Top 5 Challenges That Affected the Logistics Sector Amid Lockdown
The Indian logistics sector was valued at $160 billion as of 2019 and is expected to reach $250 billion by the end of the year
Without a shadow of a doubt, the COVID-19 pandemic has left the world reeling under its impact with the global economy taking a plunge. Businesses are ramping up their efforts to maintain continuity and stay afloat in the highly competitive and transforming market. And, the Indian logistics sector is no different. The industry has been going all out in its efforts to cushion the fall owing to the pandemic and the subsequent lockdown.
The fast-growing logistics sector in India is expected to reach $250 billion by the end of 2020 and is bound to become one of the largest logistics markets in the world. Gone are the days when the logistics industry was considered as something operating in the background. Today, it is the differentiator. However, the sector has witnessed its fair share of challenges amid the pandemic and the lockdown, just like most other businesses. Here are the top five challenges that affected the logistics industry during the lockdown.
Decline in demand for non-essentials
The nationwide lockdown in the wake of the COVID-19 pandemic resulted in the demand for essential items such as groceries, food, and pharmaceuticals to skyrocket. Non-essential items, at the same time, have been stocked up and stored in warehouses for long periods during this time. Warehouses are now full or overflowing with the stock of non-essential items and are grappling with the issue of insufficient space.
Demand and supply are aspects that usually go hand-in-hand for any business. However, taking into account the current global scenario, the supply of several items has been in short. With the stringent lockdown regulations, manufacturing plants have been forced to temporarily halt production with strong recommendations for citizens to remain indoors. This means that there is little to no production of numerous goods. This forced closure of factories has resulted in brands racing to find new ways to procure the goods to meet the rising consumer demand.
Goods stuck in transit
There is one other reason which correlates to the shortage in supply: goods stuck in transit. With flights grounded, ships docked or anchored, and full-fledged road and railway transport halted temporarily, there is a significant lack of transportation. This makes it nearly impossible for the goods stuck in transit to reach stores or merchants and ultimately be delivered to the consumer.
Stringent regulation for passes
For the e-commerce and logistics brands that are still functioning, there is yet another challenge to face—the stringent regulations and delay in obtaining passes. The government had recently implemented a rule that requires passes to be obtained for delivery executives to commute freely within a state/city. Inevitably, with the increasing demand, increasing requests are being made for passes by delivery executives. This puts a strain on officials to sanction the passes since they are functioning with an extremely limited workforce.
The lockdown has forced a majority of the workforce to remain at home except for essential workers. Even as lockdown regulations are being lifted, the government has announced that businesses can operate only with half or less than half of their workforce. This forces them to operate with extremely limited manpower, hindering business. Particularly for logistics players, limited manpower would mean delayed deliveries owing to shortage or non-availability of delivery executives posing yet another hurdle.
Despite such challenges, technology has allowed the logistics business to come a long way even amid a global crisis. Particularly for businesses in the delivery segment, logistics will be a game-changer provided there is cost optimization through increased adoption of technology. With the government and private players coming together, the logistics industry would be able to increase operational efficiency and achieve quicker progress in the future.
Saahil Goel is the CEO and co-founder of ShipRocket (BigFoot Retail Solutions Pvt. Ltd.)