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 … 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.
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…” 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.
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.