COVID 19 pandemic and Logistics & Supply Chain

The lockdown and sealing of borders has affected the first and last mile transportation of goods within the domestic segment of the supply chain.
COVID 19 pandemic and Logistics & Supply Chain

The saga that started in December 2019 that was feared to be initially affecting the various trade and industries of China later turned out to become a global pandemic causing slowdown of markets and leading to a global recession. Supply Chain and logistics has also faced the setbacks and difficulties to a great extent. In the initial days of the outbreak of the disease from China, Chinese markets were affected with most manufacturing units of Construction, Chemical and Shipping industries badly hit. Also this affected the imports of several countries as China happens to be the main trade partner for raw materials, finished goods, spare parts, and so on. This caused disruptions in the supplies for the various manufacturing industries globally.

Since then, the pandemic has been vastly spreading across the world and most of the countries are affected as on date forcing the Government, national and international authorities to take inevitable measures like lockdown of cities and restricting movement of people across nations to curb the impact. This has consequently affected Global trade and supply chain which has come to almost a standstill. There exists a deferred slowdown as far as movement of goods are concerned with most countries restricting international flights and air travel, thereby restricting air freight capacity to just the operational cargo aircrafts and ferry passenger flights carrying only cargo. Shipping segment has also been affected badly as vessels are placed under quarantine for weeks before being allowed into the ports thereby slowing down processes. Moreover, the demand for raw materials has reduced for the most traded commodities as most countries now require medicines, pharmaceuticals, medical supplies and medical equipment. Hence, any available capacities are going underload thereby causing a disbalance of the ratio between revenue and the operational costs. Furthermore, there is severe shortage of manpower at the air cargo facilities and shipping ports due to lockdowns which again hinders any scope of supply chain continuity.

The lockdown and sealing of borders has affected the first and last mile transportation of goods within the domestic segment of the supply chain. This is affecting movement of goods by railways and road transport, leading to deferred movement of supplies which ultimately ought to increase the cost of commodities even for domestic consumption. With the cancellation of the domestic flights across the country, the rapid movement of e-commerce and supply chain has got affected with deferred or delayed deliveries and commitments. In a nutshell, the demand and supply gap has increased.

With most of the economies of the world facing a virtual doom taking the countries a few years behind in terms of growth and sustainability, the supply chain will witness shortfall of diversity in the kinds of goods being moved. There will be a phenomenal reduction in the desire for consumable goods and products and more demand for essential goods in the trade between the nations. . The trade movement of the luxury or leisure goods are ought to diminish for at least an year till the nations are able to compensate for the economic losses the pandemic has caused. The only trading commodities that we can assess in the forthcoming months would be pharma, vaccines, medical goods and supplies, hospital items, perishables and food products that the nations are in dire need.

If we speak about the e-commerce business in the supply chain, since only essential commodities are permitted to move, the apparel, fashion, electronics and other sectors serving non-essential category of goods are severely impacted with lesser or no demand during the lockdown. India’s online retail industry is approx. worth $60 billion out of which the essential commodities constitutes only a small proportion. As far as the essential goods providers are concerned, there is a huge demand but there are delays in deliveries due to delay in procuring goods, unexpected transit halts and shortage of manpower. Amid this we are also hearing of many technologies like drones and airships being worked out as a measure to combat the last mile delivery worries also honouring social distancing.

As we still cannot predict how long the pandemic is going to prolong, to put a number or figure to the prediction on its impact on supply chain sector is not feasible due to the uncertainty. With both air and sea freights impacted badly, there is a deceleration to the movement of goods across nations causing a considerable gap in demand and supply. The global investments are going to take a worse hit due to falling economies and a possibly worst recession. As this situation prolongs, the cash flows and reserves of the companies are going to be hit and even employment would become a concern.

 

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