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Logistics Sector Resilience Holds Key To Revive The Economy Post Covid-19 Era

The Union Budget 2021 promises increased spending on infrastructure, focusing on new and improved economic corridors, and road and railway infrastructure.

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What began as a health scare in China turned into a pandemic that has spread across every country in the world. In the last one year, the world has seen economic slowdowns, border restrictions, and disruptions in international trade and global supply ultimately leading to negative impact on consumer spending. India too witnessed its share of the viral ambush and its repercussions on the economy.

The logistics sector has been on the frontline since the beginning of the unprecedented crisis, ensuring supply of essential goods remain intact. From the early days of the lockdown, most if not all logistics facilities have remained operational and after some initial hiccups, road transportation also continued as before. While there was a sharp fall in freight availability due to restrictions on production of non-essential goods, at the same time logistics services were crucial for the distribution of many essential items. Warehousing demand shot up for products where manufacturers were unable to take delivery of raw materials in the pipeline. Most of the logistics industry functioned with energy and readiness to the challenges of Covid, balancing the peaks and drops in demand while protecting its staff and customers.

Two main forces that has helped logistics industry to overcome the ripple effect from the lockdown is major manufacturing hubs resuming production, and the rise in domestic consumption across all categories. These forces have triggered a ripple effect along the supply chain, affecting multiple sectors, most significantly for automotive, textiles, electronics, food and pharma. Businesses have realized that while the timeframe and extent of the COVID-19 impact are uncertain, and the consequences will continue to be felt even after the spread of the virus is contained, with proper supply chain planning they can mitigate their risk to a very large extent.

The Covid-19 pandemic has made users of logistics services realize how stretched their supply chain was and how it made them vulnerable to disruptions. This has led to many companies redesigning their supply chain network, building in redundancies for critical items, at the same time opting for a leaner just-in-time solution in other cases. Now more than ever, the industry will need to focus on ensuring efficient supply chains with quick delivery of goods across end points.

To achieve this, firstly focusing on Digitization is very essential. It has gained a significant importance during the pandemic. Big data analytics can assist firms in streamlining their supplier selection process, facilitate and manage supplier relationships, and logistics and freight processes can be boosted through automation and the internet of things. The logistics service providers have to integrate their operations with their customers and provide tailormade solutions on a case to case basis.

Second important aspect is increased focus on warehousing. This needs to go beyond just infrastructure - sharper focus on quality of service, time defined and optimized services using enhanced technology will make a huge difference.

The third factor is to increase the adoption of multi-modal services. The pandemic has shown the need and opportunity to leverage both rail & road a lot more effectively and in conjunction with each other rather than viewing them as separate modes of transportation. Companies have realized the need for real-time visibility and first-last mile delivery to support large scale operations with maximum efficiency. Infrastructure development, accelerated regulatory support and a technology ecosystem will enable the same.

The Union Budget 2021 promises increased spending on infrastructure, focusing on new and improved economic corridors, and road and railway infrastructure. The Government’s push to port, road and rail infrastructure through various investments, initiatives and projects will further add to the development of the logistics industry in India. With faster construction of the Dedicated Freight Corridors and road highways, not only will the logistics sector benefit, but it will be able to add strong support to our domestic manufacturing programs.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Prem Kishan Gupta

Chairman & Managing Director, Gateway Distriparks Ltd.

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