Logistics fights back after Corona in China – Hope for all

हमारे YOUTUBE चैनल को सब्सक्राइब करें !

The Covid-19 lockdown has paused the Indian Economy and consequently, India’s logistics sector as well. Naturally, truck-owners must be worried how and when the recovery will begin – and even if it does anytime soon, will it be quick enough? 

If we look at what happened to the Chinese Logistics Industry after COVID-19, some relief could be found. As per incoming news from the original epicentre of the pandemic i.e. China, the logistics sector is already on a smooth way to recover back to normal levels.

Much like what’s happening today in India, during the peak of the pandemic in Feb second half in China, delivery capacity in China had fallen to 10%-15% of normal levels. This was primarily because: 

  • Manufacturers were producing less than half of their output levels, and,
  • Workers at many enterprises (including delivery companies) were quarantined at homes

However, astonishingly, as the pandemic was brought under relative control, the Deputy Director of the State Post Bureau reported on 6th March that:

  • Delivery capacity had rebounded to 80% of its normal capacity i.e. 160 million parcels were being handled daily. Infact, they were expecting the delivery industry outside Hubei province to achieve full delivery capacity by mid-March.
  • More than 90% of delivery couriers, i.e. 3 million workers were back to work

As per tracking data from G7.com, full truck load delivery capacity as on March 11 (47 days after Lunar New Year) reached 72% of Nov 2019 peak levels. In 2019, it had taken 25 days after Lunar New Year to reach 95% of Nov 2018 levels – the graph below shows that in spite of some delay, the upward recovery trend is back in delivery capacities.

Further optimism can be derived from the guidance (forecast) of leading logistics company ZTO. It suggests that parcel volumes in the 1st Quarter of FY 2020 should rise beyond levels seen in the 1st Quarter of FY 2019. Infact, the calendar year 2020 could see 15% parcel volume growth. 

While this rapid revival in delivery capacities could be a testament to the efficiency of China’s government and its industry, it also reflects that purchasing demand had remained solid since the Covid-19 outbreak. Infact, one expects that sections of the Indian society could have comparably strong purchasing demand, which in turn, could support a similar resurgence in Indian logistics. 

Infact, during Jan and Feb, as per China’s National Bureau of Statistics, online retail sales dipped only 3% on a year-on-year basis, while online physical sales in fact saw a rise of 3% year-on-year. Discretionary products like apparel, cosmetics, jewellery, household appliances, automobiles etc obviously saw a fall but the better than expected online retail sales provide some evidence and a ray of hope for a similar trend in India. 

WheelsEye’s take on the situation – Hope for the best. 

The good times may well return quicker than expected. Whenever the lockdown is lifted, there might be a resurgence in retail demand (specially, e-commerce) from India’s middle and upper-middle class. This might provide the required boost to get your trucks moving again. And if China could take capacities back to 80% in a week, India definitely won’t be far behind. 

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