Logistics startups hopeful of festive season; see COVID-19 vaccine delivery as opportunity

KEY HIGHLIGHTS

• There has been a rise of new first-time online users post pandemic. Additionally, most brands and retail players are also taking the online route to reach out to customers

• Firms like Ecom Express and Shiprocket have ramped up their capacity to meet additional demand

• Indian Railways has reported growth in freight loading indicating an upward trend in logistics demand

• Industry experts attribute higher loading of Railways to average freight train speed going up, freight rate discounts and also a sizeable number of trucks remaining off the road

Logistics start-ups like Fortigo, FarEye, Shiprocket, EcomExpress and Pidge are betting big on upcoming festive season, and also see business opportunity in COVID-19 vaccine delivery. With consumers preferring online over in-store purchases and upcoming festive season being the first major opportunity to boost sales, the start-ups have ramped up their capacity to meet additional demand.

K. Satyanarayana, Co-founder and Director, Ecom Express said that there has been a rise of new first-time online users post pandemic. Additionally, most brands and retail players are also taking the online route to reach out to customers. "All these factors indicate a strong surge in online order volumes. At Ecom Express, we are thus gearing up for the surge due to festival sales and the increasing preference to doorstep deliveries," said Satyanarayana.  

Ecom Express has added over 3 million square feet area across its hubs and fulfillment centres to meet festive season demand. Anjani Mandal, co-founder and CEO of logistics start-up Fortigo, has seen volume going up in the recent months following the gradual unlocking of the economy but remains cautiously optimistic for long-distance transportation.

"Large companies of all segments that have the cash-flow are active now and stocking up for the upcoming festivals. Unfortunately, relatively smaller organisations would be compelled to produce as per conservative estimates in these times of cash-flow challenges. The overall impact, however, will be higher demand vis-a-vis previous year and a V-curve or near V-curve recovery for 2020-21," predicted Mandal.

Demand has improved ever since economic activities were allowed but uncertainty has continued in many sectors due to a surge in coronavirus cases. Indian Railways has reported growth in freight loading indicating an upward trend in logistics demand. In the month of August 2020, the Railways loading was 94.33 million tonnes, 3.31 million tonnes higher compared to same month last year.

Industry experts attribute the higher loading of Railways to average freight train speed going up, freight rate discounts and also a sizeable number of trucks remaining off the road.

Riding on gradual recovery, logistics start-ups remain bullish about volume growth in the sector. "We are all gearing up for unprecedented demand for e-commerce this festive season. We expect a significant YoY increase and have doubled our operations and customer service teams to keep up with this demand. There will be challenges especially given COVID but all the stakeholders in the supply chain have worked together to ramp up capacity given the current challenges to provide our customers with a hassle-free experience," said Gautam Kapoor, Co-founder and COO of Shiprocket.

With government working overtime to bring vaccine for coronavirus, transportation of the vaccine is also set to offer big business opportunity for logistics firms especially those operating in the last-mile delivery space.

Ratnesh Verma, Founder and Leader at Pidge said, "COVID-19 vaccines are something that we are all waiting for eagerly. Regardless to say when it does come out, it would create huge demand. The current health infrastructure does not have the capacity to handle this surge of demand. The government should look to collaborate with private players that specialise in home services to provide vaccination, while movement of the vaccine at this scale would mean the focus would be more towards partners that are safe and reliable in their delivery."

Noting the key role of last-mile delivery firms in transporting vaccine, Kushal Nahata, CEO and Co-Founder of FarEye said that logistics companies must work towards developing an immediate crisis exit solution to support COVID-19 vaccine delivery in a clean, efficient and safe manner.

"When it comes to making the vaccine available to masses, it all boils down to ensuring a robust and highly effective last-mile delivery," Nahata added.