India is consumption based economy and it needs logistics more than ever now: K Satyanarayana, Ecom Express
Anushruti Singh July 31, 2020
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Several challenges such as labor shortages, cargo capacity constraints, a manufacturing slowdown, order delays, and stuck shipments arose during country-wide lockdown in India. Along with this, India’s real gross domestic product (GDP) is at its lowest in 6 years because of the COVID-19 standstill. It has further affected consumption and investment adversely in Indian economy.
This manufacturing halt has caused a downward pressure on prices of warehousing, freight, and logistics. Despite the obstacles, Indian logistics industry has shown resilience by resuming operations with help of digital tools. K Satyanarayana, Co-founder and Director at Ecom Express in conversation with SME futures asserts that logistics will rebound in coming days and will play a dominant role in upliftment of Indian economy.
COVID-19 has disrupted global supply chain at large. How has been Indian logistics sector impacted so far?
India has made major strides in the logistics sector during last two decades and it is now a $200+ billion worth of industry. But, these are unprecedented times. Initially, the pandemic disrupted global supply chain and even movement of essential goods was halted. Due to this, logistics services came to a halt. However, the industry bounced back by quickly adopting the necessary protocols and by resuming operations in no time.
During the initial lockdown phase in late March and April, it was an opportunity for the logistics operators to align their infrastructure according to requirements poised due to the current crisis. Adding to it, adherence with strict safety procedures by government was also a necessity. This thereby ensured business continuity for logistics platforms. Personally, I feel there is a positive outlook now for post-COVID scenario as we have enhanced our business processes in many ways.
Also, people are hesitant to walk into physical stores due to the fear of contracting virus and hence logistics industry is growing. Till the time supply of non-essential goods started, our facilities geared up for handling COVID-related protocols. We had almost 92 per cent of our employees reporting back to us. In June, we were fully operational and I feel that situation is better than pre-COVID period for us now.
Can we then say that COVID-19 has boosted the business growth for Ecom Express?
Absolutely, we can say that. The logistics sector has been proving to be saviour in current crisis for many. It has also played an important role in keeping the economy running. People are restricted to their homes doing their jobs while sitting at home. Hence, we are seeing a complete transition in consumer behaviour due to rising health concerns.
Consumers are more inclined towards online shopping instead of going to malls or big retail stores. They are opting for home deliveries more. Thus, I can say that our firm has been proactive in continuity of the supply chain. As a stakeholder in logistics industry, we are working efficiently in taking care of our consumers’ needs. We are connected to them in every way to deliver all sorts of essential and non-essential goods. I believe that the crisis has presented an immense opportunity and while pursuing it growth is inevitable.
How has technology transformed the logistics industry and how has your firm enhanced your IT infrastructure in the present scenario?
Technology now-a-days is the core of any industrial operations irrespective of sectors. COVID-19 has given an opportunity to companies to reshape their logistics operating model to increase effectiveness, efficiency and resilience.
Businesses are thus forced to innovate and adopt new digital tools faster than ever to minimise disruptions in current scenario. The players who embraced tech solutions were able to survive the impact of pandemic and continue their business.
The tech tools help us to map and track the shipments or cargo and follow safety protocols. Entire workforce can communicate through these solutions or apps. Digital services give real time supply chain visibility and helps in running logistics operations smoothly. Industry embracing technology is just a silver lining in the current crisis and use of AI, machine learning and IoT is also on surge.
We have country wide reach. The complete life cycle of shipment from pick up to delivery is channelized through hub and spoke model which is backed by technology. I mean to say every aspect of our operations is covered with tech tools, from pick to post delivery stage. Thus, we are practicing contactless services for pickup, delivery and payment options such as scanning a QR code or signing a digital image.
For instance, we have provided handheld devices to staff during pick-up stage. People will know about the shipment information through these API integrated devices. The stage of each shipment can also be determined and further course of action can be decided. Further, our staff has to feed information at each stage. It can be about pick up of the package, customer information, or scanning. It can also be about bringing the package to processing centre, distribution centre, or to hub and then to delivery. We have a robust IT system at each stage.
One of the biggest challenges that India Inc faced during lockdown phase was of workforce migration. How did you cope up with this situation?
We have workforce presence across India. Our entire human resource team dedicated itself towards connecting to staff wherever they were during this tough phase. They called each one of them time to time and updated records of their well-being. We also introduced family connect programme. In this, we connected to family members of our employees and resolved their health-related problems.
We also assured them to pay their salaries and payments on time. Not much problems were posed for us due to migration of workforce since we believe in generating local employment. Majority of people working in our company are natives from each location. However, we had migrant workers in metro cities such as Delhi, Bengaluru, Surat etc. But, we were able to complete 65 per cent of shipping during initial lockdown phase when supply chain was highly disrupted.
How do you foresee logistics playing a pivotal role in strengthening the Indian economy?
Due to COVID-19 situation operations of industries from all sectors took a massive hit. Entire supply chains were disrupted and drivers were stranded at checkpoints due to the lockdown. Hence, the volume of inland logistics companies is likely to fall by 10-15 per cent. Also, companies could take a longer time to recover according to India rating.
India is however a consumption-based economy since almost 60 per cent of India’s GDP is determined by consumption. Thus, the country needs logistics more than ever now. The sector was therefore playing a significant role in the manufacturing and supply of essential products such as FMCG, medical equipments, masks, medicines, test kits etc even during pandemic.
I firmly believe that logistics industry has a larger role to play to connect manufacturers with suppliers and consumers. The industry also plays a pivotal role in completion of consumption cycle and its various phases such as production, demand, and supply etc. These phases hence need efficient logistics infrastructure.
Further, government initiatives and reforms such as GST, Make-in-India, Sagarmala or Bharatmala projects, self-reliant India initiative etc will promote domestic production and manufacturing which thereby will lead to the growth of logistics sector. Today, India has developed an excellent road and air infrastructure.
Once the situation gets back to the normal and sectors reopen, the freight capacity that we have created in our existing system will help in boosting the supply of domestic manufactured products. Our role is to ensure the supply to the last mile consumers wherever they are. I believe logistics industry is very significant to support the economic recovery.
Social media commerce is the new retail landscape. How you see it as an opportunity for the logistics market?
With internet penetration in India, social sites have become prominent distribution channels for businesses showcasing their products. People are selling on WhatsApp, Facebook, Instagram, Pinterest, and Youtube through influencers and bloggers. For instance, Thailand operates 80 per cent on social e-commerce platforms. Entrepreneurs are leveraging social media platforms for scaling up their businesses.
In other words, social media is another gateway of e-commerce. In India, social media commerce has a potential to build a market worth of $70 billion which is just the double of present e-commerce market. To attract consumers, merchants on such platforms are incorporating facilities such as basic logistics and good shipment processing.
Logistics operator in turn generate leads through this and we acquire connect to consumers through various channels. It also gives us chance to enhance customer experience and drive supply chain innovation. I believe social-media commerce has created another avenue for logistics business and freight. Going forward, we are going to see more entrepreneurs moving from web to social e-commerce platforms. This in turn is going to create immense market for us.
What is your opinion about the future of logistics sector and key drivers for its growth?
I believe the future of this sector is very bright. Till now, government is working well to develop better infrastructure of roads and railways for solving logistics issue. Announcement of Delhi-Bombay corridor is one such example. Even commerce ministry has created a logistics department.
There is therefore an immense opportunity for shipping and river cargos and it can be the best way to attract more FDI in India. Local manufacturing accelerated through different government initiatives will be a new business model for us. This will further help in optimising resources. These factors are will propel growth of Indian logistics sector.
But, as an industry we still need to work on few areas such as implementation of national logistics policy which is still in draft. It is also critical to bring down the logistics costs as fuel charges are rising indiscriminately. There is also a need to create more employment in the sector. It will need support from government and public sector. Lastly, companies hit by the pandemic require an easy credit to retain their normalcy.