Meeting demand for supply

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In the Indian transportation and logistics industry, 7.5 million trucks, 7,400 freight trains and numerous cargo planes drive through the country every day, and millions of vehicles transport raw materials to factories and goods to grocery stores, supermarkets and customers’ doorstep. The announcement by the Union government on the evening of March 24th that it would close the country almost immediately from midnight that night brought all essential stocks to a standstill. The center soon realized, but perhaps not early enough, that this was a disruption India could hardly afford and issued new orders next week to clarify that the transportation of all goods, not just essential goods, was exempt from the ban would be. Meanwhile, the human chain of skilled, semi-skilled and unskilled workers keeping these wheels moving has flocked back to the sanctuary of their villages, increasing the very real prospect of an acute shortage of markets across India in the coming weeks.

This sudden seizure of the country’s economic body has undoubtedly further impacted economic growth forecasts as rating agencies raised red flags shortly after the ban was imposed. On March 26, Crisil lowered its growth forecast for Indian GDP in the 2021 financial year from 5.2 percent to 3.5 percent. On March 27, Moody’s Investors Service revised its estimate of growth in the current fiscal year to 2.5 percent, less than half of its previous forecast. Experts say the pain will continue for several quarters, especially if the government is forced to extend the ban beyond the first 21 days.

In late March, when the first week of the closure ended, Union Minister of Railways Piyush Goyal and Foreign Minister S. Jaishankar made a call to some of India’s leading industrialists to get an idea of ​​the situation on the ground. Participants included Mukesh Ambani, Chairman of Reliance Industries, MD Uday Kotak from Kotak Mahindra Bank and CEO & MD C.P. by Tech Mahindra. Gurnani. Sources say one of the main points of discussion is how to get the cargo moving again. The business leaders emphasized the debilitating difficulties in transporting even important goods and said that truck drivers are bothered by officials and bureaucracy and that cargo of all kinds is stuck on highways on the other side of the highway.

Although Prime Minister Narendra Modi said at the announcement of the ban that the government had taken steps to ensure that supplies of essential goods ran smoothly, the legal uncertainty of the essential goods led to a transport paralysis. To overcome the traffic jam, the Union’s Interior Ministry (MHA) allowed all goods to be transported across the country on March 30 without a distinction between essential and non-essential goods. The message highlighted the complexity of the economic supply chains and the confusion in the administrative processes, and even attempted to name certain foods that were considered to be essential elements such as: B. hand wash, soaps and disinfectants [and] Body wash ”, among other things.

There is paralysis across the supply chain, an official at a large fast-moving consumer goods company (FMCG) says, asking not to be named. The situation was expected to relax somewhat after clarification by the MHA, but the supply chain cannot be restarted at the push of a button.

OFF-ROAD TRANSPORT

While the core of the problem is the COVID-19 pandemic, a major problem has to do with the size and complexity of the transport sector. A single major event, such as a sudden freeze in vehicle movement, can have consequences that reverberate for days and weeks.

According to the toll committee of the All India Motor Transport Congress, a leading group of Indian transport companies, the sudden announcement of the national ban has stuck 20 percent of the 7.5 million trucks or 1.5 million on highways and roads across the country. Almost 3 million drivers and helpers were stranded together with these vehicles. At the time of writing, many remote deliveries that were underway at the time the lock was announced were stuck on highways, toll booths, and gas pumps across India. The immediate hope is that the March 30 MHA notification will remove these bottlenecks, but it has not yet done so.

How does this affect the movement of goods across India? It is crucial that the Indian transport sector is mainly based on trucks. A November 2019 Care Ratings report estimates that around 60 percent of India’s logistics movement takes place on the road and 30 percent on the rail. It is also inevitable that the transport of rail heads to warehouses and markets on the last mile will continue to depend on trucks. India has a total road network of around 6 million km, of which the national highways cover approximately 114,000 km and the state highways 175,000 km. The fact that the majority of freight transport takes place on the road is confirmed by the sector’s contribution to national gross value added (gross value added, a measure of the value of goods and services in the economy). In 2016-17, the transportation sector accounted for 4.85 percent of the country’s gross value added, road transportation 3.12 percent, rail transportation 0.77 percent, and air transportation 0.16 percent.

Visible signs of transport paralysis can be seen in the markets of the Agricultural Product and Market Committee (APMC) across the country. These markets, which deal with fresh agricultural products, are usually full of activities. In the early days of closure, however, they were deserted and there were trucks with supplies on roads and highways. There are over 2,400 APMC markets in India, of which Maharashtra has over 300. An estimated 500,000 trucks transport perishable goods such as processed food, vegetables and fruit from across the country to these markets every day. Now that truck movement has partially recovered, shipments have started to trickle, though the values ​​remain well below normal. At the APMC market in Vashi, Navi Mumbai, between 400 and 500 trucks with agricultural products from different parts of Maharashtra normally arrive every day. On the morning of April 1st, only 80 such trucks had arrived that day. Around 150 trucks directly supply the markets in Dadar, Ghatkopar and Byculla in Mumbai, but even these have experienced unusual delays.

The Indian Railways has also transported important goods in freight trains, which meets the requirements of mass transport. For example, much of the food transportation of the Food Corporation of India (FCI), which stores and distributes food across the country, is done by rail. Every year, the FCI transports 40 million tons of food, of which around 85 percent are transported by rail. The FCI is dependent on road traffic only in areas with poor rail connections. A small tonnage of food is also transported by ship, for example to the Lakshadweep and Andaman and Nicobar Islands. The FCI has 98 sidings, on which food rakes arrive directly at the FCI depots. According to reports, the FCI is currently focusing on the delivery of grain to countries with food deficits such as Uttar Pradesh, Bihar and Himachal Pradesh. According to a PIB press release, 148,000 tons of grain were shipped to food-deficit countries on April 1, with a total of nearly 1 million tons of grain shipped to different countries since March 24.

Another problem is that drivers are in short supply as a result of the pandemic. Truck drivers are now either saying they are unavailable or unions are asking for more money, says the CEO of a leading food company. He underlines the coming pain and adds: It will be impossible for companies to pass these additional costs on to consumers. Sanjeev Diwan, a well-known union leader in Punjab, Chandigarh and Haryana, explains the lack of workers, says that many drivers don’t report to work because their families are worried, and also highlights the many shipments that get stuck on Indian highways. In addition to the difficulty of getting road freight traffic going again, some state governments have put their own barriers in place. For example, on March 30, Punjab Prime Minister Amarinder Singh prolonged the blockade of the Union government in his state until April 14 and ordered the borders to be sealed.

Efforts are also being made to increase cargo flights, if only to ensure the transportation of necessary medical care. On March 30, the Union Ministry of Civil Aviation announced that it had requested (and will do) Air India and Alliance Air aircraft to conduct nationwide health care operations in response to government requests for medical care. On March 29, an Alliance Air flight from New Delhi announced such deliveries to Kolkata for Guwahati, Dibrugarh and Agartala, according to the announcement. On other occasions, deliveries of ICMR (Indian Council of Medical Research) Covid-19 kits have been transported in subways such as New Delhi and Chennai.

On the commercial side, the picture is rather mixed. According to SpiceJpress, SpiceJet’s air cargo arm, a major focus in the past few days has been on the transportation of medical good diagnostic kits, face masks, disinfectants, and surgical devices, with SpiceJet even converting passenger aircraft to cargo to meet government transportation requirements. A spokesman also noted that the company had trouble picking up the first and last mile and that it took longer than expected to implement the goods traffic regulations. SpiceXpress has a fleet of five dedicated freighters that cross the country daily and fly to countries in West Asia and Southeast Asia with loads of fresh fruit and vegetables, cold chain medical supplies and medicines. The company states that the demand for the transportation of meat, fresh fruit and vegetables from India to West Asia has increased. The pipeline is now flooded with charter requests from around the world, including Korea, Argentina and Canada, the spokesman added.

THE BUSINESS HIT

The FMCG sector, one of India’s economic drivers, is completely dependent on a healthy transport network. Industry spokesmen speak of major business disruptions in the first days of the blockade following the sudden restrictions on the movement of goods and workers.

Hindustan Unilever, headquartered in Mumbai, India’s largest FMCG company, was only able to operate a handful of its 28 factories shortly before and after the closure. To prevent the virus from spreading, local authorities had imposed strict restrictions to prevent workers from traveling to factories and sometimes working in factories. Many factories were later shut down as local authorities issued curfews and ordered private offices and factories to be closed, as in Maharashtra. FMCG Titan ITC speakers tell a similar story. While we’ve received permission since then [to operate and transport our goods] In some states, the lack of trucks remains a major challenge, a spokesman says.

This history of frozen supply lines has occurred in a number of India’s economic sectors. The sudden blockade has severely impacted interstate and local truck movements across the country, broken supply lines, and ripened conditions for confusion in the business ecosystem due to additional labor shortages in factories due to pandemic fears and constraints. “

This was clearly visible in the e-commerce area. Before March 24, the government’s request for self-quarantine caused a number of people to stay at home and sign up for their daily (and possibly panicked) purchases on e-commerce platforms. As the crisis worsened, platforms like Amazon and Big Basket were reduced to selling only essential goods. Then, on March 25th, the transport networks froze completely. Making the rapid recovery impossible was the vague regulatory environment in which the prime minister had announced that carriers would be issued IDs for essential goods. There were no clear administrative protocols for this. For companies, this meant late orders and clogged delivery pipelines.

As a result, the e-commerce majors experienced a virtual, ongoing business collapse from March 22-29. For example, during March 22, Janta Curfew, Amazon, Flipkart, and Big Basket found it impossible to do full orders for goods transportation from warehouses to customers, despite expectations of an increase in demand. In the days between Janta’s curfew and national ban, there was so much confusion that each state administration made independent decisions about traffic and transportation restrictions, an industry source said. Even some district administrations threw wrenches into the factories. Things have improved a bit since then: with increasing clarity regarding essential goods, we have decided to only deliver these items, sources at Amazon India say.

Nevertheless, many online providers report serious problems with the execution of orders. This is so widespread that, for example, the Paytm Mall has temporarily waived penalties for merchants for cancellations and delays in shipping orders. Around 100,000 orders on the platform are still pending due to government restrictions. Srinivas Mothey, Senior Vice President at Paytm Mall, says: [Our] Support teams work hard to resolve all seller inquiries and to regularly update updated order processing information.

Even the most critical medicines are not spared. While the central government’s drug department issued guidelines on March 26 to ensure the unrestricted transportation of raw materials, packaging materials, and labor for the manufacture, packaging, and distribution of drugs and medical devices during the ban, experts questioned their implementation.

RUN AGROUND: On March 26, Mumbai’s Sassoon Dock was largely deserted. Photo: ANSHUMAN POYREKAR / GETTY IMAGES

The Medical Technology Association of India (MTaI), a top committee representing large medical device companies, says that state governments and local administrators are not acting in accordance with the guidelines. They don’t seem to understand that this 21-day ban is supposed to prepare hospitals [and stockpile resources for what is to come]says MTaI chairman Pavan Choudary. He says trucks with vital raw materials get stuck at city and state borders, and although some manufacturing and storage companies have been issued official papers that prevent their operation from being blocked, they are involved in endless legal disputes with local police and administrative authorities of their materials.

A HERCULEAN TASK

On March 30, a consortium of CEOs from the food industry spoke to Harsimrat Kaur Badal, the Union Minister for their sector. They raised a number of questions, including government authorities’ failure to comply with central transportation guidelines during the blockade and requests to provide official instructions to state police stations. They also say that the multiple exemptions and permits required to reopen factories are an unsustainable burden for the industry.

There are other important problems as well. For example, as Rajnish Gupta, a cooking oil wholesaler in New Delhi, points out, the production and delivery of cooking oil is allowed, but not of empty bottles and closures. (This problem also affects industries such as the pharmaceutical industry.) Food processing companies have stocks on average [of packaging materials] A CEO from this industry estimates for about a week. The unavailability of workers is another problem. The employees do not report to work for fear of the new corona virus. Although we’re trying to convince workers that we maintain the highest standards of social distance and hygiene, many don’t come back, he says.

On March 29, officials from the Prime Minister’s Office informed Parameswaran Iyer, Secretary of the Ministry of Drinking Water and Sanitation, about the establishment of eleven government response teams, monitored by Prime Minister Modi, P.K. Mishra. Iyer, known for his execution skills and working with the Prime Minister on the Swachh Bharat initiative, was tasked with the Logistics Working Group. He leads a team of high-level bureaucrats from several key departments, including food procurement and public distribution, consumer affairs, border management, CBDT (Central Board for Direct Taxes) and NDMA (National Disaster Management Authority). The most critical of his tasks is to bring the food sector back online. A measure of how serious this moment is is in the immediate goal. Experts say it will be a great success if the Iyer Group can quickly bring the sector’s production back to 40 percent of its capacity.

The problems that Iyers Group has to solve are innumerable. An important problem is that the government must quickly create, publish and implement a clear system for issuing exceptional papers for different industries in different countries. Some states and local governments are contributing to the support. The Delhi police have announced plans to speed up transport passports, while the Bengaluru police have issued curfew guidelines and the Maharashtra government has started issuing passports and guidelines for transportation companies.

Given the COVID-19 pandemic, the government’s decision to impose a national ban was generally seen as a necessary evil. However, so that the cure does not take a worse toll than the disease, it is important that the production and distribution of the country’s primary care, which is based solely on a functioning transport and logistics sector, remains robust and active. If the impending crisis in the manufacture and delivery of these goods, including food, medicine and medical supplies that are not tackled on a war basis, the national ban will be an unbearable burden for the nation.

Ready to go, Can not walk

Harishchand Yadav, 55, driver, Shreya Logistics Mumbai

The national lock was a nightmare for Yadav from Uttar Pradesh (in white). His truck has been parked since the March 24 announcement. His employer, Lalit Kumar Pathak, has a fleet of 25 truck trailers. Everyone is now idle in the company’s garage in Jasai near the Jawaharlal Nehru port in Navi Mumbai. Nobody knows when the textile, rubber and steel companies with which his company works in cities like Vadodara, Vapi and Silvassa will go back into operation. Some of Pathak’s work also relates to agricultural products, but these deliveries were also often stopped at checkpoints, which led to the decision to shut down. Most of my 50 employees come from Uttar Pradesh and Madhya Pradesh. Since they cannot go home, I have to take care of their maintenance, which amounts to around 6,000 rupees a day, Pathak says.

A day of total chaos

Saurabh Kumar, 36, founder, Grofers NCR

As soon as the block was announced, there was a full day’s work stoppage. Kumar says his deliverers can’t get into the camps. There was total chaos, everyone knew that essential services were allowed, but there was a lot of confusion on the first day. Obtaining permissions was cumbersome. We had to apply in every district we work in, and each district had different rules. His business is now facing a labor shortage and problems in securing the supply of goods. Delivery to consumers is regulated, but the delivery of raw materials to manufacturers and the securing of workers and the delivery of branded goods are cause for concern. Most brands say they have their supply chains in stock for a month. However, if the blocking period is extended, bottlenecks in the supply of important goods can occur. According to Kumar, the implementation of a central control agency, an online portal for authorizations and uniform guidelines across the country would have helped to prevent the chaos.

Far from the normal

Sanjeev Diwan, 47, owner, Chandigarh Indore Roadlines Chandigarh

Diwan’s company is one of the largest in Chandigarh and operates around 40 trucks. He says more than 10,000 of his colleagues’ vehicles are stuck on highways across the country. And many of the drivers and cleaners who made it back are unwilling to get behind the wheel again. Her families are concerned, says Diwan. Long-distance transports are stranded at various toll booths and petrol pumps. Stranded drivers have no choice but to take care of themselves, but being far from home and without reliable access to food has made life difficult. Even worse, since the Punjab government sealed state borders, movement has become almost impossible.

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