Curtailed logistics services resume, full ops may take time
Operations of logistics companies have resumed although in a limited manner as the lockdown restrictions have been eased. Resumption of complete operations, however, is likely to take some time.
Rajesh Neelakanta, ED & CEO, BVC Logistics noted that the 35-40 per cent of the general logistics operations have commenced, with a large part of it being predominantly the export-import traffic which has resumed since the past few weeks. Non-essential goods’ warehouse operations have also commenced in most locations with curtailed staff, he said.
“The sector should start working at 80 per cent of pre-COVID volumes by June end,” said Pranshu Kacholia, Vice President, Business at Clickpost.
Kacholia was of the view that the sector will bounce back soon largely due to the e-commerce boom and demand in the sector.
He noted that limitations may be from the supply side rather than in demand.
Businesses across sectors will have to undergo several change and adoption of new technologies and logistics is no different.
Kacholia noted that real-time shipment visibility driven by IoT devices has become a necessity today, due to the large number of delivery exceptions that happen daily.
Globally, some companies are piloting crowd-sourcing models of deliveries, since there might be a shortage of full-time delivery partners due to an increase in e-commerce volumes, he added.
Neelakanta said: “I foresee an opportunity to create ‘Transportation Collectives’ – a cooperative of sorts for all small and medium transportation businesses to come together, perhaps under the banner of their local district or state level associations and pitch for business opportunities by pooling in their resources and fleet assets and meeting the user community as ‘one entity’.”
He said that such an initiative will ensure survival of this sub-set of the transportation industry.
Regarding the challenges faced by the sector players, Neelakanta was of the view that as is the case with all other industry segments, the logistics industry too faces the eventuality of job losses, primarily from the forecast of low demand for most products other than essentials.
“Also, the migration of labour, skilled to some extent and unskilled to a great extent, will have a telling impact on the productivity and efficiencies of logistics service providers, as will be the case with other industries,” he said.
Some of the fringe and small players in the logistics industry may face the unfortunate situation of business closures and there is a strong opportunity and possibility of industry consolidation expected to happen in the coming few months, in the near to mid term, Neelakanta said.
“A very vulnerable section of the logistics industry would be the small, individual transportation providers, who may find it difficult to operate in these tough times of poor liquidity and higher safety and security requirements,” he said.
The government should come out with practical solutions like tax payment deferment without penal interest and fines, interest waiver or subvention for those entities filing their tax returns promptly for the past three years, he suggested.
Tax waiver for the next six months on logistics services or at least a tax rate reduction, access to low cost funds and toll fee waivers should be brought in among other steps.
Clickpost’s Kacholia said: “The issues in logistics can be solved by enabling better communication and compliance by government officials. Monetary support would do little help in logistics like it would in other sectors.
Paperwork should be made smooth, he added.