Is Impact Of Coronavirus on Road Transport Industry is a terrifying concern, 2020?
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Impact of Coronavirus on Road Transport Industry in India
Indian logistics, a highly unorganized industry, broadly divided into e-commerce delivery, trucking, and overseas freight transport, is in chaos because of nation-wide lockdown. They are all battling unique challenges and are unable to ascertain the impact of the highly contagious virus that has now spread to 150 countries and territories.
In India, Road transportation is a $120 Billion industry and comprises of 70% of the total logistics happening on the roads. There are approximately 40 lakh trucks on roads and 85% of them are owned by people who own less than 10 trucks. So, there are around 3.5 lakh fleet owners and 60 lakh truck drivers in the country. 90% of the businesses have been hit hard by the corona virus effect and there is a vast economy that is relying on this trucking sector.
Corona Virus Effects
A population of 1.3 billion stays indoors to fight against the Covid-19 and as a result India is facing difficulties to move further and a lot of questions are being raised about what this lockdown would do to the logistics sector of the country.
According to the India Brand Equity Foundation (IBEF), a remarkable economic crisis across the country has affected the logistic landscape tremendously. The market size of the logistic sector was expected to climb to $215 billion by 2020, logging 10.5 percent compound annual growth rate (CAGR) over 2017. Logistics is known to be the lifeline of the country as it helps in connecting various markets, suppliers and customers across the country
According to the Retailers Association of India (RAI), 25,000-30,000 supermarkets have been hit badly during this lockdown. In this downfall, India has decided that this sector should be functioning with all the essential goods, however, logistics firms have to face a lot of issues in transporting cargos.
Impact of Coronavirus on Road Transport Industry: One of the major difficulty logistics confronted was, trucks being stopped at the borders and not allowed to enter states due to lack of transparency over the classification of essential and non-essential goods. This resulted in long lines at the border and some of the drivers have been abandoning their vehicles as they are also scared about the transmission of the virus through police officials.
While most of the drivers are not willing to work, as they are scared they’ll be contaminated, the drivers who are on duty are under constant pressure not only to deliver goods but also to face numerous troubles due to absence of basic essential utilities during their journey. There are no highway dhabas, mechanic shops, or even a small tea stall for them to stop by. Even though the government has allowed them to remain open, due to shortage of labor and essential raw materials to prepare food and also due to absence of public transport for commutation, the highway businesses had to remain closed
As a result, there is direct impact on the income of around 40 lakh to 50 lakh drivers as they get paid on the basis of kilometers run. The truck drivers also have extended families and when their income is low, it hits their families. This means that 3-4 crore people will not have any money felt in their future.
This lockdown has resulted in labor shortages across the country, which in turn has added to the limited availability of transportation facilities. Logistics operational employees have also been facing hard times with their residential landlords to vacate their house as there are more chances of being infectedif they go to work.
As a result, small fleet owners have lost opportunities to serve their orders. Support for small and medium businesses should be stepped up.
The government has to consider few beneficial measures in the logistics sector, such as relaxation from toll collection, passing on the benefits of the fall of crude prices by not increasing the taxes and also giving subsidy on tax deduction on salaries paid to drivers, etc. In this regard, Confederation of Indian Industry (CII) is preparing a database of all the logistics firms across the country. The list is being updated daily and this information is being spread through 9,000 me
According to Indian Chamber of Commerce (ICC), the cumulative loss estimate is as high as Rs.50,000 crores with the highest loss coming from the Aviation Sector, followed by Roadways, in terms of lost Toll Taxes and halted fully loaded trucks on the road due to sudden lockdown..
As of now, it would be advisable for all businesses to formulate short-term plans for the survival of the enterprises, once the production and logistics resume. Due to virus and lockdown, the wheels are coming off the Indian logistics industry
As of now, it would be advisable for all businesses to formulate short-term plans for the survival of the enterprises, once the production and logistics resume. Due to virus and lockdown, the wheels are coming off the Indian logistics industry
Impact of coronavirus on road transport industry
Road Transport Industry During Lockdown
Daily movement of trucks has collapsed to less than 10% of normal levels, according to All India Motor Transport Congress, an umbrella body of goods vehicle operators representing about 10 million truckers.
Road transport accounts for about 60% of freight traffic in India and 87% of its passenger traffic, according to Road ministry.
Starting April 20, the central government relaxed certain lockdown guidelines to restart select commercial activities such as the transport of goods.
All goods, not just essential products as permitted in the first phase of what is now an over 40-day nation-wide lockdown. Yet only 15 to 20 percent of the over 90 lakh trucks in India are back on the road.
Due to the Impact of Coronavirus on Road Transport, Logistics Companies aren’t able to open warehouses, consolidation is not taking place, parcel movement is not taking place, express movement is not taking place, Pradeep Singal, national president of All India Transporters Welfare
Long-Term Impact of Pandemic on Logistics
The recovery and long-term impact of the pandemic on logistics may be affected by adaptions
and factors, as described below:
● Increased dedicated air cargo capacity: The airline industry is already reallocating fleet to
exclusively serve air cargo demand.
● Increased cargo inspections and cross border control protocols: Governments have
responded to the crisis with temporary trade embargoes and export restrictions for sensitive
cargo (such as medical supplies, pharmaceuticals). In the longer term, logistics costs may
increase due to tighter cross-border processes and controls fueled by concerns regarding the
transmission of diseases.
● Technology and e-commerce rise: Logistics has been in the midst of a tech-driven revolution.
Companies with robust digital capabilities that allow them to provide cargo visibility/traceability
and do business online are at an advantage. This would entail investments in technology, such
as the Internet of Things (IoT), cloud computing, automation, and data analytics. In the long
term, robotics, drones, and autonomous vehicles might reduce logistics services providers’
exposure to labor shortages.
● Reconfiguration of global value chains: The pandemic has exposed the vulnerability of
extended and complex value chains to production disruptions, particularly in the East Asia
Pacific region. As a reaction, many of these supply chains may shorten or diversify through
reliance on alternative partners (for example, nearshoring) or intensified efforts to bring
home (such as reshoring) strategic value chains. The shortening of supply chains may benefit
countries with capable manufacturing sectors and beneficial exports’ policy (for example,
Colombia, India, and Mexico) to partially substitute China over the medium term. There may
also be a trend towards placing additional warehousing capacity or dry ports near demand
centers to shorten the time to get goods to market.
● Recovery prospects will vary by country, subsector: As logistics is a diverse sector, recovery
prospects will vary depending on the length of lockdowns and the duration of the subsequent
economic crisis. Large companies with a diversified business (such as multiple clients, serving
different sectors in various countries/states) will be better placed to weather the storm.
After-effects of Corona Lockdown
It is significant that these problems will increase even after the business operations resume. Doubtlessly, these miserable events will act as the wake-up call to many companies and will strategize their future policies or events in a better way. Due to the Impact of Coronavirus on Road Transport, The fleet owners, in order to tackle this storm, should deal with this scenario efficiently by optimizing operations and embracing digital technology thereby reducing human intervention.
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