COVID 19 – A Setback For the Logistics Sector

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The After Effects

It is a tough task right now to calculate the exact amount of losses in the logistics sector due to the outbreak of COVID 19, and the lockdown following it. To quote the prediction of IMF,” the sector would undergo a 3 percent contraction for the global economy in 2020″. If the prediction comes to be true then it would deliver a second hit to demand. Constraints on the movement of vehicles would lead to delay in delivery, congestion, and higher freight charges. However, the scenario in e-commerce is somewhat different. People prefer online shopping for essential commodities. In the wake of such a situation, the governments may provide a bit of relief to the transport operators by reducing the fuel prices. The overall effect of the period will be evident in the low collection of revenues.

Coping up with the crisis

 Governments across the globe have exempted the logistics sector from lockdown measures. Many airports are still opened for the landing and take-off of cargo flights, carrying essential commodities. Some governments have collaborated with third-party logistics to ensure easy clearances. Numerous measures have been adopted by the third-party logistics companies –

1) Some companies are ensuring social distancing in the warehouses, disinfecting the work areas, providing protective gear to the staff to combat the crisis. Though such measures incurred many expenses on the companies.

2) Some companies are opting for alternative transport modes. For example, DHL has used chartered flights to transport goods to and from China. Airlines companies are focussing on repurposing passenger aircraft for cargo. According to some economic observers, the China-Europe rail would gain a massive profit as 60 percent of the air freight capacity between China and Europe has vanished.

3) Bigger companies are playing a vital role in the fight against the pandemic. UPS provided free air transport for two million masks and protective gear to Wuhan in February. Warehouses and retailers are focussing on high-demand articles. Many of them are supplying groceries to the homes. Some companies have made out ‘no contact delivery’ options-, where robots and drones are used.

Post Lockdown changes in the sector:-

In the long run, the logistics sector will turn out to be a symbol of radical change. A lot of adaptation and factors will facilitate a speedy recovery of the sector in the post-lockdown period. 

1) Air cargo capacity will be increased along with the increase of air fleet to serve the cargo demand

2) For time being, the governments have put on loose constraints on essential commodities like food,medicine etc. But in the long run logistics cost will definitely increase as there will be tighter cross border protocols and increasing concern regarding the transmission of diseases.

3)In the near future, logistics will be driven to a technological revolution. Companies with well planned digital capabilities will conduct business online. In near future more usage of drones, robots and automated vehicles will reduce the problem of shortage of labors.

4) rate of recovery would vary from country to country, depending on their economic development, extent of lockdown and formulation of post lockdown policies.

To conclude it can be said that being an integral part of global economy the logistics sector has served in almost every spheres of human life. Though faced a terrible setback, the sector is heading towards a speedy recovery. In the changed scenario, a technical revolution is about to begin in the sector which shall facilitate economy as well as daily life of the common people. To quote Rahul Goel, Vice President-Finance ,of Moglix, an e-commerce firm, – “when the lockdown will get lifted the operations will not start from day one. Business should be told that this is the procedure that will be followed, as it will be difficult to bring in the migrated labour who have moved from cities to their hometowns. The lockdown lift-up should be announced beforehand rather than being done suddenly.”

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