With different lockdown regulations, timings, etc in the different parts of the country, logistics companies are facing operational challenges.
Lockdowns and unclear regulations have thrown a spanner in the works for logistics players and e-commerce companies as they are struggling to operate with different set of restrictions and timings in various parts of the country.
While orders are now piling up in warehouses, the uncertainty has also led to a massive drop in orders for non-essential goods.
“There has been a definite drop in shipments. Even though states like Delhi and Maharashtra have allowed outbound movement of trucks and goods, certain product categories are still not being allowed to move out of the state and some are not allowed to enter the state,” says an executive at a logistics company.
Delhi-NCR and Maharashtra, have a large number of e-commerce fulfilment centres. Unclear regulations in these regions have hit outbound movement of non-essentials to cities and towns that are not under lockdown.
According to industry estimates, about 40 percent of the total number of e-commerce shipments in the country are facilitated by these two states.
“There is a bit of confusion about whether the inter-district movement of goods within Maharashtra is allowed or not. There have been a series of announcements and we are still trying to understand them,” says Praharsh Chandra, co-founder and COO, Shadowfax, a logistics company.
Similarly, according to a source in one of the large e-commerce marketplaces, the company is struggling to source products from its sellers in Delhi due to the restrictions on the movement of non-essentials.
“Products like oxygen concentrators are classified as non-essential, however, in today’s scenario they are a necessity and we can only source them from the offline sellers,” he shares.
Drop in orders
The logistics players are facing challenges in inbound as well as outbound movement of products in Chhattisgarh also because several districts imposed a lockdown in the beginning of the month itself.
“Inter-state, as well as inter-city movement of goods, is difficult in the state,” says Chandra of Shadowfax.
In the wake of these lockdowns and curfews, wherein some states including Delhi and Maharashtra are only allowing delivery of essential products, e-commerce order volumes in the country have dropped by over 50%, as per industry sources. Though e-commerce companies have reported a rise in orders of essential items such as groceries, a large share — about 90% — of e-commerce order volumes in the country are contributed by non-essential categories like fashion, smartphones, and gadgets and a regulatory ban on them impacts their order volumes.
To fight the second wave of COVID-19 pandemic, Delhi had announced a six-day lockdown from April 19-26 on Monday, while Maharashtra had announced a state-wide curfew from April 14-May 1. States like Rajasthan, Uttar Pradesh etc have announced weekend curfews, while others like Karnataka, Kerala, Telangana, Goa etc, have imposed night curfews.
Though most companies claim the situation is much better this time around given the increased awareness amongst the local authorities, lack of uniformity in rules is hindering with smooth operations.
According to Saahil Goel, co-founder and CEO of logistics player Shiprocket, the company is facing issues due to constantly changing lockdown rules. “Some states have weekend curfews, others have night curfews, while some have week-long lockdowns,” he adds.
To tackle this challenge, Shiprocket has built a real-time map of lockdowns/curfews in the country and is constantly updating its sellers about the situation.
“For instance, if a seller wants to ship t-shirts to Maharashtra, then we quickly block that let him know that these products would not be allowed to enter the state,” shares Goel.
Shiprocket connects small and medium-scale businesses (SMBs) with consumers. Goel says the guidelines do not specify whether these sellers, who are dependent on the channel to earn their living, can ship products or not.
Industry watchers say this leads to a pile-up of goods in the warehouses, and companies are not able to utilise their resources.
“These companies have capacity but it is under-tapped. And though they are unwilling to lay-off people at the moment, if this situation continues, they might have to consider measures to right-size,” says Manish Saigal, managing director, Alvarez and Marsal.
However, companies and experts are hopeful that the industry would follow a trajectory similar to last year, wherein e-commerce and logistics companies had reported growth driven by massive order inflows after the reopening of the economy.