COVID-19- Its effect on Indian Shipping and Logistics



COVID- 1 lingers to devastate the economics, acutely hitting businesses and services, worldwide. The ripple effects are rocking the logistic industry, due to the absolute lockdown observed by many countries and cities too. Along with other countries business in India too has come to a virtual halt, as n supply chain.

The domestic ports and logistics companies are finding business tougher due to the Covid- 19

A business which was already confronted by collapsing revenues amongst the global economic stagnation the Covid- 19 pandemic has made the business of Indian domestic ports and logistics companies tougher. Due to the disruption from both supply and demand side the Terminals, ICDs, warehouses and CFSs are feeling the heat. The main challenge faced by different sections of the business is the labour shortage, mainly in warehousing, trucking and last-mile delivery. Many factories have shut down due to lack of manpower to de-stuff cargo and truck drivers to evacuate cargo, thus derailing the smooth functioning of the logistic industry. A decline of 32% has been witnessed by the world trade and a loss of $ 9 trillion cumulative loss has been estimated. 35% plunge in exports and 29% in imports, has been India’s market. A fall of 50 to 60 percent in the traffic was witnessed in the ports and was operating on a 30- 40 percent capacity. From March 2019 – March 2020 there has been a decline of 5.25 % in cargo volume.  From 3 days turnaround time at ports to 12.2 days are taken at the present COVID-19 condition, and there has been a drastic downfall in the containers to 12.51%.

Nearly 1.5 million truck drivers have gone back to their natives and along with restrictions in movement between inter- state and inter- district, has spiked freight rates to nearly 80% high. Neighbouring countries like Sri Lanka and Bangladesh have containers piling up.  Approximately 80,000 containers are stuck at CFS and JNPT, and around 50,000 at Chennai Port. So is the case in other private terminals.

The shipping industry has also been hit in a very bad way, since the countries have sealed their boundaries to prevent the spread of the virus. As per the Indian Logistics players, it is very challenging to conduct the business lines operational.

A dip of more than 25% has been seen in the bookings, as per Shipsy, a Gurugram- based company. They are into connecting exporters and importers with shipping companies and helps in managing the logistics through a digital platform.  The export could take a considerable hit, with most of the major cities locked down. According to Co-founder Mr Soham Choksi,” 8%  of the overall trading volume happens through our platform, we used to get around 80,000 to 90,000 container bookings every month that has fallen by a good 25%”.

Freightwalla, another professionals in the shipping field, who is into managing cargo movement for exports feels the whole industry is facing multiple challenges and the situation is changing dynamically. Industrial production has taken hit the export sector, as most of the labourers being asked to stay at home and many moving out to their hometowns. A significant fall in demand can be expected in Europe and North America as the spread of the virus is not contained fast, thus directly impacting all businesses in India in the coming weeks or months, according to Mr Sanjay Bhatia co- founder of Freightwalla.

Across the globe the shipping industry runs on container movement.

The bizarre shutdown all over the world has greatly hampered the movement. At the beginning there was no container movements out of China, due to the unavailability of people to unload at the docks, by which demand for containers from Indian exporters piled up. Indian ports are now facing lockdown when China is exhibiting signs of recovery.

After-effects

Once the business operations resumes after the epidemic there will be a significant complex issues as new orders will add to the already pending orders, thus further stressing the logistic network. The need of the hour will see crucial and mass hiring of delivery personnel. To brave the impending storm and handle the scenario skilfully a stronger network will be an absolute requisite, by calling for higher manpower.

The limited infrastructure and finite resources available at the time might not approve a surge in production which is necessary to atone for the slowdown. Ths could lead to exhaustion of resources, as companies have to deal with the hike in the cost of logistics, mainly in terms of lower- valued goods.

A disturbance across the country were visible in the supply- chain management, even before India underwent the mandatory lockdown to combat enduring effects of COVID- 19. Work from home policies had a great impact on delivery percentage, also a lot of gated societies in several cities had banned access for delivery agents.

Roadmap to recovery

The outbreak and the untoward turn of events would be a wakeup call to many companies to strategies their future policies and actions to survive an unforeseen events hereafter. It would be advisable for all businesses to devise short- term plans that would take off some burden from their enterprises, basically the production and logistics kick- starts.

 

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