HomeBlogAgri-LogisticsAgri Logistics — The Unorganised sector

Agri Logistics — The Unorganised sector

Logistics and Transportation constitute an important and relevant part of any Agri-Supply Chain System. Being the forerunner for the delivery of raw materials, intermediate and finished goods and products from one unit to another makes it very critical to the overall functioning of the value chain; right from the sources to the customer to be supplied too. Based on the same, any firm of organisation readily tries to employ certain set of controls and measures to implement overall cost-efficient strategies that is specifically responsive to handle the massive amounts of quantity being transported by maintaining proper quality for the same.

The case of Agri-Logistics provides a key insight with less than 29% of the total requirements being single-handedly fulfilled by the use of Contractual agreements and the remaining catered by On-Spot requirement. Many large MNCs owing to their sheer bulk of production of goods and bargaining power are exclusively involved in contracts with key suppliers, The MSMEs and many other low-level volume production houses avail the logistics on the basis of goods that needs to be transported daily/weekly/monthly.

Looking into the issue of the delivery of goods and produce to the clients and users, firms deploying on-spot logistics planning have to readily suffer through problems pertaining to demand and supply mismatch. The last minute gap in the form of low supply of transportation presents the grim situation of exploitation whereby exorbitant prices are charged to avail the services which unfortunately are not that reliable to even ensure the timely delivery during periods of urgency. Hence, the operating costs take up a major chunk from the already low margin of profits.

Considering the different stakeholders that are attached to the same, the problems faced by each vary in terms of the type of operation each one is involved in and the level of complexity that is faced by them as well. To begin with, the most affected are the ones who are directly ensuring viable and timely delivery of products i.e. drivers. The type of transportation available for them to work with varies from lightweight vehicles to many heavyweight vehicles. Upon interviewing some of them, the most recurring problem was found to be the lack of good income sources and basic facilities/amenities like access to basic hours of sleep, food and water etc., preferably at times of crisis like the ongoing COVID-19. Many also have to suffer from long hours of wait due to technical malfunctions or lapses on the part of other concerned authorities towards ensuring proper offloading and on-loading of items and clearances/checks. Adding to these are the problems of retention of drivers who are able to cope with such harsh job environments.

Moreover, the increasing rules and regulations with the deployment of various schemes and services on part of Government have only added to the woes. Many states having a different set of process system, itself creates inconsistencies of data and information gaps across different geographical stakeholders, putting the very working of operations highly complex to sort and drive smoothly. The implementation of GST and the current lack of robust infrastructure for payment services present quite a picture of where the system needs its major improvements. The ongoing emission control and anti-idling compliance measures by the vehicle/fleet owners are also proving to be highly expensive in regard to the potential benefits it can help to reap in the future.

Commoditization of the Transportation services have also brought undue challenges of pricing and hiring of third parties for maintaining the logistics system for any firm or organisation. With many service providers in the market, the surge in competition visibly marks an era where the price is the king. With different types of operations involved due to the varying raw materials and intermediaries, people or firms are surprisingly less focused on the different parameter and service options delivered by the concerned parties and rather jump into availing the cheapest mode on delivery of goods. Hence, better off providers have a better say by capturing a portion of market shares in logistics via offering flexible options of services at exquisite prices.

Further, looking into the workings of the process systems for delivery of products, the frequent problems of deadheads puts a heavy and unnecessary cost on operation and maintenance. Poor tracking and non-availability of goods at places and sourcing, demands the vehicles to operate without any considerable or null loads to distances that is clearly deemed as wastage. Additionally, the information gap as discussed before, resulting into poor forecasting, undue surge in prices by brokers or middlemen in the hope of profiteering from the sense of urgency of services presents an important aspect to control and monitor to avoid losses.

The recent COVID-19 outbreak has proved to be a vehement spoilsport for the earning at each level of interaction and transaction within the logistics and transportation systems. Drying up demand and lack of availability of supplies on the either sides are rubbing salt to the wounds. With more than 41 million people involved and having a hefty contribution of more than 200 billion USD to the economy hangs by a mere thread for survival, the resulting delays and shipments stuck saw an increase by more than 9% in both cases. These are ultimately resulting to a massive decline of 8–11% in order fulfilment rates with many states already blacklisted for entry or exit of specific goods. Rising inventory costs and almost zero revenues to pay for, the eyes are solely focused on the lock-down period set to expire on 14th April as of now.

Increasing reach and demands truly presents a very promising scope for advancing the level of technologies and further bolster the process systems by reducing time spent on routine activities which are basically redundant. Professing the use of processes that help to improve the profitability without encroaching upon the sustenance of stakeholders involved is the need of the hour.



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