COVID-19 has spread across the globe at a rapid pace, disrupting and debilitating the economy. India has faced several challenges due to the country-wide lockdown, with GDP plummeting to -8.9% as of November 12, 2020. There have been labor shortages, cargo capacity challenges, a manufacturing slowdown, order delays, stuck shipments, as well as demand and supply shocks.
The pause in manufacturing brought down demand for logistics services, which likely resulted in downward pressure on prices across warehousing, freight, and logistics. When countries around the world began locking down, minimal export-import movements amplified the crisis in the logistics space.
The logistics industry contributes significantly to the national economy by creating employment and generating foreign investment influx. It connects various markets, suppliers and business areas such as material handling, warehousing, packaging, supply chain management, procurement, and customs services across the country. Now that lockdowns are being lifted, the industry can help revive the post-COVID economy.
Steps taken by the logistics industry for revival of economy
Rapid technological advancements, changing consumer preferences, government reforms, and shifts in service sourcing strategies are expected to lead the transformation of the Indian logistics ecosystem. In this new normal, there have been strong market trends towards the e-commerce segment, transforming interaction between brands and consumers.
India’s economy started to bottom out with lockdown getting lifted. During the festive season, India witnessed a strong surge in online shopping while consumers wanted to stay indoors. As per the Festive Shopping Index 2020 by the Retailers Association of India (RAI) and Litmus World, 75% of consumers have considered online shopping. Flipkart’s ‘Big Billion Days’ and Amazon’s ‘Great Indian Festival’ was a big success this year amid this global pandemic as these two organizations had ensured that the consumers get access to everything they need from the comfort of their homes at affordable prices. It was possible because of their
The pandemic also brought an increase in the demand of essential items such as groceries, food, and pharmaceuticals. Many logistics companies catered to this demand while adhering to safety protocols with contactless delivery. In this situation, the logistics industry focused on increasing the efficiency of services and optimizing cost.
Another method adopted by the logistics industry was to help the MSMEs and align with the government’s self-reliant movement. For small-sellers who want to take their business online and increase their customer base, the logistics industry has become an all-inclusive solution. With automated warehousing and packaging services, the industry should ensure that there is minimal weight discrepancy and a seamless post-order experience.
A recent Mckinsey survey (October, 2020) on consumer sentiment across the globe reveals that consumers will continue to shop online even after the pandemic is contained. Those from metros and smaller towns have already started placing orders for non-essential goods and services. What’s more, the stimulus package too will play a crucial role in putting more cash in the hands of consumers for non-essential consumption.
While other sectors and industries may take more time to recover from the impact of COVID-19, the logistics sector will be one of the few that will continue to operate at an increased pace and bounce back. The discretionary spending that it may spur in due course of time will significantly contribute to the post-COVID revival of the economy and unlock India’s economic growth potential in the post-pandemic world.
A country’s economic growth depends largely on the logistics companies and their ability to transform themselves. Thus, it is important to choose the right supply chain partner who can help elevate businesses post-COVID.
At H&S, we balance sustainability and profitability by building future-ready 4.5PL solutions. We work with innovative technologies such as electronic vehicles, blockchain, AI, etc to create a digital supply chain. We also utilize techniques such as the weighted distance traveled method to optimize the use of transportation.