Logistics Industry News: Despite Omicron Threat, Logistics Industry Ready To Shoot, As Economy Moves Forward

Logistics is seen as a barometer capable of understanding the health of an economy. Its central role – and its weak points – has been highlighted during the two years of the pandemic, especially when it took action to deliver oxygen cylinders and vaccines to all corners of the country. The outlook for the industry is promising in 2022, according to stakeholders. The government is now focused on building infrastructure and as the economy opens up logistics will find this a good avenue to take off.

The sector had a turbulent 2021 year. Manufacturing activity opened up, leading to increased demand for logistics services, especially after June. Globally, supply chain disruptions have taken hold of the logistics industry, and this situation may not be resolved quickly. Despite this, India’s logistics industry saw a strong recovery in the second half of fiscal 2021, growing 9% sequentially in the fourth quarter of fiscal 2021. This contrasts sharply with the sharp decline in revenues. and earnings reported in the first quarter of fiscal 2021, rating agency ICRA said.

2022 will be a promising year for logistics, says Suresh Kumar, CEO,

Ltd. “The lessons learned from the lockdown year 2020, the focus on building resilience, the rise of e-commerce, the acceleration of digital, the adoption of new technologies and green logistics will propel the sector in 2022 and beyond. Supply chain disruptions caused by imbalances on many fronts will gradually ease. With the government’s continued emphasis on the ease of doing business and initiatives like Gati Shakti, massive investments in infrastructure, the emphasis on public-private partnerships, the sector is poised for rapid growth, ”he said. he declared.

He is not the only one to express such opinions.

Ashvini Jakhar, founder and CEO of supply chain platform Prozo, said the industry will continue to benefit from favorable winds. He even sees a prolonged growth cycle – at a 9-10% CAGR. “This growth is primarily fueled by growing demand associated with the adoption of e-commerce by more consumers. Over 130 million shoppers spent $ 46 billion in 2021. By 2025, the number of online shoppers is expected to reach 300 million and e-commerce GMV to $ 110 billion. New e-commerce models such as q-commerce (delivery on demand) will further contribute to the growth in demand for logistics services, ”says Jakhar.

Despite improvements in the sector, the logistics cost for the country remains very high compared to developed and emerging countries.

A visible effect of the Covid phase (which is still ongoing) has been the accelerated use of digital technologies in logistics and supply chain systems. Omicron has further reinforced the need for rapid adoption of digital technologies among logistics companies. Industry stakeholders say this trend will accelerate in 2022.

Interesting new supply chain models are being developed across industries as the focus is on improving the customer experience and delivering goods faster, said Pushkar Singh, CEO and co-founder of the platform. -LetsTransport last mile technological and logistics form. “We continue to be very optimistic about the adoption of electric vehicles (EVs) in logistics and are actively activating the entire EV ecosystem in the commercial vehicle space. We believe this will be a game-changer and bring significant benefits to everyone in the value chain. ”

Technology-based logistics are sure to be the new normal in a post-Covid business environment. This rapid adoption of technology has allowed the manufacturing and retail industries to revisit well-established inventory management practices. A streamlined and more efficient logistics system means more companies can adopt just-in-time systems, reducing costs and storage space for manufacturers.

Same-day delivery and instant delivery models will continue to evolve over the year, resulting in more dark stores and a need for express logistics, points out Prasad Sreeram, CEO and co-founder of the intra-logistics platform. -urban COGOS.

Many companies are switching to e-commerce and transforming their supply chain.

Transportation and warehousing will drive the adoption of the technology, says Anjani Mandal, CEO of Fortigo Logistics. The focus will be on cloud-based solutions for the digitization of the transport process. All of this growth will mostly be seen among organized gamers, Mandal adds.

D2C will be the next bastion of growth

The pandemic has accelerated demand for e-commerce and direct-to-consumer (D2C) businesses. Technology-based logistics companies are already helping e-commerce and D2C companies run a smooth supply chain and low-cost last mile delivery operations. India has more than 800 D2C brands, and the industry was worth $ 44.6 billion in 2021 and is expected to reach $ 100 billion by 2025, according to KPMG. Experts say this means the next wave of growth for logistics companies could come from the D2C segment.

In 2022, logistics companies will adopt the latest technology and experiment with visionary ideas such as artificial intelligence and machine learning, said Kushal Nahata, CEO and co-founder of logistics platform FarEye. With the help of these AI-powered tools, says Nahata, businesses will gain proactive and predictive visibility, which will give them a competitive edge. “In addition, there will be a growth of autonomous vehicles which will ultimately become the future of the logistics industry, reducing costs and environmental damage and increasing efficiency by automating delivery packages,” he said. -he declares.

The troublemaker

All optimism aside, one question that has started to haunt logistics companies is: will the Omicron variant make a dent in the industry’s renewal and prospects. The information currently available indicates that most cases of Omicron are asymptomatic and require significantly less hospitalization in those vaccinated. Can this give hope to stakeholders?

While the Omicron variant may affect global supply chains, the variant is unlikely to stop the industry’s relaunch, according to Prozo’s Jhakar. The fundamentals of the Indian economy are centered on domestic demand and the infrastructure that facilitates electronic commerce. Additionally, ecosystem players are likely to handle temporary disruptions better now than they did in March 2020, he says.

As the industry heads into the new year, stakeholders have also highlighted the need to tackle major bottlenecks that could derail their growth plans in 2022.


India’s logistics performance index compared to Vietnam.

Mandal of Fortigo says he hopes the new year brings resolutions to the industry’s top operational hurdles. Today, many large organizations continue to have business terms and payment processes that cross the equity line. “Large companies can change trade terms and prices at their discretion. The force majeure clause has been removed and contractually, natural disasters are not considered a valid exclusion from high penalties. In addition, the payment terms are defined as “after 45 days” instead of “within 45 days”. Digitally signed electronic invoices are not accepted even if they are valid by law, ”Mandal said.

These issues have a greater impact on small logistics players, especially those in the SME category.

Experts also say that the quality and quantity of infrastructure and logistics services need to improve and this needs to be done in the long term. They also want India’s logistics cost as a percentage of GDP to be reduced to 9-10% from 13.5% currently. This is the only way for India to face international competition and become a global logistics hub, factors that will drive economic growth.

Experts point out that access to better warehousing infrastructure; easy-to-use and cost-effective supply chain technology; faster rail, road and maritime logistics networks, among others, are key catalysts for the growth of the sector. They recall that the operational and regulatory framework for warehouses must be improved.

It’s a long wish list, but if 2022 is to be the year India becomes a global logistics hub, these steps should be accelerated.

Edited by Ram Mohan.

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