POST COVID-19 – LOGISTICS INDUSTRY

The logistics industry is a sheer interplay of demand and supply. With the increase in trade the global logistics market size reached a value of US$ 4,963 Billion in 2019. If we see the Indian scenario, the logistics sector is currently growing at a rate of 10.5% CAGR since 2017 and estimated to be of $215 Bn by the end of 2020. The sector in India employs more than 22 million people and has been ranked 44^th in the World Bank’s logistics performance index in 2018 which was 54^th in 2014 but due to unprecedented COVID-19 the overall capacity of logistic efficiency has gone down by almost 70 percent at present which has led to freight rates shooting almost 6-8 times from the usual. Predictions say that logistics industry seems to witness drastic transformations both economically and operationally. The sudden change in key factors like: change in consumer behavior, discontinuity in supply chain operations, lack of manpower, new technological deployments, increase in competitiveness and new government interventions have made the industry to take measures that will rebuild and redefine it.

No business has been immune to the crisis – with profound impacts on the Freight and Logistics industry. Right now, no doubt both profitability and operation models are under constraints. If we look at the logistics industry by bifurcating it in two jargon that it caters, B2B and B2C, both has its own plight. While catering B2B segment they are struggling with- ‘just – in – time’ approach of the operating cycle and also with the demand for customized products from the consumer end. From the B2C segment point of view if we see than many leading players who adopted the concept of “Total Retail” allowing customers to have personalized marketing experience but excerpting the shippers, who are not the part of this retail experience thus letting them to not get the fair share.

Now the challenge for the industry is to find new ways to match demand with constrained supply. Another one is the lack of digital culture and training, the biggest challenge facing transportation and logistics company. There is no other industry where so many industry experts ascribe a high importance to data and analytics in the next five years than transportation and logistics – 90% in T&L compared to an average of 83%.8. If we manage to thrive over these challenges then as per the reports post COVID-19, the global logistics market size is projected to grow from USD 2,734 billion in 2020 to USD 3,215 billion by 2021, at a Y-O-Y of 17.6%.

There are two ways in which industry can cope up with this, one is to have a good database, to match peaks and troughs like the way the airlines use flexible pricing to influence consumer behavior to fill empty seats and second is to invent new ways to handle the passengers and goods efficiently within constraint supply. But these two ways are quite vast in itself.

To get good data the industry should look forward to opting for Enterprise resource planning to make the sector more organized. Moreover, consolidation of the various operational aspects linked to the industry can ease the situation i.e. transforming traditional linear pathways to emerging aggregated ecosystem which has already been done by various key industrial player.

Blackbuck with a tagline – “Organizing, Digitizing and Simplifying Trucking” has brought a new pathway for the industry by bringing trucker and shipper in an aggregated ecosystem.  The data sourced from Paper.vc showed that the start up’s valuation has hit $862 million (Rs 6,039 crore) mark. Data Science is the core of their business. Rivigo also in this challenging situation is doing its best by the technological, data culture, and operational excellence. Not only these there are many other industrial players who are exploiting and exploring the technology to strengthen the movement pipeline of India.

Thus, to flourish exponentially and to bring sustainability to the sector the industry has to become more organized and technologically sound.