For logistics sector, opportunity comes knocking amidst a crisis

Supply Chain

When the lockdown was announced, nearly 70 consignment-bearing vehicles were stranded across the length and breadth of India. For days, teams worked tirelessly, coordinating with local government(s), police and port authorities, and transporters to have the materials reach their destinations, reports Sundreysh Sarup, MD, Logistics Plus India. But this scenario wasn’t unique to his company; according to Ramesh Agarwal, Chairman, Agarwal Packers and Movers Ltd (APML), 35 lakh such trucks were abandoned across India at the height of the lockdown.

But Agarwal feels that the real challenge would be post lockdown. “The trucks are lying unattended and when these drivers will go back and see the trucks, there are chances of disputes as some of them would have lost spare parts or even find their consignment missing,” he said.

Digital transformation sees accelerated adoption

India’s logistics sector is the second-highest employment provider after agriculture with nearly 15 crore people working in this segment, according to a recent report from the All India Transport Committee. According to industry estimates, the sector may be facing almost Rs. 42000 crore losses due to the nationwide lockdown resulting from COVID-19 pandemic.

All is not gloom and doom, however. Most of the logistics companies ET Insights spoke with see the lockdown in a positive light. Having overcome similar challenges in the past, some had already made the move to spread their services across different verticals. “We saw setbacks in 2008 and 2011 and hence we took adequate precautions in our business strategy by not focusing on any particular area, unlike some companies where 60-70% of the business depends on certain verticals,” said Shesh Kulkarni, MD, Noatum Logistics.

Key players in the logistics space said they have accelerated the pace of digital transformation and found clients responsive to going digital. For instance, in the pre-COVID-19 times, customers were insistent that logistics companies share physical invoices which took between four to seven days in transit, depending on the customer’s location. Now, customers are accepting e-invoices with digital signatures. Some of the other changes include order intends that are being sent via mobile applications; proof of delivery and goods receipt-based invoices are now digitally sent and accepted.

According to Sravan Kumar, Head of Operations and Expansions, Transin Logistics, the company had to earlier push vendors to adopt the technology. But the ongoing crisis has made vendors more accepting of using digital applications related to complete order lifecycle, PoD submission and PoD Settlement.

Logistics Plus already has cloud-based and blockchain-based solutions as part of its routine business. This includes managing global consignment movement for the healthcare sector and monitoring domestic trucks on an hourly basis for a leading automotive company, according to Sarup.

“This is an opportunity for our industry to embrace digitalization. Just as digitalization has been a game-changer for banks, it can do the same for the logistics industry,” opined Aaryav Gupta, Director – Global Business, Pridel.

Crisis leads to new business opportunities

Though the nationwide lockdown resulted in a slowdown for the sector, several logistics companies have been quick to innovate and create new streams of revenue. Zaiba Sarang, Co-Founder, iThinkLogistics, said the company had not focused on hyper-local and same-day delivery. However, the ongoing crisis made them explore new business strategies resulting in the company providing such services through its own delivery network in Mumbai.

Considered one of the primary players in the logistics space, APML re-looked its business strategy. “We created a concept called ‘Trucking Cubes”, which are mini containers that are highly secured with capacities of 1-ton, 2-ton, 3-ton and so on. Customers can book the container and pay per use. We will consolidate these containers from various clients, load them onto a truck and ship it to the destination,” explained Agarwal. Since the customer now pays only as per use and not for the entire truck – the practice followed earlier – Agarwal has seen a huge surge in demand, so much so “that even when the industry would be at 70% capacity, APML will be have a business of 110-115% after the lockdown,” Agarwal added.

Transin has partnered with ENAM, NIC & Agriculture ministry for transporting agriculture produce pan India. “Our systems are integrated with Krishi Rath app where the farmer or trader can input their vehicle requirement, get quotes and truck placements,” said Sravan Kumar. The company is currently working with MSTC for e-commerce and agri-transportation.

For Logistics Plus, new opportunities came via operating freighters for “our customers ex-China. We had never explored chartering freighters earlier, but COVID 19 certainly gave us this opportunity,” Sarup sums it up.

And as the country starts to ease its restrictions and businesses reopen there is bound to be a resurgence in demand for logistics-related services. And if the sector continues to innovate and accelerate its pace of digital transformation then the sky’s only the limit for opportunities awaiting logistics companies.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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