What has been the impact of lockdown on the logistics sector?
The COVID-19 pandemic had a severe impact on logistics firms, which included handling the flow, storage, and movement of goods. The pandemic’s effects on supply chains had shaken the sector’s competitiveness, the growth of the economy, and employment opportunities.
Inconsistencies in the supply chain due to lockdowns have hampered logistics operations around the world. Border restrictions have led to a temporary stoppage in human mobility and transportation activities, which has resulted in unprecedented pressure on shipping and road freights and created severe impediments to international trade. With this, many firms have experienced major disruptions in transportation and logistics services, including impacts on transportation and logistics data, time delays, cargo cancellations, port closures, and slow customs clearances.
Additionally, the manufacturing industry has been severely impacted, which has decreased demand for logistics services and pushed down rates for warehousing, freight, and logistics. Short-term indirect effects included decreased output, broken supply chains, decreased demand for raw materials, etc. All these have adversely impacted the transportation and logistics performance to achieve the predicted future potential.
As a global logistics company, we face supply chain disruptions on a regular basis. We adapt our global standards of business continuity management continuously and test our Business Continuity Plans (BCPs) addressing different crisis scenarios. These BCPs are designed to protect the safety and well-being of our employees and to ensure uninterrupted service for our customers. Regarding the magnitude of the COVID-19 effect, we executed new and continuous risk assessments and business impact analysis and implemented new measures into our business continuity framework based on alert levels.
Your comment on the role of the logistics sector in reviving the economy.
The COVID-19 pandemic has brought the entire world to a standstill. It had a significant impact on the supply chain because the shipment of goods had been negatively impacted, consequent to the curtailing of all transportation activities. The logistics industry, however, has quickly bounced back as it has been crucial to the world economy’s revival.
The logistics and supply chain industry had a significant resurgence because of the integration of modern systems and digitally assisted technology that has helped businesses to overcome critical issues, especially during the pandemic. With the changing demand and customer requirements, logistics companies are building reliable solutions to help with the on-time delivery of goods. Additionally, the businesses have launched solutions emphasising sustainability and efficiency in day-to-day operations with tailored service offerings. Therefore, logistic enterprises have transformed into solution providers, facilitating the seamless and simple recovery of the economy by providing a wide range of supply chain and transportation solutions.
Digitalisation will play an important role in the efficiency and performance of freight management and port operations. What are the steps taken by Kuehne+Nagel India to adopt the new digitalisation trend?
Kuehne+Nagel continues to invest in technology such as big data and predictive analytics. Kuehne+Nagel provides a suite of digital solutions such as eShipAsia and eTrucknow with on-ground support from its local experts.
Similarly, myKN digital customer platform, where all our logistics services are consolidated and ready to be accessed at the touch of a button – from transport offering to shipment tracking. The online platform, seaexplorer, enables our customers to track all container ships worldwide in real time and anticipate the transit times of our ships. In air freight, the Shipment Data Wallet application digitalizes bookings that are still made non-digitally.
Specialized Service offerings:
– KN offers Quick, a premium logistics solution that provides round-the-clock support and efficient transportation with customised solutions for time-sensitive shipments.
–KN FreshChain, a solution for perishable commodities and refrigerated products to ensure that they arrive with an optimal shelf life to the customer.
–KN PharmaChain delivers a configurable shipping service with superior compliance and a global network of 90+ KN PharmaChain logistics expert who monitors the shipment performance based on strict processes and guidelines.
Indian government recently launched the National Logistics Policy with an aim to improve India’s trade competitiveness, create more jobs, and improve India’s performance in global rankings and pace the way for India to become a logistics hub. What are your expectations from NLP?
The National Logistics Policy (NLP) has taken a comprehensive approach to address various logistics industry pain points to create a seamless, cost-effective, resilient, and sustainable logistics ecosystem in the country while streamlining rules and addressing supply-side issues. Furthermore, the policy encourages the development of infrastructure, interoperability, and the smooth operation of goods, as well as the reduction of logistical costs. These enhancements will provide a strategic direction for the sector and act as a critical catalyst for attracting investments. We are excited to see how the NLP initiative will take India’s logistics to the next level. We look forward to collaborating with the Indian government to make this a reality.
The Indian Government has taken active steps to cut logistics costs by 5 per cent from the current 14 per cent. If the target is realised, it will catapult India to the league of developed nations, where the logistics costs are around 8-10 per cent of their GDP. Measures such as framing state-level logistics policies and master plans, use of a single-window clearance system for logistics, establishing the grievance redress mechanism, and large-scale skilling in this sphere will help to achieve ambition. The Government is moving positively in establishing connectivity for its Air, Rail & Road and Waterways transportation within the country.
The policy’s comprehensive approach should pave the way for more inclusive progress, with more job opportunities and improved logistics service delivery efficiency.
Technology is redefining the e-commerce industry in more ways than we can even begin to imagine. How is technology reshaping Ecommerce?
The world has seen unprecedented growth in the e-commerce sector. Since the pandemic began, people all over the world, including India, have been shopping online in greater numbers, raising the prospect of e-commerce and delivery services to record heights.
Despite severe transportation disruptions, the e-commerce logistics sector achieved significant growth during the pandemic. Last-mile and multimodal transportation is assisting e-commerce infrastructure in becoming deeper, faster, and leaner to carry things from factories to doorsteps. Many organizations are turning to third-party logistics and maximizing their resources to satisfy the need for speedier delivery.
The industry players are incorporating technologies such as Big Data to understand customer behaviour and improve the service experience, Artificial Intelligence (AI), and Machine Learning (ML) technologies for a deeper level of personalization. Cloud-based technology is helping e-retailers, reduce shipping costs, simplify their logistics, analyse their spending, and seamlessly manage returns for both the customer and retailer.
Thus, technology is transforming the e-commerce industry for both buyers and sellers, and as it evolves, possibilities for businesses and consumers will emerge.
What are the major trends, challenges and opportunities in the logistics and e-commerce sector?
The logistics costs in India have been an area of concern for a while now, especially in terms of global market competition and the recent efforts in making India the global manufacturing hub with the ‘Make in India’ movement. Against the backdrop of the pandemic, even as global trade slowly comes back to speed, mounting logistics costs pose a major hindrance to the growth of the sector and the economy at large.
India also faces challenges in port and roadways infrastructure, which directly impacts the transportation of goods. The need of the hour is to develop adequate warehousing infrastructure in the fringe areas of major metropolitan trade hubs of the country and in high commerce corridors.
To overcome the challenge of unskilled manpower, logistics companies must offer cross-training opportunities that can help create career paths within and establish a reliable talent pipeline. By working with educational institutions, the logistics sector can open doors for the next generation of workers by offering internships or apprenticeships for transportation planners, warehouse operators, and other logistics-related roles.
Going forward, following trends and opportunities will impact the logistics and eCommerce sector to a great degree.
–Increased dedicated air cargo capacity: The world has seen unparalleled growth in the e-commerce sector, which has led to significant growth in the air cargo industry. Therefore, the airline industry is already reallocating its fleet to exclusively serve air cargo demand.
–Reconfiguration of global value chains: The pandemic has exposed the vulnerability of extended and complex value chains to production disruptions, particularly in the East Asia Pacific region. As a reaction, many of these supply chains may shorten or diversify through reliance on alternative partners (for example, nearshoring) or intensified efforts to bring home (such as reshoring) strategic value chains. There may also be a tendency toward locating additional warehouse capacity or dry ports near demand areas in order to reduce the time it takes for goods to reach the market.
–Technology and e-commerce rise: Logistics has been in the midst of a tech-driven revolution. Companies with strong digital capabilities that enable them to give cargo visibility/traceability and conduct commerce online have an edge. This would necessitate investments in technology such as the Internet of Things (IoT), cloud computing, automation, and data analytics. Long-term, robotics, drones, and autonomous vehicles may lessen the vulnerability of logistics service companies to labour shortages.
What is Kuehne+Nagel India’s outlook on logistics and supply chain segment?
India’s supply chain industry has a bright future ahead as tremendous growth is anticipated and past disruptions are estimated to settle. India’s logistics sector, which includes supply chain and operations, is expected to expand at a CAGR of more than 10 percent, increasing from $200 billion in 2020 to $320 billion in 2025. And we believe that digital transformation and sustainable business initiatives will be the way forward.
In a Supply Chain 4.0 world, predictions are being made about ‘smart factories, which will use high technology like real-time analytics, automation, and other such concepts to make the process easier and the outcomes more profitable. The future will also lead to real-time control and transparency, which will be beneficial in tracking performance. The usage of RFID tags is a good measure as it is helpful in all sectors. Integrating artificial intelligence and the Internet of Things will help companies carry out tasks efficiently and maximise potential.
Forging ahead, Kuehne+Nagel endeavours logistics solutions that are more sustainable for our customers, enabling them to build a more resilient and agile supply chain.
What are the sustainability initiatives undertaken by Kuehne+Nagel India?
The logistics industry has a responsibility to safeguard the environment. At Kuehne+Nagel, sustainability is the foundation of everything we do. As part of our efforts, in line with the Science Based Targets initiative (SBTi) and commitment to a low carbon business model, we are continuously developing easy and transparent sustainable shipping options so that our customers have options of how they can minimise the environmental impact of their shipments.
Sustainable Aviation Fuel (SAF) plays a huge role in achieving a transition to net-zero flying and achieving emissions reduction goals across the aviation industry. We recently became the first air logistics provider to offer our customers the option to purchase SAF for all air freight logistics services, across all its platforms and channels – online or offline. The offering of this new SAF option will contribute greatly to the reduction of carbon emissions and impact the future of sustainable air logistics.
Beyond SAF, in sea freight, there are vessels running fully on biofuel. However, that is not the industry standard yet. Following the same principle as in air freight, Kuehne+Nagel offers the Mass-Balance-Concept allowing to allocate fully traceable biofuel contingents to cargo shipped on a regular fuel vessel.
For trucks, we see Hydro-treated Vegetable Oil (HVO) as a primary strategic bridging technology to 2030 that is steadily on the increase and biofuel will become more readily available over the coming years. It is a long-haul focus, offers up to 90% reduction in CO2 emissions, and is being used today in our own fleet of trucks and carriers on select routes in Europe. India is an important market for us, and we have launched several initiatives to provide green logistics solutions and reduce carbon emissions.
We relocated our India headquarters to the AIPL Business Club on Golf Course Extension Road in Gurgaon, which employs solar panels and efficient double glazing with lower solar gain, among other things. We also recently launched an electric vehicle service for airport transfers in Mumbai. With this service, we aim to switch to electric vehicles (EVs) in a phased manner to reduce vehicular CO2 emissions by 24.7 tons per year. Kuehne+Nagel intends to gradually transition to EVs across all regions to progress toward a more sustainable future and Greener India.