Logistics back on the rails

Since the Covid-19 crisis began, it has affected almost all business operations in every sector and every part of India. Logistics has been particularly hard-hit, without which only certain cottage industries may function.

Even before the second wave of the disease began, in the spring of 2021, the pace of recovery was unclear. In 2019, the McKinsey Global Institute (MGI) predicted that India’s logistics sector would expand at a compound annual growth rate (CAGR) of more than 10%, from $200 billion in early 2020 to at least $320 billion in 2025. Unfortunately, the sector’s future is much more uncertain now than it was when MGI made that forecast….

Warehousing: Ordering and maintaining appropriate quantities is now harder than ever because traditional forecasting techniques have become ineffective: experienced buyers make decisions to purchase raw materials, but that experience may count for less in a radically changed country and world. Most companies could shrink their product mix to allocate warehousing to the most essential items in their portfolio….

Transportation: A shortage of drivers raised truck rental costs by a staggering 56-74%. For these and other reasons, logistics functions may remain open to all options during and after the pandemic, so they will have to act nimbly. One saving grace of the current crisis is that it has given India its best opportunity to shift toward multimodal transport – typically rail, supplemented by trucks for moving shipments to their final destinations.

From ‘India’s Post-Pandemic Logistics Sector: The Need for Technological Change’, McKinsey & Co


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