The coronavirus is spreading at a fast pace across the globe causing increasing COVID-19 cases. While the cure or vaccine for COVID-19 is yet to come out, the come out, the only way to combat it is to contain it. Most affected countries have now realised the essence of containment and have taken measures like home quarantine, lockdown of cities, closing of state and country borders.
It is imperative and high time that such measures are taken. Meanwhile, we can also assess the flip side of the measures to the various industries. The airlines, hotels, travel and tourism, retail services, luxury products and services, fashion and clothing, Entertainment and Cinema, electronics, mobility services (cabs and taxis) are the worst hit segments due to the lockdown and subsequent decline in demand and necessity.
Impact on online deliveries
The necessity calls for more demand in the logistics, supply chain and e-commerce segment which is the most required sector to transport movement of goods and essential supplies. However, the supply chain sector has had its own impacts. With the closure of air travel to most parts of the world, the belly capacity reduction has impacted movement of cross border trade by air. It is only the cargo aircrafts that are operating which means that the capacity has gown down by almost 70%. The war for space on the available capacity has led to global freight rates shooting almost 6-8 times in the present scenario. This is expected to further go skyrocketing as the global supplies need to be replenished through trade and the demand will only increase.
When we speak about commodities, the pharmaceuticals, medical goods, vaccines and drugs, medical equipment, essentials like face masks and hand sanitizers demand are the most traded commodities, whereas the regular exports like garments, automotive parts, leather products, home furnishings, handicrafts and perishables have declined due to comparatively lesser requirement.
The way forward
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 affecting railways and road transport will lead to deferred movement of supplies thereby increasing cost of goods. With the cancellation of the domestic flights across the country, the rapid movement of e-commerce and supply chain will get affected and the e-commerce business will become deferred. In a nutshell, the demand and supply gap is expected to increase.
The situation will also lead to unemployment and an interruption in the source of income of the daily wage workers like truck drivers, loaders, equipment operators in warehouses and ports. The rents and loans payable by the various companies and individuals ought to increase leading to defaulters and delays in payments.
In view of the above, while the demand of the logistics, supply chain and e-commerce sectors have not been directly impacted by Coronavirus, but the indirect impact is inevitable and is will subsequently affect the growth and sales which is yet to get unfold.
The article has been authored by Mr. Dr Ambrish Kumar, Founder, Logycode Tech Solutions Private Limited