The COVID-19 pandemic upended livelihoods and businesses, disrupting the global economy and supply chains across the world. However, a few sectors proved to be a boon during this unprecedented time, including logistics.
The logistics industry helped ensure that the global flow of goods, particularly essential items, remained largely unhindered despite the lack of transport and disruptions in the supply chain.
In India, the year 2020 saw the logistics industry’s growth graph climb. Hampered by the pandemic in the first half of the year, startups bounced back later with shorter lead times, better at-door experience, and increased safety. The numbers reflected this change.
For instance, New Delhi-based same-day delivery and courier service Pidge received its first 50,000 orders in 40 weeks. It completed the next 50,000 in just six weeks following that, and the next 100,000 in another six weeks.
End-to-end ecommerce logistics solution provider Ecom Express saw an over 60 percent surge in order volumes in comparison to pre-COVID-19 times. Ecommerce enablers such as ShipRocket also claimed a 100 percent growth.
It wasn’t just the numbers; the trying times also helped startups increase bonding with their clients.
ShipRocket Founder and CEO Saahil Goel says the defining moment was when he was able to fulfil over 1,000 medicine orders in a week for a client whose stock was stuck in an Amazon warehouse. Pidge founder Ratnesh Verma recalls a heart-warming call from a customer, thanking the team for helping fulfil her dog’s last wish by delivering its favourite food.
It’s clear that logistics, once seen as a supporting service sector, has transformed into an essential and mainline sector.
However, Orios Venture Partners Managing Partner Rajeev Suri believes that the Indian logistics industry has to gear up to do much more to get India to parity with the rest of the world.
“Think about this one statistic. Amazon India has 45 million products to sell, whereas Amazon US has 14X more products at 600 million, and Taobao (China) has 30X the number of products at 1,500 million. The primary deterrent is the inability, owing to logistics, of these products to get consumers,” he says.
Exporters also struggle with issues such as poor inventory management, lack of availability of container space, and transportation among others.
However, Sanjay Bhatia, CEO, Freightwalla, says there is likely to be a transition towards smart demand-supply management in the near future, but a lot more support and planning is needed to streamline this [logistics] sector going forward.”
The outlook for logistics in 2021
COVID forced the entire world to make a quick shift from offline to online, with a reliance on the logistics sector for human-to-human connectivity.
The Indian logistics market is expected to grow at a CAGR of 10.7 percent between 2020-2024, and brands are only boosting this growth by leveraging cutting-edge technologies.
Moving forward in 2021, a number of trends will drive this growth and all will involve the adoption of technology. Be it tactical and operational decision making, routing, fleet optimisation, data analysis, or strategic planning, technology will be all-pervasive.
“The larger macro trend for 2021 is around the speed of deliveries, on which consumer happiness hinges. Another trend is managing customers during deliveries, which includes slot-based deliveries,” says Gaurav Jaithliya, Co-founder and Chief of Strategy and Investments, Shadowfax.
Earlier this year, the government mandated BS-VI trucks to regulate the output of air pollutants. But making this shift isn’t easy.
Sonesh Jain, Entrepreneur in Residence (EIR) at WheelsEye, says the fact that BS-VI trucks are expensive and loans are not easily available or viable forces fleet owners to buy second-hand trucks to sustain in a critical economy.
Here’s what we can expect for the Indian logistics industry in the new year:
Greater accountability and new operating models
Shippers will look for increased reliability from carriers. Companies will want easy communication and complete visibility across all legs of the supply chain. “Incumbent carriers will face increasing competition from niche players in the last and middle-mile transportation movement, which, in turn, will drive incumbents to adopt new operating models,” says Krishna Khandelwal, Chief Business Officer, Locus.
Agile supply chains
The pandemic has prompted the industry to build future-ready infrastructure that can respond to any disruption more swiftly. Going forward, a responsive supply chain will be a combination of speed, cost, and efficiency. Market and demand patterns are changing very rapidly, and the ultimate strategy would be opting for agile supply chain management.
Increased focus on automation
Shadowfax’s Gaurav envisages that the future of the logistics sector will be data and technology-driven. In handling future scale, there is a need for automation aimed at improving efficiency and offering speed that reduces handling time while enhancing employee productivity (throughout everyday tasks being handled seamlessly across the shop floor value chain of inwards, processing, bagging, and connections).
“Robotics and technology such as drones are set to occupy the space in the future of the logistics arena in offering new-age solutions driving cost reduction, convenience, and delivery cycle,” says Manju Dhawan, Co-Founder and Head, Business Development & Customer Service, Ecom Express
Increased use of blockchain, AI, IoT, smart sensor applications
The logistics sector requires synchronised transactions to improve visibility across supply chain, and well-organised and secured fleet services.
- IoT: to ensure smooth, efficient, and transparent operations.
- AI: to be integrated as a tech-enabler in tackling demand and to proactively deal with fluctuating demands across supply chain operations.
- Blockchain: to adopt more blockchain-based documentation to get rid of unnecessary printing, scanning, and emailing.
“The government can encourage tech adoption in the industry by building a well-connected ecosystem where digital solutions are accepted and become a standard way of working,” says Freightwalla’s Sanjay.
Accelerated growth of online D2C businesses leading to logistics growth
Brick-and-mortar businesses were forced to go online to survive, leading to a boost for India’s D2C sector. Pidge’s Ratnesh expects to witness much faster adoption of this online D2C approach by businesses in 2021. To become self-reliant, they will look for logistics partners who can help them build their brand image without taking control of their business away.
Change of perception towards last-mile logistics
As people stayed at home for prolonged periods, they got used to fulfilling their needs through logistics. With online celebrations and events being the new normal, their demand from last-mile logistics to deliver higher need state items has increased: celebratory and gifting. In 2021, consumers will move upwards in the value chain in their perception towards the last-mile logistics sector.
Growth of third-party logistics sector with ecommerce
Ashish Sharma, CEO, InnoVen Capital India, says accelerated growth of ecommerce will drive stronger demand for new-age, tech-enabled third-party logistics players and captive logistics arms of major ecommerce companies. There will be greater focus on enhancing tech capabilities, and some players will expand their service offerings to become a full-stack player to differentiate their offering, i.e. warehousing, B2B fulfilment etc.
Increased demand for service reliability
As supply chains came to a halt, and the delivery workforce migrated to their hometowns, many brands were unable to fulfil demand. This laid bare the unreliability that accompanies the gig employment model.
“In 2021, there will be an increased demand for service reliability, from both brands and individual customers,” says Pidge’s Ratnesh.
Edited by Teja Lele Desai
Link : https://yourstory.com/2021/01/outlook-2021-expected-trends-indian-logistics-startups
Author :- Meha Agarwal ( )
January 05, 2021 at 01:02PM
YourStory