The Covid-19 pandemic has brought in fresh challenges and opened up a whole world of opportunities for the micro-logistics and last-mile delivery ecosystem. Find out what the experts have to say about the sector and its future.
Global logistics is expected to be a 10.6 trillion dollar industry in 2020, according to a study by Frost and Sullivan Urban Logistics Opportunity, and transportation alone will account for about 70 per cent of this pie.
As the economy slowly opens up in post lock-down phase and consumer demands start to rise, there is a lot of anxiety surrounding the micro-logistics and last-mile delivery ecosystem. It is also a sector that is seeing an unprecedented growth owing to the high demand of online grocery, e-commerce and delivery from mom-and-pop stores around. The only way forward is to come up with disruptive models to meet the changing consumer needs in these testing times. Technology will surely be one of the biggest game-changers in the ecosystem.
“The first couple of days of the pandemic were filled with a lot of uncertainty as there was no previous data point to show us the next step forward. At the same time, there was a surge in demand. We had to think on our feet and develop new SOPs to mitigate the risk of spread of the disease. We put a lot of time into thinking how we are going to do contactless delivery and more importantly, how are we going to make it traceable," said Shreyas Shibulal, Founder and Director, Micelio and Lightning Logistics.
Shreyas Shibulal was speaking at a virtual panel discussion on ‘Micro Logistics and Last-Mile Delivery in COVID-19: First Response and Opportunities amidst Challenges’ powered by Livemint and Lightning Logistics. The discussion was moderated by Utpal Bhaskar, Infrastructure Editor, Mint.
India is a country where no one size fits all. Diverse parts of the country have different demographics and demands. Supply chains use a wide range of vehicles to ferry produce from one part of the country to another.
“Looking back, logistics was present in the blood and vein of our country. India specifically has a heterogeneous vehicle population. We have cycles, cycle rickshaws, e- rickshaws and autos, and there is an easy possibility of mix and match of all of these to provide the optimum solution to any last-mile delivery, which is becoming more and more relevant because of the pandemic," said Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV) and Chief Executive Officer (CEO)-Global Business, HERO ECO.
Owing to the pandemic, people are not going out to buy things any longer but ordering them from the safety of our homes and expecting same-day deliveries. “Consumers are becoming dependent on things being brought to them. More and more penetration of online purchases will happen – it is the biggest push that India has seen in online transactions," said Hanish Yadav, Associate Partner, McKinsey & Co.
Almost all major brands are pushing for online and offline channels to meet customer requirements. “There is a huge demand for micro logistics because everyone needs to get a delivery. We are seeing a lot more traction where individual brands are thinking about setting up their own omni-channel network and this is where the hyperlocal delivery becomes critical," he added.
This surge in demand has come as an opportunity for electric vehicles, which are perfect for last-mile delivery because of the economy of operation that they offer. During the pandemic, there is an additional demand for shifting from large aggregators to smaller last-mile delivery players.
“About 85 per cent electric two-wheelers run at low speed or city limit speed and are much more efficient than other vehicles. In smaller ranges, the cost of operation is almost half. They are not replacing personal vehicles but fulfilling a need – either of moving people or materials. I believe this is the time for electric vehicles," Gill added.
Due to these reasons, a lot of companies are opting for EVs even as some long-term implications need to be studied. “EVs offer operational efficiency and optimum cost per km. But what is the residual value of these vehicles is yet to be figured out. Also, it is important to find out if banks are prepared to offer at-par finances for EVs. The current interest rates are a bit high for EVs," shared Shreyas Shibulal.
As we get back to the new normal, will the fear to purchase things other than essentials go out? “There is a reluctance to purchase. The organized sector has to completely overhaul its B2C model. Owing to the heterogeneity of some of our locality, neighbourhoods and habitations, one-size fits all logistics model will not really work out for the corporate sector. If you are looking at an economy driven by hyperlocal transactions, even businesses will need to figure out how to make it more and more decentralised," said Dr Laveesh Bhandari, Director, Indicus Foundation.
In a world full of uncertainty where we are not sure when consumer demand levels in different sectors will reach pre-Covid times, the surge in demand for micro-logistics and last-mile delivery comes as a candle, a much-needed ray of hope amid the darkness.
Lightning Logistics is a trusted, sustainable last-mile delivery firm, providing businesses and customers a seamless, last-mile delivery experience with intelligent, data-driven logistical solution.