The clear differentiator for India, as it was for China two decades ago, is its large domestic market. It is a pathway to local scale, climbing the competitive value chain, as well as building an export base. The outcome is long-term employment and opportunities that will, in turn, strengthen the economy qualitatively and commercially. Rohit Hegde, Director at KSH Group explains how improvement in governance, attention to employment and tackling key issues faced by the industry is critical to realise the value proposition at India’s core. Excerpts from his interview with Upamanyu Borah.
In the later phase of lockdown, what is the ground reality? Has seamless transport systems been restored?
Seamless transport systems have absolutely not been restored, and it won’t until we get back the migrated labour force. This would require putting in place safety policies that can enable a phased return to a semblance of normal operations. I think we are a while away from that, and it’s too early to say when that will be. We have to see if the lockdown and all other measures taken by the government can curtail this widespread pandemic as adequately and expected before the transport systems can return to normalcy.
How has your organisation been providing a stable customer experience during the lockdown?
We have multiple businesses and the experience in each has been different. In our container logistics business, we have been classified as an ‘Essential Services Provider’ and our operations kept running throughout the lockdown period. However, we had been struggling with the trucking segment with all our drivers having returned to their respective states of Punjab, UP and Bihar. Despite business constraints, we have been serving our customers who have also realigned expectations considering the market conditions.
Talking about the infrastructure developments, initially, we had a temporary shutdown of the construction sites due to lockdown. Later, we managed to resume operations and retain our labours on site, with taking necessary care of their health and safety throughout the ongoing lockdown period. This has resulted in our ability to continue work when the situation has become today’s ‘new normal’.
The consumer sentiment being low now and considering economic downturn across the globe, what will be the scenario of logistics services requirement in the next couple of years?
We expect this year to be a tough one for the logistics sector. There have been several disruptions to the global supply chain, which will have a lasting impact on the Indian logistics industry as well. Having said that, a few sectors will continue to grow; e-commerce, in particular, is expected to see manifold growth. I think every organisation will have to recalibrate their business strategies to cope with the challenges of COVID-19 and also benefit from the opportunities that are likely to arise.
In our 3PL segment, we have identified the multi-client warehousing operations segment as critical and putting our renewed focus. We are currently rolling out a pan-India platform to cater to the growing need for short term and flexible operations. With growing disruptions in global supply chains, we feel, large multinational companies will look for more dynamic supply chains, which are not constrained by location or scalability. We expect this market evolution to continue at a robust pace.
Do you see some modal shifts in the way the industry had been working earlier?
India will continue to see a push towards automation, but I doubt if there will be a dramatic shift in the way things are being done. We will still need a lot of trained manpower, and the future will continue to be bright as long as we can make fundamental changes that can lead to our manufacturing sector becoming more competitive. In India, it’s an absolute necessity to accelerate growth considering our exploding population, and for those fundamental issues such as availability of land and trained manpower will have to be addressed, the rest will automatically follow.
Experts say the industry will also see lot of automation across industries with less staff and more of machines doing the job. Is this a curious case of commercial consideration or a business continuity necessity?
Globally, automation is a growing trend, and we see rapid adoption of automation amongst multinational companies. Most of them will learn from global experiences and continue to adopt ideas that have worked elsewhere. Having said that, the balance between business continuity necessity and commercial consideration will differ from industry to industry and each will react accordingly. I think in a country like India, we should focus more on job creation, improvement of governance, and tackle key issues faced by industries such as availability of land and trained manpower, and not worry too much about disruption of job opportunities because of automation.
I personally feel that we are still far away from those concerns and have plenty of basic economic issues to address, which could help make India a more sustainable manufacturing base for global players. All our focus should be on supporting and enabling that.
Post-lockdown, how long would you estimate it would take for our industry to get back to business as usual?
I expect the industry to recover in the next 6 to 9 months post-lockdown.
This is largely due to two factors, first is the non-availability of labour. Skilled labours from across industry sectors have gone back to their villages or towns and are likely to return only when COVID-19 cloud completely settles down. The non-availability of labour, combined with continuous disruptions to work on account of spike in COVID-19 cases is hampering business stability; this is likely to continue to an extended period.
The second factor is consumption, which may remain depressed for some time. Key players have already recalibrated their operations to sustain their engagement and outreach capacity to cater to this depression in the market. For this sentiment to reduce and consumption to pick up in general, it may take between six to nine months after the end of the lockdown period.
What are the areas logistics professionals globally need to keep an eye on, and put up a unified front?
The logistics industry is going through a technological transformation. The startup eco system in logistics is robust; there are several different businesses that are being built from the ground up over the past five years. These businesses will compete with a lot of the nuts and bolts players of the past.
I think every aspiring logistics professional should be informed these developments. And for that, it’s imperative that you keep your ears close to the ground. In India alone, there are several startups such as Rivigo, BlackBuck, Delhivery, etc. which are disrupting the way logistics has been traditionally carried out. These are young and exciting companies and it’s important for everyone to stand up and take notice and learn and adapt.
As India tries to be a manufacturing hub, how can the logistics ecosystem players gear up in supporting India’s dream of becoming a manufacturing hub?
I think the logistics ecosystem is gearing up for the e-commerce revolution, and a number of renowned companies have already emerged on Indian soil. Having said that, India becoming a global manufacturing hub would not only depend on the private sector. Key structural reforms will need to be undertaken to make that happen. I am quite confident that when these reforms do take place, the dynamic entrepreneurial spirit in India will shine and pull us through.