The logistics sector is known for meeting two ends meet, which is supply and demand. Whenever there is a need for a particular product or service, it cannot be delivered without the help of logistics. The logistics sector helps to transport goods from the place of origin or production to the place of consumption to meet customer requirements.
However, with the COVID-19 pandemic, everything has changed and come to a halt. All the businesses are currently under lockdown which has hit the logistics sector pretty badly as there are travel restrictions placed on the movement of goods as well. Only the goods coming under the essential goods category are allowed to move from one place to another. Thus the logistics of other goods are incurring severe losses.
Some Important Updates in the Logistics Sector:
According to India Ratings, the volume of inland logistics companies will fall by nearly 10-15% in the year of 2020-21. Also, the time taken by the sector to fully function again will be slow and gradual. Also, the import and export logistics will be severely affected as domestic and international travels have not been fully opened for operations.
There is still no clarity as to how these situations will impact the cash flows and profitability of the sector as this will depend upon how much business the sector is able to do post lockdown. Also, the decisions taken by the private players and the extent of support given by the Government will also determine the success of the recovery.
However, the year of 2021-22 will be great for the sector as the agency predicts that almost all the value chain activities are expected to recover and it is only the freight operators who will struggle to keep up given low volume and high amount of debts.
The COVID impact can be clearly seen affecting the logistics sector given lack of labour and travel restrictions imposed by the Government.
By 2020, the IBEF has predicted that the logistics industry will reach $215 billion and will also bring in investments worth $500 billion by 2025!
On the other hand, Market Watch has predicted the Indian logistics industry to grow at a rate of approx. 10.7% in the forecast period of 2020-2024.
The Government has also increased its expenditure on investing in the logistics sector including infrastructure and will touch $500 billion by 2025. The Government has also introduced an initiative Multi-Modal Logistics Parks Policy (MMLPP) which will help reduce the freight cost, pollution and congestion and will also cut warehouse cost to promote domestic and global trade.
So while there is slow recovery for the logistics sector in the future, the Government initiatives will hopefully provide the much needed boost to the sector.