Covid-19 virus. People are finding it hard to get a move on and the questions are being raised regarding the 21-day lockdown…how it will impact the crucial logistics sector. Across the country, trucking executives and online truck booking companies are sounding the alarm. The pandemic will affect the Indian economy severely as the lockdown is causing significant disruption across various sectors including oil, manufacturing, financial, tourism among others, says a report.
A major economic fallout of the novel Coronavirus is the resulting incompetency across the nation’s already overloaded logistics sector which employs over 40 million people as per IBEF (India Brand Equity Foundation). Covid-19 pandemic has hit the globe at a speed and scale that we have only seen so far in the movies. In reality, what we are experiencing today is more terrifying than fiction.
The human cost of the novel Covid-19 is going to be unbelievably high and it’s going to end up leaving a long tail too. World Health Organization (WHO) and the World Bank estimated the effect of such a virus at 2.2- 4.8 % of global GDP (US$3 trillion but that was quite before the world was aware of Covid-19.
Barclays predicted that India’s strict 21-day lockdown against covid-19 could bring down the country’s growth from 4.5 % to 2.5%. Prime Minister Narendra Modi clearly mentioned in his address to the nation that if this pandemic is not controlled, it could drag us back by decades.
The former chairman of the US Federal Reserve, Ben Bernanke is quite optimistic. In an interview, he said, if there is not too much loss caused to the employees, to the businesses throughout the lockdown period, however, extended that maybe, then we could see an equally quick recovery.
The 21-days lockdown of coronavirus has impacted the supply chain of agronomic commodities. It has taken a toll on the loading and unloading of agricultural produce or foodstuff. Also, the lockdown has created the issues for truck booking companies as the movement of trucks carrying essential commodities is also hindered. Many warehouses and cold storage owners complained about the lack of laborers. Police beating fear has caused the unwillingness to work among many laborers. Either they are staying home or trying to reach their hometown.
The shortage of trucks, difficulty in getting local approval and lack of manpower are among the few challenges faced by companies offering transport services across the nation. However, the Centre has advised State governments to allow the transportation of essential items during the lockdown period, the packaging materials sector that caters to such firms is dealing with these challenges on the ground. Packaged food and pharmaceutical companies are not getting timely approvals for their operations and also, shortage of trucks and the workforce has doubled their problems.
A senior executive said that despite the Centre’s guidelines, in many states, local authorities are not ready to understand that the manufacturing and transportation of packaging supplies and other raw materials are crucial to keep the supply chain of essential goods smooth.
The CEO of Cosmo Films, Pankaj Poddar said, “The administration has allowed the pharma companies and food processing companies to operate, however, they, in turn, are reliant on their raw material, packaging material suppliers and the companies offering transportation services to them”. Also, their suppliers are, in turn, dependent on their supply chain. Currently, this whole supply chain is shattered because of the shortage of laborers, trucks, packing material, etc. and the management should take quick action to deal with this situation or else people might feel serious supply shortages by the 3rd or 4th week of April.
Some online truck booking companies are asking their drivers to put in overtime because retailers are demanding more and more goods as panic buyers over shop the stock, leaving the stores’ shelves empty. With this 21-days lockdown, transport companies are going to see reduced revenues and at the same time they’re increasing their expenses by hiring more staff to complete backlog work.,” said T4A’s policy director, Scott Goldstein.
For workers or drivers, the process of issuing e-passes manually by different local-level officials has become time-consuming. Hundreds of transport workers associated with the top transport company are working hard to maintain the supply chain. The chief economist at Dun and Bradstreet India (D&B), Arun Singh said that the performance of the work and logistics industry is quite co-dependent. He added that if manufacturing activity is stopped, what will be there to transport?” The current 21-day lockdown has put restrictions on both the segments- this, certainly a bad sign for an already slowing down economy in India.
Harpreet Singh, partner at KPMG also put some light on this peculiar matter. He said that the Indian logistics industry is largely unorganized. Therefore, the sector is severely hit as most of the industry players offering transport services neither have any backup nor recovery plan. He added that the logistics sector in India is mainly driven by a standard approach of trucking, warehousing, loading & unloading and material handling. This sector not only lacks technological development but also, lack of advanced tools.
Experts from the country say the domestic manufacturing supply chain is also not untouched from the effect of covid-19. The entire manufacturing supply chain has come to a halt. The consequences of a major lockdown are manifold. From the manufacturing unit to the warehouse, or from the warehouse to the end-users or buyers, the entire supply chain is severely hit. With almost all the countries across the world looking down, there are least export-import operations and this has intensified the crisis in the logistics landscape.
Moreover, as per KR Sekar, partner at Deloitte India, the cost of logistics players’ supply chain is going high during the 21-days lockdown. He added that their global supply chain will be severely hit as sourcing of essential inputs will become more challenging now. Petrol and diesel prices are going up as per the government’s plan to support revenues in these difficult times. Thanks to the lockdown due to which footsteps across cities will reduce.
The lockdown has resulted in acute labor shortages across the country. This has added to the restricted availability of transportation services and facilities. The businesses that function on a “just in time or limited stock” basis are likely to get disturbed due to delayed deliveries. The situation has been aggravated due to the complete shutdown of other businesses and supporting services. Due to the complete lockdown of public transport facilities, labor needed for transportation and handling of essential supplies and commodities is required to commute to their office on foot. The same is very exhausting for workers and leading to reduced productivity.
Now the question is what will it take to turn the tide on this Covid-19 led gloom in the industry? Country’s top logistics players believe that this unique crisis calls for unique coordination among industry, civic authorities and the public.
Essential commodities and medical supplies across the country are majorly dependent on the strong logistics and supply chain backbone. Thereby, law enforcement authorities and regulators must recognize the logistics industry as essential services to keep running critical supply chains.
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