Impact of COVID – 19 on Warehousing in India

As we know that there has been coronavirus across the globe. This pandemic has paralysed the life of entire 5 continents since January 2020 till date and also effect is continued. It has impacted greatly on economy and all the businesses and it is said that in India more than 12 crores people have lost their jobs either partially or fully. “Social Distancing”, “Lockdown” are commonly used words which were only in dictionary some time back. 

Like many other businesses, coronavirus has influenced “Warehousing in India”. Today, in India, big warehouses have grown up near the major cities where industrialization has taken place.  Warehousing supports industries hence came up around those cities. The main reasons for warehousing are set up at the outskirt of these cities were taxes, availability of space at lower cost and labour at cheaper rate. I am referring major warehouses for the companies of automotive, chemical companies, machine tool manufacturers, compressors, boilers, etc for managing their raw material, spare parts and sometimes WIP. 

Conventionally, in India, warehousing has been labor-intensive business. Most of the handling (barring very big consignments) is done manually. Most of the companies hire the warehouses on lease. They do so because it is economical to hire warehouse since there is no investment, no labor commitment but output will be at desired level. Also through contracts you can change the entrepreneur if he does not meet the requirements. 

In such warehouses there is inward and outward of material through trailers, trucks, lorries, tempo, three-wheelers, etc. Unless the material/load are palletized, it will be unloaded and loaded/handled using manual labors. Most of the personnel in the operation are illiterate or education level could be at best high school. The office staff would be computer literate and one or two could be graduates. A very few warehouses are equipped with overhead cranes or sophisticated material handling equipment. Any warehouse normally engages managerial staff and supervisors on their role while rest others are on contract. Second point to be noted is that area-wise there is influence of local “dada” on the contractual labors.  These contractual labors are not permanent employees and number also fluctuates depending on the work from time to time. The contractual labors seldom are regular and they will keep changing. You have to engage them through the local “dada” only. 

Post coronavirus, the biggest challenge for warehousing will be the availability of labor to work in warehouses. As explained earlier, it is highly labor-intensive business. As media shows that migrant workers are going back homes to their home towns. Even Government is making arrangements of trains and buses for these workers to go back. These are the people who work on contract in the industries and warehouses on daily wages. When they are going back, there is every likelihood that either they may not come back and find an alternate livelihoods in their home towns/villages or if at all some of them turn up they will rise after a few months. 

Then what is to be done immediately? A big question will be there to these entrepreneurs running warehouses (and of course industries also). One silver line in the dark cloud is that, as mentioned earlier, there would be a lot of unemployment due to loss of jobs to many individuals. But now, we have to attract those individuals and convert them to work for you. In that case, you will have to train them to suit your work requirements and sustain their interest in work too.

Apart from the availability of laborers, for Small and Medium Warehouses there are other challenges to be faced as we reopen. 

  • Huge delays in payments from customers directly affecting cash flow. Top of it, customers are asking a reduction in lease amount YOY. High level of negotiation and cost-cutting tools of OEM/Big companies further squeeze MSME.
  • Operational cost is marginally met with inflow. Hence, there is tremendous pressure on cost-cutting on expenses. Fixed costs such as WH rent, office administrative expenses, electricity charges, EMI, software and IT development expenditure etc. are difficult to manage.
  • Additional usage of CC will restrict MSME to invest in new projects, thus loose business opportunities.
  • Once the industry opens up, employee’s involvement issues might create some IR issues.

In long run, dependency on personnel should be reduced and more and more automation is to be done. But it will not be so easy and will take time and also calls for investment. Secondly, it does not exclusively depend on you alone. There has to be a radical change in the operations and handling of material across India. Cartons need to be replaced by pallets and crates. Manual handling is to be minimized as per as possible. Transport vehicles need to be changed and standardized. But this will take some time. Slow but steady changes will happen in the next 3 to 5 years. 

Coming back to our subject point is the Impact of Coronavirus on Warehouses in India in the above-mentioned scenario. The lockdown will not continue for long. One day or the other things will start moving and slowly the industrial operations will have to be up and running. Otherwise the economy which is already derailed will collapse. But now, while starting afresh everyone will have to follow new rules of the game.

  1. Organizations will have to understand the needs of workforce and healthcare during and post this pandemic. All the operating personnel (including managers, supervisors, DEOs and helpers, handlers, pickers, packers, security and housekeeping staff, etc) will have to be trained to operate in light of Coronavirus pandemic. They have to be appraised “DOs” and  “DON’Ts” intermittently and constantly.
  2. Ensure personal hygiene requirements are met including sanitization/hand wash and use of proper PPE (masks, hand gloves, shoes, goggles, etc) depending on the nature of material being handled. Checking of temperature of all the individuals through remote thermometer gun at the time of entry and exit. So far there could have been negligence, however, now it will not be tolerated. “Social Distancing” needs to be maintained. You may explore the possibility of some of officials for “Work from Home”.
  3. Use of software for maintaining social distancing by tracking location of individual(s), to control the flow of vehicles on the docks to avoid crowding of vehicles and individuals, etc.
  4. Consolidation of receiving and dispatches for effective and efficient utilization of transportations and in turn warehouse also.
  5. Truck drivers are to be educated and trained on personal hygiene practices. They MUST follow SOPs when entering and leaving warehouse. 

Although the aforesaid points are some of the difficulties and deterrents in warehousing, the future appears to be bright. America and many European countries who are suffering and already suffered due to coronavirus are blaming China. They are planning to shift their manufacturing setups from China. Similarly Japan also is preparing for up routing some of the businesses from China. In this situation, India has very bright chances of grabbing all those opportunities of manufacturing businesses and set up units here. 

Additionally, on 12th May 2020, our Honourable Prime Minister Mr. Narendra Modiji while addressing the nation in light of coronavirus, declared a package of Rs 20,00,000 crores to make India “Atmanirbhar – Self Sufficient” and indirectly attacked China. He said through various actions, Central Government will encourage industry as well as agriculture to be self-sufficient. This will certainly boost the manufacturing and the Service Industry. Time and again he insisted on creating demand and backed by a very strong Supply Chain. This implies that the demand for supply chain and logistics professionals will see a huge spike in recent years to come. Also employment rates will improve and new entrepreneurs will be motivated for start-ups. In years to come, India will become economic power center in the world. 

Another wave which is now taking shape in India is eCommerce. The trend of strong warehouse demand growth continued well in 2019 and initial part of 2020. Since COVID-19 struck the market early March 2020 with consequent nationwide lockdown, there has been a standstill in overall demand activity. However, a sharp rise in inquiries from the eCommerce segment will spurt as the market reopens.

To conclude, it is clear that in near future, India will see a good inflow of foreign investment in manufacturing sectors, electronic goods, chemical industries, engineering industry. When there is a growth of industries definitely Warehousing will have good days ahead. However, they have to be agile and quickly adapt to new ways of working. Automation, use of sophisticated material handling equipment, use of software to bring discipline amongst operators, digitization and training are the key to success. This is going to be the need of an hour.