Logistics will remain at the core of the next stage of the fight against Covid-19: experts
The national logistics sector is expected to remain at the center of the next stage of the battle against the virus in 2021, although some relaxation in freight costs and container shortages are also expected, which affected exports in the last quarter. from the previous year. during the year, experts have said.
India’s $ 215 billion logistics sector is one of the largest in the world and has been growing at a CAGR of 10.5 percent, according to a recent report. The sector was a key player in the movement of essential supplies and medicines during the full nearly two-month shutdown to curb the spread of the pandemic last year.
“For the logistics sector, the year (2020) has been very busy! Even more so during the closure, when the sector emerged as the key player in prioritizing shipments of basic and medical products. As vaccines are rolled out, hopefully in the coming months, logistics will once again be at the center of the next stage of the battle against the virus in 2021, ”said DHL Express Senior Vice President and MD RS Subramanian.
Logistics plays a critical role in enabling the Indian economy to achieve its potential in the coming months, he said, adding that the sector depends on creating the necessary business infrastructure to enable future growth. Globally, geopolitical changes and the need for resilience, caused by the pandemic, open a window of opportunity for small and large companies in India, he emphasized.
Staying competitive and becoming a global sourcing base for a variety of sectors, including automotive, fashion, life sciences, and food processing, among others, is an opportunity that should be seized, according to Subramanian.
“This will give a huge boost to the Indian economy and help it to recover quickly,” Subramanian said. He said there is a need for ongoing reforms to simplify the regulatory framework, digitize and boost transparency, adding that many government policy moves are in the pipeline, which should hopefully come into play in 2021. It should be mentioned here that in the last Budget of the Union, the government had announced that it will develop a National Logistics Policy with the aim of improving the productivity and competitiveness of manufacturers by reducing logistics costs.
The proposed policy talks about developing national and state master plans for multimodal connectivity; formulation of a global national logistics law; comprehensive standards for the sector; and the development of IT applications to provide solutions that include truck tracking and tracing. The logistics sector is highly fragmented and the government aims to reduce logistics costs from the current 14 percent of GDP (Gross Domestic Product) to less than 10 percent by 2022.
In recent events, the Ministry of Commerce is said to have sought opinions from different departments on its proposed national logistics policy. “The year 2020 has seen us in uncharted waters. The Covid-19 pandemic has led to a fundamental change in the way we work, live and participate. Despite the immense challenges presented by the pandemic and the shutdown, the logistics industry has been the underpinning of the recovery, ”said Rampraveen Swaminathan, MD and CEO of Mahindra Logistics.
For most logistics players, including Mahindra Logistics Ltd (MLL), preparing for the COVID vaccine supply chain is a key issue, he said. “At MLL, we are in the process of partnering across the ecosystem to help develop fit-for-purpose solutions across the entire value chain,” he said. Additionally, a strong chain of appropriate technology infrastructure is being mapped to support vaccine data throughout the supply chain, Swaminathamn added.
“Moving forward, we continue to see a higher level of service integration, further growth in fulfillment logistics, and greater adoption of multimodal transportation for cost optimization,” he said. According to him, the digitization of supply chain management with a focus on newer technologies such as blockchain, AI, machine learning, IoT will remain a critical factor for value creation.
“In 2021, we expect some moderation in the freight rate, which started to skyrocket towards the end of September, with a slight drop and blank sailing at the back of the Chinese golden week, but it may not drop quickly.” Soham Chokshi said. , CEO and Co-Founder of the Shipsy logistics platform. The final quarter of 2020 was unprecedented with skyrocketing freight rates and a lack of container availability affecting the largest of exporters nationwide, he said.
“Freight rates increased 3 to 8 times compared to the same period last year, with port congestion and delays putting more pressure on container availability,” he added. Chokshi said he also expects shipping lines to significantly increase capacity, with many already ordering massive vessels, which should help facilitate container availability and the overall freight rate. “In general, we see that the year 2021 will be much better than the second half of 2020,” summarized Chokshi.