Logistics in the post-Covid world set to explode

For the logistics industry, the pandemic has proved to be both a boon and a bane. On the one hand, the Covid-19 situation has increased the financial pressure on a lot of companies in the industry, especially transporters. While many others rose with energy and alacrity to the challenges of Covid, protecting staff and customers while flexing to the peaks and troughs in demand.

A few of the large players in the global logistics industry have been catapulted to a high-growth trajectory while few others have struggled in the wake of sudden supply-chain disruptions the pandemic caused in its initial months.

Covid-19 showed how stretched the global supply chains were and how that stretching made them vulnerable to disruptions, with a break at any point affecting the entire business. To avoid this and engender greater resilience, logistics in a post-Covid world will need to focus on shortening supply chains and ensuring that goods are delivered across end points quicker.

The unavailability of suppliers during the pandemic forced companies to look out for local supply chains to augment shipments from overseas. Logistics players in a post-Covid scenario will ask their current local suppliers to take on greater volumes across different product lines.

Key trends

Five key trends are likely to emerge in the post-Covid environment in India.

Firstly, digital is table stakes. The importance of digital as a channel to market has accelerated significantly due to the pandemic. Till now we were used to the general trade and the kirana stores. Then came the modern trade and the big retail malls. Now we have online trade. India’s online trade is growing in terms of penetration but in a Covid-induced lockdown era, online trade has stepped up a whole different ball game.

We are seeing this shift from offline to online in a far more accelerated way. And it is irreversible now. It will be relentless in days and months ahead.

The second key trend is increased focus on fulfilment logistics are warehousing. Many of our customers want to move inventory as closer to demand as possible and also improve their reach. The Covid-era has perforce reminded all of us that having no inventory is as bad as having it in the wrong place. Inventory in the right place is very important; being close to our customers is equally important.

This goes beyond just infrastructure and access — there is likely to be a much sharper focus on quality of service, optimisation and time defined service levels, and technology will be a key differentiator here.

A third key trend will be a growth in omni-channel networks. Companies are trying to figure how to operate the inventory in a far more efficient way in the field and drive optimisation through omni-channel models for distribution, so that they can use the same inventory and support online as well as physical delivery. An increased level of volatility and demand variability puts added pressure on customers.

The fourth big trend which is happening is increased focus and adoption of multi-modal logistics. The pandemic has shown the need and opportunity to leverage rail, sea and waterways a lot more effectively. In many of our key markets like auto and farm sectors we have seen a step change, thanks to the increased focus and support from the Railways.

So multi-modal is now becoming a bigger focus and it is important for India. If logistics cost in our country has to come down then in the long run we have to become much more multi-model. You need to have cost-efficient transportation models to use waterways, air, road and two-wheeler modes judiciously.

Cross-border supply chains have also become a key focus area and we expect a greater impetus. Through the pandemic, most companies have realised the need to improve resilience, real-time visibility and end-to-end management of the same. This will also be critical to support growth in exports. This shift will require accelerated regulatory support and infrastructure development, and a technology ecosystem to enable the same.

And now comes the final and perhaps the most significant trend of using technology, data sciences, analytics and automation. In the post-Covid environment, there is a greater focus on improving the predictability of supply chain. Customers are focussing on a much more granular and multi-variable dimension of supply chains.

Today, it is not just marketplaces or aggregation tools, but systems which allow management of the overall supply chain, optimisation and design of the network and the ability to do that with the appropriate level of customisation. Technology building blocks and integration will not just be enablers but differentiators in the future.

Remodelling the global as well as local supply chains in the post-Covid world is essential. There is an increasing need for system upgradation across the entire supply chain, which should include automatic tracking and alerts, enhanced navigational abilities, real time digital tracking and route optimisation. The logistics industry involves direct contact between people, making it essential to inculcate technology across all links in the supply chain including data science, analytics and Big Data.

In the short to medium term, the logistics industry will have to rise and support vaccination programmes across the world. In India we have challenges of infrastructure, technology, etc., but the industry will rise to the challenge.

As we look to the future and a more Atmanirbhar India, the logistics sector must emerge as an enabler to the economy by accelerating productivity for our customers.

The writer is MD and CEO, Mahindra Logistics

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