Demand for consumer goods keeps logistics platforms going

Annapurani V Chennai | Updated on April 03, 2020

Rural household consumption for packaged consumer goods has hit a seven-year low in the July-September period

Sector expected to take a $50-billion hit by April 15 due to lockdown

Covid-19 has not only brought the whole world to a standstill but also disrupted businesses across sectors. Things are no different for the $200 billion-plus Indian logistics industry — most supplies and deliveries came to a grinding halt when the country went into a nationwide lockdown.

But these platforms are now beginning to see a silver lining, thanks to the persistent demand for consumer goods.

Praharsh Chandra, co-founder and COO of Shadowfax, a crowd-sourced business to business (B2B) last-mile delivery services platform, said it has seen more than a 2X increase in demand from its grocery and pharma clients over the past few days.

“We have been focussing our energies on enabling deliveries of these essential commodities during the lockdown,” Chandra said. “Other non-essential categories have seen drops of almost 90 per cent,” he added.

Sachin Haritash, founder & CEO of Mavyn, a digital trucking company, said the company has been seeing a nearly 150 per cent surge in business since Monday, due to the increase in demand for FMCG products.

According to a recent report by logistics platform ClickPost and Shadowfax, the Indian e-commerce logistics industry saw a 21 per cent increase in order delays and a 9 per cent rise in stuck shipments between March 10 and March 20. This was even before the government announced the nationwide lockdown, on March 24. Data also showed that deliveries had already declined by 9 per cent during that period.

“The consumer durable and auto industry are in complete lockdown with almost no business,” said Haritash. He added that the e-commerce industry business is down 90 per cent and only grocery shipments are happening.

In the aftermath of Covid-19, the company is only recording a cumulative 20 per cent business, Haritash said. He also estimated the impact on the logistics industry would be $40-50 billion by April 15.

Due to the lockdown, e-commerce has also been facing disruptions, with a few warehouse locations becoming unserviceable. Furthermore, the number of deliveries that were sent back to the pick-up location — the return to origin rate — has also climbed over the past few days.

“There has been an initial increase in return to origin percentages last week, of 9-10 percentage points, since a lot of deliveries got delayed post the lockdown,” said Shadowfax’s Chandra. “However, we expect it to reduce significantly from this week onwards,” he added.

Challenges in delivery

Thanks to the rising demand for consumer goods and the fact that the public is not too keen to step out to make purchases at stores and supermarkets, these firms now cater to more districts and cities across the country. But how are they managing the surge — be it in terms of the documents required to travel or the shortage of riders to deliver goods? What are the impediments these firms are facing? How are these platforms ensuring the timely delivery of goods?

“One of the biggest challenges is ensuring that our delivery partners have appropriate government-sanctioned passes and are not stopped by police administration in any of the cities,” said Chandra.

The delivery rates have also shot up 300-400 per cent for short distances (100-800 km) and 150-200 per cent (more than 800 km) for long distances, said Mavyn’s Haritash.

To keep the business going, these platforms are finding new ways to manage deliveries in the most effective ways possible. They are also ramping up their fleet to serve as many orders as possible to make up for the dearth of riders.

Pratish Sanghvi, co-founder of Grab, a last-mile logistics company for businesses, said that due to the significant drop in the food-tech space, a lot of riders who were earlier with companies such as Zomato and Swiggy recently joined Grab.

He added that they are trying to integrate deliveries in such a way that more customers can be served, plus the rider also spends a shorter period of time on the field.

Published on April 03, 2020

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