The Irrevocable Influence Of Covid-19 On Logistics Sector

With his vast knowledge & experience in the area of supply chain, operations, and logistics management, Vijay plays a major role in expanding the company's customer base worldwide.

The recent tough times have affected several industries, in which the service industry specifically the Logistics sector has also been severly affected. This has happened mainly due to a severe drop in Air and Sea transport and equipments availability. Consequently, the freight rates have been abnormally escalated and the imports/exports from several countries have been red flagged due to various reasons ranging from the pandemic regulations as well as geopolitical reasons taken by the GOI for security measures. In spite of what preceded, the e-Commerce Trade logistics, Cold Supply Chain, and the Reverse Logistics have thrived during these times.

Presently, the estimated size of the Indian Logistics sector is placed at $215 billion and is growing at a CAGR (Compound Annual Growth Rate) of 10.4 percent. It is known that almost about 80-90 percent of the overall market is controlled by the unorganised players. Out of the aforesaid amount, the online (e-Commerce) vertical is estimated to be between $20 & $30 billion by 2025. The Indian Logistics market is expected to reach about $255 billion in 2022, growing at a CAGR of 10.4 percent. Post COVID-19, the Global Logistics Industry market is projected to grow from an estimated $ 2,734 billion in 2020 to an estimated $3,215 billion by 2021, at a Y-O-Y of 17.5 percent.

In return, the Indian Logistics sector is expected to grow at a CAGR of 10.4 percent and is estimated to be worth about $255 billion within 2020-2024. Subsequently, some players are boosting this growth by incorporating cutting-edge technologies. The working systems in this sector in 2021 will use a lot of new trends to drive this growth and all will involve the adoption of technology, whether it is tactical & operational decision making, routing, fleet optimisation, data analysis or strategic planning, and new technology incorporation will be a must.

The GOI is aiming to reduce the logistics cost from 13 percent of the country's GDP at present to eight percent in five years. For that the following steps have been taken. A National Logistics Council (NLC), Central Advisory Committee on Logistics (CACL) and an Empowered Group of Secretaries (eGoS) are planned for effective coordination, implementation, and for integrated development at the state level. The framework includes a State Logistics Coordination Committee (SLCC). It is widely believed that a National Law would provide a fast and an effective regulatory environment through a unified legal framework for the `One Nation-One Contract' act that has been framed and is under consultation with stakeholders. Towards this, a National Logistics Policy is in the work. Logistics Ease Across Different States (LEADS) survey for ranking states & UTs on their ability to facilitate logistics before the launch of the National Logistics Policy has been introduced by the GOI.

This policy has suggested setting-up a key Logistics Wing that will act as the central agency tasked to identify key projects for driving first mile & last mile connectivity, to select from the modal mix to identify commodity, and the corridor for the most efficient & cost-effective mode of transport. It is a fact that about 25-30 percent of fruits and vegetables produced in India are wasted due to lack of cold chain infrastructure. The Logistics Wing is expected to work with the various ministries of food processing sectors, consumer affairs, food & public distribution, the horticulture Dept, and the APMCs in various states to pinpoint key policy interventions and infrastructure enhancement, in order to promote and introduce cold chain facilities and usage of refrigerated vehicles in these selected locations.

This proactive step taken by the government is a very significant one, as the high logistics cost impacts the costing and the turnaround time (TAT) of the domestic goods, when comparisons are made in the international market. The policy if effectively implemented would help to provide a fillip to trade, increase our export competitiveness, and improve India's ranking in the Logistics Performance Index, which will furthermore help India in becoming a logistics hub of repute.

The Gujarat government has recently approved its first Integrated Logistics & Logistics Park Policy 2021. The policy supports the entire value chain of logistics and will also cover warehousing, cold storages, air-freight stations, and jetties & ports. This policy will be used by the state government to create a state-wide logistic master plan which will help in identifying storage locations for future projects. Various different departments of the government will be cooperating in creating this master plan. Gujarat has been ranked number one in the Logistics Ease Across Different States (LEADS) ranking of Union Commerce and Industries department during 2018 & 2019. The LEADS index is a useful indicator in assessing international trade logistics across state & union territories. On July 19, 2021, the Government of India announced the launch of a new category of awards named the National Logistics Excellence Awards. These awards will provide due recognition to the various players involved in the logistics supply chain in the country. The launch of the National Logistics Excellence Awards will focus on best practices which include process standardisation, consolidation, digital innovations, technological upgrades & changes, and sustainable practices in the logistics sector.

The future of the logistics sector will be data and technology-driven

With these awards, the GOI aims to turn the focus on logistics service providers who have attained adopted digitisation & technology, operational excellence, pursued sustainable practices, and improved customer service among many other achievements. The point is to improve India's ranking in the Global Logistics Performance Index to 25-30 over next five years and reduce the logistics cost in India by five percent of GDP over the next five years. To achieve the above targets, we need to focus on some of the following steps, primarily which will include an increased focus on automation of the various processes involved. The future of the logistics sector will be data and technology-driven. In handling the future processes, there is a need for automation aimed at improving efficiency and offering fast analysis that will reduce the handling time while enhancing employee productivity that is throughout everyday tasks being handled seamlessly across the spectrum of the supply chain value, processing, bagging, and last mile connections. Robotics, AI, and Blockchain technologies such as Drones will be important tools in the future of the logistics space in offering new-age solutions, resulting in cost reduction, paperless transactions, and faceless clearances at the customs convenience and delivery cycle. The logistics sector has always required improved synchronised transactions to enhance visibility across supply chain and well-organised & secured fleet services in addition to the following –

1. IoT (Internet of Things): To ensure smooth, efficient, and transparent operations.
2. AI (Artificial Intelligence): To be integrated as a tech-enabler in tackling demand and to proactively deal with fluctuating demands across supply chain operations.
3. Blockchain: To adopt more blockchain-based documentation to get rid of unnecessary printing, scanning, and emailing.
4. Big Data Analytics: Data which can be analyzed for insights that leads to better decisions and strategic business moves.

The government should now adapt to this rapidly changing scenario by encouraging technical adoption in the industry generally by building a well-connected ecosystem, where secure digital solutions are accepted and become a standard way of working. This will not only reduce the lead time in `end-to-end' carriage of goods but also bring down costs involved. It will also help India to synchronise with global trends in a smooth and a seamless way, especially in this post-Covid era.

To summarize, the Global Logistics sector is an important chunk of the whole pie for industry. It has proven itself, during these Covid-19 pandemic times, wherein the humanitarian work as well as commercial industry wheels were kept turning. As industry picks up globally again, the forecast for growth of this sector is very bright. The Indian Logistics sector also is poised for a phenomenal growth trajectory and the GOI is doing its best to keep pace with and to support its growth domestically.