Transporter industry suffers Rs 1000 crore per day losses due to Pandemic lockdowns

Covid19 impact has now reached new heights in transmitting the virus to a number of people. The loss created due to this pandemic situation is not just restricted to people, it is badly affecting the transport industry. Due to the rise in Covid19 positive cases, the government has imposed fresh lockdown restrictions in many states.

As lockdown is the demand of the hour to control the spread of the infection, it affects the daily earnings of over 60% of the population. In India, not everyone is privileged with work from home option. Many have to step out of their home to earn money.

Impact of Lockdown on Transport Industry

Due to the recent events of imposing lockdown and restrictions, Transporters are facing heavy financial losses. Transporters’ body AIMTC (All India Motor Transport Congress) said that the transport companies are suffering heavy losses (around Rs 1,000 Crore/day) due to the latest weekly lockdown restrictions. In some of the states, these losses can increase further. To control the situation or to save the transporters from these crises, the government should take the necessary steps to mitigate the situation.

In an industry like transportation, there is not just a single section that involves in the operations but many. Since transporters will be having lesser deliveries, business is expected to go down by 25%. Lockdown is affecting a whole chain that involves the shippers, retailers waiting for goods to be delivered, customers waiting to take delivery of the goods, and many more such important relatable tasks.

The COVID-19 lockdown restrictions are destroying the poor transporters as they are already in the economic crises. Pune Transport companies and even transport companies in all cities and states need money as they have to pay insurance, taxes, salaries for drivers and other staff, and administrative costs and EMIs.

When the restrictions were forced in Maharashtra on April 12, the research unit of AIMTC (the All India Motor Transport Congress) had calculated a daily loss of about Rs 315 crore/day.

According to a recent estimation, the daily losses to the transport sector can increase further due to the duration of the pandemic-induced lockdowns and restriction Due to the rising number of COVID-19 cases, the lockdown and night curfew first imposed by Maharashtra, but later many states followed it. It has disrupted the businesses dependent on transportation of goods.

Transporters got some relief with the proactive steps taken by the Indian administration to sanction delays in EMI payments, insurance, and taxes. The government has also waived or extended e-way bill validity to upcoming financial crises in the transport industry.

According to the current pandemic situation, the crises are sure to increase, and then, all these steps will not be sufficient. The industry will keep falling till the government takes more proactive measures. The lockdown restrictions imposed by states like Delhi, Punjab, UP, MP, Rajasthan, and Karnataka on the movement of vehicles transporting non-essential items have led to the decreased demand for vehicles up to 50 percent and increase the idle capacity.

The duration of lockdowns due to pandemics will further hit the sector badly. Therefore, quick, careful, and proactive measures should be taken by the government to avoid another crisis before it gets too late. No matter how difficult the situation is, transport companies are trying their best to keep the supply chain moving. Companies offering transport services in Vadodara have an immediate concern to maintain supply chain especially food and medical items. The transport industry is doing its best to handle this difficult situation, with frequently changing rules and restrictions and often in a disorganized way.

As per AIMTC’s research unit prediction, the financial situation of various sectors including the transportation sector, where payments are not forthcoming can be worsened. The truck fleet utilization had increased to 85% in March, which was more than the pre-Covid levels, but has now again dropped to 70%, as per truckers.

This is going to add to bad loans and default of legal compliance such as insurance, taxes, fees and other statutory compliances like GSTR returns, TCS, and TDS, among others. They further added that people with no resources at the back-end facing more trouble because all payments are stuck and this situation could be worsening in the coming future.

Almost all people associated with the Hyderabad transport industry are under greater pressure and facing major challenges, resulting in mental anxiety and financial distress. However, certain measures are essential for the betterment of the public, it will definitely affect worse to a certain sector.

Recently, the government has also forced a rule on ports to waive off all the charges on cargo-carrying oxygen products for the next 3 months. Vessels carrying any consignment related to medical graded oxygen, portable oxygen generators and oxygen bottles; steel pipes (those manufacture oxygen cylinders), and oxygen concentrators will get waver on some charges. The administration has asked the chairman to pay special attention to supervise all the logistics and operations to guarantee proper functionality.

Major challenges faced by transporters

Major FMCG (Fast Moving Consumer Goods) companies in Pune Transport struggle to transport their goods due to lack of trucks. Though the government has allowed the movement and delivery of goods, accessibility remains a challenge as the logistics are not moving at a quick pace because of many restrictions in place.

There is a shortage of drivers. Companies offering transport services in Vadodara didn’t have sufficient labor to load and unload material. Pandemic lockdowns are paralyzing goods movement, resulting in major economic losses as many transport operators are not able to balance their finances due to poor cash flow, increasing debts, and loan payment obligations. However, the Prime Minister assured that transport won’t be stopped anywhere, but state governments are not allowing the movement of trucks within the state highways.

What is Foreseen?

With this pandemic situation, the transport industry is facing a crisis. To face this situation wisely, there has to be exceptional coordination among civic authorities, industry, and the public. Government authorities must recognize the transport industry as an essential service to run critical supply chains smoothly.

It is the time when all enterprises should assess their supply chain threats and proactively develop mitigation plans such as using alternate modes of transportation or a combination of it – small trucks, lorries, etc. for last-mile goods delivery. Hyderabad transport and logistics companies should build capabilities to go with the changing demand at a short interval of time.

Though the times are tough for businesses and especially for the transport industry, it is a temporary phase. Once businesses resume their operations, mass hiring for delivery, loading, and unloading will become a need of the hour. Even after the pandemic pending orders along with the fresh ones will further pressurize the logistic network. Thus, a logistics network must be planned to handle the sudden increase in consumer demand. Very soon manufacturing units spurt back into action, so a stronger network will be important to deal with the scenario proficiently.

Undoubtedly, the pandemic outbreak and the adverse turn of events will serve as a wake-up call for businesses across various industries to implement business continuity plans to better perform and survive in such unplanned and uncertain situations in the future.