Logistics is the wheel which keeps the industry moving and flowing just like a river flows towards the sea inexorably, so do goods and services flow towards their customers and end users. Prof. R. Jayaraman, Operations and Supply Chain Management, Bhavan’s SPJIMR (S.P. Jain Institute of Management and Research) talks about how the world of logistics likely to be affected by COVID.
No company can operate without logistics of some sort; it can be physical, as in the case of trucks, ships, trains as well as non-physical, as in emails, tweets, Instagram and more. One may be surprised by seeing the inclusion of emails and others as ‘logistics’, we will explain. The global, conventional logistics market is expected to grow at a CAGR of 3.48 per cent per annum, between 2016 and 2022, and reach US$ 12 trillion. Transport is about half the size of the Indian logistics industry, followed by warehousing and storage, comprising another 25-30 per cent of the market. The rest of the Indian logistics industry market size constitutes value-added and freight forwarding services. Road transportation with over 50 per cent market share dominates the logistics industry in India, followed by the Railways sector at over 30 per cent, water transport at seven per cent, and air shipment at one per cent.
After COVID, a set of new media will come into existence to service the new normal which are online – buying, selling, education, offline – home delivery, last mile delivery, high speed delivery, express delivery and combined logistics – information and transport. These three new fronts will get opened to the traditional logistics sector, after COVID.
The COVID phenomenon is likely to present opportunities and breakthroughs to those logistics partners which are willing to change their present processes for carrying goods from one point to another. In the traditionally commoditised business of logistics, new gaps have been created, for branding through differentiation. What are these, and what is the positioning? To begin with, assuring the customer of ‘COVID Free’ (CF) transport and deliveries by using innovative ways of including new services in the transport portfolio, regular carriers can provide an additional degree of comfort to customers, who are seeking assurances that their customers (the end customers) will be happy to receive CF goods. The new CF services include preventive, detective, and transitive measures.
Preventive measures for CF transportation for trucks and tempos
Since road movements account for over 50 per cent of transportation, let’s address this mode of transport first. Preventive measures are undertaken to ensure that only CF trucks or tempos are sent to meet customer requirements. They are to be practiced at all depots of the company where trucks/tempos are parked, ready to go on a customer call.
Unlike in the case of Uber or Ola, where the nearest available cabs are told to go to the customer, to meet the need immediately, in industrial transportation, this should be avoided. Only trucks or tempos which are stationary and certified as ‘COVID Free’ by an internal certifying agency, at a company depot, can be allowed to go to the customers for cargo loading. It is known that many small transport companies do not own or operate company depots, such companies will be at a disadvantage. They should immediately look at how this can be done through a ‘co-operative for shared services’ route.
A few small transporters can get together, hire a space, and operate a ‘co-operative depot’, where parking and a few other services are available, by a third party. Preventive measures will include a clean parking space from where the trucks or tempos will start for the goods-carry, where, practices like sanitising, hygiene, masked and gloved personnel, security checks of incoming and outgoing goods will be done, monitored, tracked for on-ground, flawless implementation, and on-line, real-time corrective and preventive actions to ensure zero non- compliance. These ‘truck stops’ should also provide for rest rooms for the truck staff, and some space for resting. Those who have seen BEST bus depots in Mumbai or railway facilities for engine drivers and guards at railway stations, can get an idea of what is being suggested. All these actions clearly indicate the need for a set of rules, processes and guidelines for doing day-to-day business, which will become the new, differentiation norms. The better a transport company is able to do this, the better is its chance to become a preferred supplier.
On-the-move CF services
Second, ‘on-the-move CF services’, which include the detective and the transitive measures, such as GPS monitored drive, pre-selected halting stations, time bound arrival and departure schedules and adherence, hygiene for the driver and the helper. ‘Detective’ refers to the tracking, monitoring, logging, verifying and audit part of the CF activities, whereas, transitive refers to the tasks performed during the transport. During the loading and unloading of goods, they must be checked for their CF status. Security clearance from the loading crew, of the customer, should be obtained. Both, the transport agency, and the customer, must contract to define and follow CF guidelines, at the customer premises. Once the truck is loaded and, on the road, the guidelines as per the ‘on-the-move CF services’ should be followed. These should include no unauthorised stops, filling up of fuel only from contracted and CF compliant parties, sticking to the pre-determined routes, CF food on the way, and generally hygienic maintenance of the truck driver’s cabin.
An important consideration is the CF packaging of the goods to be carried. Goods to be transported must be well covered in non-plastic media and must be packed in environment friendly containers. The loaders and unloaders must be certified for their CF status by the respective client companies. Instruments for temperature measurement, oxygen levels, masks and gloves as well as sanitisers should be available at the client end. Information about the overall COVID situation near the client premises (whether green, yellow, orange or red zones) should be known. This will help in minimising the risks of COVID catching.
What happens when the transport is multimodal?
It would be ideal if one transporter uses one medium to carry goods. However, such an ideal world is not possible in reality. So, the next best thing is to identify those transporters who are in the CF mindset, and collaborate with them through MOUs. Contractual understanding must be reached with other modes of transport, and this will, over time, lead to a consortium like approach to transport. Those consortia which are perceived to be the best in terms of a CF delivery, will be preferred. This will take some time and efforts, but those who succeed, will reap the low hanging fruits. There is no doubt that this will be the way for the long term, and I would suggest that transport companies start working on the new concepts explained above – CF services, transport consortia. Those transport companies who are already in the 3PL and 4 PL operating mode, will find this transition easier.
What is the future of the transportation industry after COVID?
For those who are willing to see the opportunities, and build for the future, there is a great future waiting. For those who want to continue with the status quo, the weather is gloomy. In addition to the two concepts which have been highlighted, there are the other new concepts of online, offline and combined logistics, which, when incorporated into the business model, will create the transport giants in India.