COVID-19 pandemic has left its mark in every sector and industry, and logistics was directly impacted. It directly and indirectly suffered a severe immediate impact. And with the government imposing the toughest nationwide lockdown in the world, movement and the flow of goods and services came to an abrupt standstill.
In an interaction with Ankur Bansal, Co-founder and Director of BlackSoil, we get to know the impact of COVID-19 on the industry and how it was overcome.
What was the initial impact of COVID-19 pandemic on the logistics industry?
The logistics industry is the backbone to global trade and suffered severe immediate impact from Covid-19. The movement of trucks fell by 90-95% within the first few days of lockdown in India.
The halt in manufacturing put downward pressure on transporters and fleet owners who faced cash flow issues. Supply-side challenges of distributed supply base, labour shortage, volatile oil prices, and uncertainty around regulations of movement of goods lead to freight prices disparity and creating an imbalance between demand and supply. However, there was a slow and steady recovery through the months of April and May with lockdown relaxations in the non-hotspot regions.
Did digital technology help during the lockdown period?
Technology was important in easing the impact of covid on logistics players. Pandemic significantly increased demand for last-mile logistics for delivery of both non-essential and essentials items and players industry wide recognized role of tech to fulfill last-mile deliveries safely with customer assurance. Logistics tech was already on an unprecedented growth path with multiple unicorns & our portfolio cos such as Letstransport & Holisol, and the pandemic promoted their adoption as legacy models failed to provide supply at transparent rates. Logistics tech is now being widely adopted by all key logistics players for fleet visibility, route optimization, return logistics, and improved connection with drivers.
With logistics mainly dependent on transportation, how was it able to overcome the hurdles? And now that most countries have just started to reopen their borders, what is the outlook for logistics?
All the modes of transportation were halted for first few days of lockdown, but the government soon designated ports, shipping, air transport, and trucking services as essential services, resuming the supply of transporters. Key challenges still included supply & price discovery and a robust last-mile delivery infrastructure. Tech played a key role in solving these problems and increase overall efficiency of available fleet for maximum utilization.
Even as the borders open for trade, there is an expectation of new trade relationships and change in global supply chains with logistics hubs reemerging at the regional level. The pandemic exposed shortcomings of extended supply chains in south east Asia and countries are now stress testing their supply chains and diversifying sources to mitigate future risk.
What new models has emerged in logistics? Has the industry taken advantage of the same?
Since the pandemic, third party logistics providers are increasing their efficiency with increased automation and tech to the fulfill demand and reduce costs. Logistics brands are going hyperlocal for faster delivery, automating fulfillment, and incorporating tech in warehouses to optimize space and loading. Another major trend is the contact less last mile delivery which has adopted by all major logistics players.
Physical transportation infrastructure is also witnessing massive inflow of smart sensors, IoT, and big data analytics integration post the pandemic. We are even evaluating few deals in this space using similar technology & processes.
Please elaborate digital transformation in logistics industry. Is blockchain technology relevant to the industry?
Digitization in transportation was long overdue and had been accelerated by the pandemic. Tech such as IoT sensors, fleet tracking systems, driver analytics, and big data have enhanced transportation and made logistics industry more efficient.
Blockchain has always been expected to disrupt logistics and multiple blockchain startups are emerging with large variety of applications such as KoineArth, a blockchain network enabling transparent and auditable exchange of trade documents for easier financing. Blockchain will also play a key role in distribution of Covid-19 vaccines for real time vaccine and cold storage monitoring, one such startup is Statwig. Multiple large companies such as Microsoft, Alibaba, IBM, and Amazon have also invested / expected to invest heavily in blockchain for their supply chains.