Business Other News 14 Nov 2019 Logistics demand for ...

Logistics demand for auto halves in festive season

DECCAN CHRONICLE. | SANGEETHA G
Published Nov 14, 2019, 1:50 am IST
Updated Nov 14, 2019, 1:50 am IST
In September quarter, logistics volumes recorded around 5 per cent drop due to the sluggishness in the economy.
E-commerce has been one sector which has been recording phenomenal value growth during festive season year-after-year.
 E-commerce has been one sector which has been recording phenomenal value growth during festive season year-after-year.

Chennai: After a slow Q2, logistics companies saw a slower Diwali this time. While demand from automotive segment was badly hit, even the best of the sectors—e-commerce—saw some slackness in volumes.

In September quarter, logistics volumes recorded around 5 per cent drop due to the sluggishness in the economy. Railway freight volumes too dropped by 3.7 per cent in Q2. The sluggishness was evident in most of the core sectors, including coal, cement and steel. The automobile industry witnessed 20–25 per cent decline in logistics demand.

 

“The unorganised sector, which accounts for the larger share of market, saw volumes dropping by 4 to 6 per cent. The organised sector has been gaining market share post GST and e-way bill and hence they registered a growth of 4 to 6 per cent. New-age tech-driven logistic service providers form a small segment of the industry. From a smaller base they have been growing faster. Overall, the logistics sector saw flat to negative volume growth in Q2 against 14 per cent growth in the year-ago quarter,” said Shamsher Dewan, Vice-President, Icra ratings.

According to industry players, the demand further got squeezed during the Diwali season this time. “Usually Diwali season sees a spurt in logistics activity and the major contributors are FMCG, industrial goods, white goods, auto and auto ancillary and e-commerce.  Logistic demand from the automotive sector would have fallen by around 50 per cent this time. Even other sectors saw volumes de-growing,’ said Sumit Sharma, Co-founder of GoBOLT.

E-commerce has been one sector which has been recording phenomenal value growth during festive season year-after-year. Technology-driven logistic companies, which largely handle the logistics for e-commerce companies, found that despite the growth over last year, volumes did not touch last year’s growth levels.

“Usually e-commerce companies give us volume projections for the festive season and we prepare ourselves to meet those projections. Till last year, we always used to over achieve the festive season volume projections. This time, the projections were not met. The projections were under-achieved by 10 to 15 per cent,’ he said.   

According to Pushkar Singh, CEO of LetsTransport, the projections of e-commerce companies were lower than the previous years. ‘This year the projections of e-commerce companies were not as ambitious as last year. E-commerce still performed much better compared to automobiles and other high value goods,” he said.

The overall slump in demand had influenced e-commerce companies while making projections. Further, with the maturity of the sector, the value of products sold online keeps on increasing every year. This leads to higher value growth compared to volume growth.

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