Konsult

Post pandemic world for labour intensive sector

In a post Covid scenario, every industry will have to adapt itself to the changes in one way or the other. In this mini-report, Konsult has assessed the way ahead for the two most labour intensive sector- Logistics and Aviation.

LOGISTIC AND AVIATION SECTOR
Products have little value to customers until they are moved to customer usage areas when they are needed, viewed through this in mind the logistics industry is considered a crucial sector to boost international trade through digitalization and globalization. Just like veins are crucial for the blood flow in the body same goes for the Logistics and Freight Industry, they are required for the flow of raw material and essential services across the globe. Logistic industry is rapidly growing and evolving to ensure quick, efficient, and economical transport of goods across India as per the need of the hour. With various promising government policies and schemes like Bharatmala, Sagarmala, and opening of dedicated freight corridors, Indian Logistic Industry is ranked 44th amongst 160 countries and its contribution was 14% of GDP (2018-19).

IMPACT OF COVID 19-
Impacts of Covid-19 are being felt across the Logistics sector, being a labor- intensive sector it is worst hit by this pandemic. The pressure of the companies has now transferred to keep a core transportation system operational with the skeleton workforce as a result of migrants’ movement to their homes.

“The volume decline will be asymmetric across the value chain, with standalone truck operators showing the highest stress, followed by inland logistics players, ports and warehouses,” the Indian Rating said.

  • Crude price reduction will impact the transportation cost positively in the short run.
  • FMCG and healthcare are among the major industries facing prominent logistics challenges. Amid lockdown in the country, FMCG industry was facing panic buying by consumers as they feared a shortage of supply.
  • The agriculture sector was exempted from lockdown to make sure enough supply of food and other essential agricultural products.
  • Talking about the mode, roadways were less affected as compared to airways as well as waterways. Trucking is seen as a critical mode of transport amid the pandemic.
  • When the lockdown ends, the country will be requiring the cargo vessels after weeks, for importing the goods to fill up the gap between the domestic demand and supply. If the demand will be very high it can impact the short term prices resulting in inflation.
  • Post monsoon the demand is expected to surge as the festive season is arriving. So a perfect supply system needs to be ensured, aligned with the surge, to serve the consumers’ needs.

RETORT, EVOLVE AND FLOURISH:WAY FORWARD FOR LOGISTIC SECTOR
Imagine the world without transportation; it would be impossible for any industry to survive if the supply of its core raw material is hampered. This black swan event of Covid-19 has brought the world in such an adverse situation that the whole country was locked down for almost 3 months, with only the bare minimum services in tune.
The logistic industry needs a plan ahead to ensure that the transport network will be ready to bring back the operations on its normal track when lockdown measures will be lifted:-

The logistics industry needs to pull up its socks to strike the balance between reduced operations and providing enough capacity for key workers to be able to practice social distancing.

Due to the unexpected shocks on the revenues side, Industry is experiencing the shortfall of the finances, therefore it needs to take up Longer-Term Investment Programmes. Re- prioritizing as well as re-planning must be done, in the light of hampered revenues.

Human Resource is the vital part, availability of the key personnel who could be critically skilled and trained to equip them with the proper guidelines to be followed while at work for their protection.

Cost-efficient maintenance of the carrier like sanitization, personnel as well as the goods need to be in line as early as possible to maintain hygiene and safety. Policy support and standardization of hygiene transport is a must.

The prerequisite is to create a number of contingency plans for resumption of the services, to meet the upcoming surge in the demand side.

Since Logistic industry is a working capital intensive industry, so working capital loan limits need to be increased to ensure smooth functioning. Relaxing terms of existing loans like interest deferment, the increased moratorium will ease life.

The digitalization of compliances related processes will help in reduced workload and will allow focusing on the core tasks.

While localization in trend resilience supply chain needs to be in place, to respond to the repercussions of unexpected events.

AVIATION INDUSTRY WAY AHEAD-
Since the COVID-19 pandemic has gripped the world into its clutches, there are many industries and major global economies reeling under the ill-effects of this pandemic. Ironically, the aviation industry which seamlessly spread the Coronavirus across the world is also one of the worst affected industries. The International Air Transport Association has predicted that airlines will lose $314bn in revenue this fiscal– almost three times greater than its original worst-case scenario’ prediction in March. Even after an ease in the lockdown measures across the world, Passenger confidence will suffer a double whammy—hit by personal economic concerns in the face of a looming recession on top of lingering concerns about the safety of travel. Over 40 major airlines have grounded their fleets and most have suspended over 90% of their flights. Moreover, some of the most financially secure airlines, like the British Airways (which has a strong parent backup of IAG) terms itself to be fighting for survival leading to a big question mark about the other airline companies which were not very fundamentally strong.

Aviation is fundamental to the support and growth of local and global economies, so what changes should the Aviation industry resort to come out of this pandemic?

  • Kiosks at all the airports. Having Kiosks will reduce human contact it will be beneficial for the customer and employees if these kiosks are enabled with voice navigation.
  • Boost for Online Check-in will help in reducing human contact.
  • Less waiting time at the airports.
  • At all airports automate the luggage belt so that human contact can be reduced while loading and unloading from the airplane.
  • Reviving traveler confidence in air travel: Additional health screening facilities, washroom cleaning facilities will all require modification to existing airport facilities.
  • Resorting to a seamless journey for passenger: Processes that avoid physical contact and reducing the formation of the queue through security and border control, would improve passenger experience and cut the future potential for transmitting disease. Replacement of travel documentation with facial recognition simplifies the normal processes of check-in, bag drop, border control, security clearance, and boarding. This also means Investment needs to be done in the enhancement of technologies at the airports.
  • Updating of Infrastructure: With this moment in the hand of the period and very less usage of airports, The maintenance, and repair work of airports must be done for building a robust infrastructure for the upcoming challenging days of airport operations keeping in mind of limiting the Capex (because the cash flows are already under stress for the airport authority).

Authors: Avishek Pahari, Naveen Yadav, Ayushi Gupta, Sakshi Rastogi

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