Cargo shipping hit globally, Indian logistics startups losing business

The rampaging coronavirus continues to roil the global economy, upending trade and commerce. As countries seal borders to prevent the spread of the flu-like virus, the shipping industry, too, has taken a hit. Indian logistics players in the sector say they are finding it difficult to keep the business lines operational.

Shipsy, a Gurugram-based company that connects exporters and importers with shipping companies and helps manage the logistics through a digital platform, said bookings were down by more than 25%. With all major cities locked down, the export business could take a bigger hit.

“Eight percent of the overall trading volume happens through our platform, we used to get around 80,000 to 90,000 container bookings every month, that has fallen by a good 25%,” cofounder Soham Choksi said.

Another player in the shipping space, Freightwalla, which manages cargo movement for exporters, said the entire industry was facing multiple challenges and the situation was changing dynamically. With labour being asked to stay at home and many fleeing to their hometowns, industrial production had been hit, in turn, affecting the export sector.

“Demand in Europe and North America is expected to fall significantly if the spread of the virus is not contained quickly, so that will directly impact our business here in the coming weeks or months,” Freightwalla co-founder Sanjay Bhatia said.

The shipping industry rides on container movement across the globe.

The unprecedented shutdown across the world has hindered the movement greatly. Initially, containers were not moving out of China, as there was no one to unload them at the docks, industry executives say. This led to a pile-up of demand for containers from Indian exporters. Now when China is showing signs of revival, Indian ports are facing a lockdown. The bottom line, loading of cargo continues to be a problem.

“Even in some cases local administration is interfering in dock activities and asking porters to shut operations as cities are under lockdown, but shipping and freight movement is exempted by government order, this is creating problems at an operational level,” said a top export industry executive on condition of anonymity. These problems were being faced in ports across the country, he added.

Choksi of Shipsy pointed out that ports were clogged in many parts of the world. Containers that would get emptied and reloaded in three days were taking more than two weeks to turn around, causing an acute shortage in India.

“But then there are demand issues as well, consumers are only buying must-haves, discretionary spends are going down, hence even while manufacturing in China is coming back to normal, the overall situation remains grim,” said Choksi.

The situation in India is better than in large parts of Europe and the United States, where the virus has spread aggressively. Even in the best-case scenario, the Western nations will take time to spring back to normal.

Sectors like textile that account for 10% of India’s exports could see a major decline in revenue, as demand will fall in China, the US and Europe, industry executives say.