US E-commerce sales to jump 18% this year
Even though the E-commerce sector has seen a sharp uptick of 18% to reach $709.78 billion this year, representing 14.5% of total US retail sales, it is still not enough to soften the blow suffered by the overall retail sector, the report noted.
Even with the economy slowly opening up, consumer spending might still remain cautious. “Total retail sales won’t rebound to 2019 levels until 2022, and estimates throughout the forecast period will be lower than previously predicted,” adds the report.
The top E-commerce categories are food and beverage at 58.5% and health/personal care/beauty at 32.4%. These aren’t surprising given that Americans are mostly ordering essentials via online platforms. The dampener is that the usually popular apparel and accessories category will only grow 8.6% as consumers are tightening their purse strings and being overly cautious about spending money on nonessential items, given the uncertainty of jobs across the country.
While E-commerce behemoth Amazon will still retain the top spot, Walmart has overtaken eBay as the no.2 E-commerce retailer in the country. Amazon’s Prime membership is a key reason for its continued dominance in the online shopping sector.
But the biggest mover in the sector has been the Bentonville-based Walmart. The company, which recently announced a stellar Q1 result where its comparable-store sales, a key retail metric, increased 10%, has also introduced a two-hour home delivery service in some markets. Additionally, Walmart’s big punt on E-commerce is finally paying off with online sales in the US jumping up 74% in Q1.
“Everything we’re seeing with E-commerce is unprecedented, with growth rates expected to surpass anything we’ve seen since the Great Recession,” said eMarketer principal analyst at Insider Intelligence, Andrew Lipsman. “Certain E-commerce behaviors like online grocery shopping and click-and-collect have permanently catapulted three or four years into the future in just three or four months.”
Walmart’s multi-pronged strategy which combines its large physical footprint, product availability, and online presence is making the company a favorite in the E-grocery sector.
“The data shows that 48% of all online shoppers used Walmart for online grocery, vs. 36% at Amazon and 24% at Kroger. While those shoppers are not necessarily exclusive to the brands they use online, 82% of Walmart’s online shoppers are using the offering at least once a month, Kantar noted,” says a Winsight Grocery Business Report, which has quoted a Shopperscape survey data from Kantar Retail.
Other retailers like Target and CVS are also seeing increasing traction on their paid memberships.
Logistics is playing a key role in this evolving scenario and companies are leveraging logistics technology to enable better route optimization for their delivery riders. Technology is also helping companies do better network optimization and adopt smarter dispatch practices like the hub and spoke model. Smarter logistics ensures better customer satisfaction.
Locus offers smart logistics solutions to enterprises in the e-commerce and retail supply chain to improve last-mile deliveries with greater cost-efficiency. Get in touch with us for a free demo
US Army Researcher Says a COVID-19 Vaccine Could be Ready by Year-End
Earlier in May, President Donald Trump had announced a public-private partnership, called ‘Operation Warp Speed’ with an objective to develop a viable vaccine for Coronavirus, then to manufacture and distribute it to the public prior to the end of the year.
He had also announced that Operation Warp Speed will be led by Moncef Slaoui, the former head of GlaxoSmithKline's vaccines division, and Army General, Gustave Perna. “Slaoui will oversee the vaccine development at Operation Warp Speed, while Perna will serve as the Chief Operating Officer overseeing logistics,” Trump had said in the statement.
The plan is to make at least 300 million doses, enough to protect as many as 90% of Americans. Scientists working on the operation have reportedly said that America plans a massive testing effort with over 100,000 volunteers and at least half a dozen of the most promising vaccine samples to deliver a safe and effective one by the end of 2020.
The role of the special operation is not just confined to the development of a vaccine, but also ensuring that it reaches millions of people in the United States, and later all over the world. Rapid mass immunization will be required for billions around the globe to combat COVID-19, and universal access to vaccines will be a major challenge for the pharma supply chain.
Maintaining a continuous cold supply chain and delivering the COVID-19 vaccine will be crucial in the future, especially to countries where electricity and cooling infrastructure is either non-existent or unreliable. This calls for a robust and sustainable global pharmaceuticals cold chain delivery system with temperature-controlled, vaccine-qualified refrigerators.
The use of innovative technology in logistics, such as real-time tracking of environment and temperature conditions, safe shipment of medications, and automated proof of pick-up and delivery of these shipments to various parts of the world will play a major role in fighting the global pandemic.
E-commerce sales skyrocket in America
A detailed analysis of online shopping patterns during the pandemic has helped Walmart to scale up operations and fulfill customer demands efficiently. The company experienced three waves of customer shopping behaviors. In the first wave, the primary demand was around grocery and consumable goods, especially paper supplies and cleaning products. The second wave was majorly focused on home-bound consumer goods including cooking and baking products, puzzles, games, bicycles, books, and entertainment products. The third wave was a gradual shift towards apparel and toys mostly attributed to stimulus funds.
“Our omnichannel strategy, enabling customers to shop in seamless, flexible ways, is built for serving the needs of customers during this crisis and in the future”, stated Walmart CEO, Doug McMillon.
About 95% of the US population, more than 306 million Americans are currently locked down in their homes, due to the stay-at-home order imposed by the US government in 22 major states. As people remain indoors to prevent the virus from spreading, in-store retail visits have significantly dropped and more people are turning online to stockpile essential groceries, cleaning supplies, and medicines.
Overall, America’s E-commerce industry is seeing Black Friday-like business since the outbreak. Online sales jumped 49% in April, compared to early March before the nationwide lockdown was imposed. E-commerce players have hired more workers to cater to increased consumer demand for retail products.
Among other E-commerce players that have seen massive profitability during the pandemic are Home Depot and Instacart. While Home Depot’s online revenue increased by 7%, Instacart sold up to $700 million worth of groceries in April, 450% over its December 2019 sales.
The pandemic is not only changing day-to-day lifestyles but also consumer shopping patterns remarkably, gradually reshaping the future of retail buying. COVID-19 is here to stay, and the only way retailers can grow amidst this crisis is by adapting to it.
Omnichannel is the way to go for brick and mortar retailers, and businesses that already have an online presence need improved logistics offerings to fulfill customer demands and withstand the competition from bigger players like Walmart.
Locus offers supply chain optimization solutions to enterprises in retail and E-commerce. Get in touch with our experts to Schedule a demo
New Zealand wins the COVID-19 Battle: PM Relaxes Lockdown to Level-2
The country followed a strict four-level COVID-19 alert system, with 1 being the lowest risk of infection and 4 the highest. Lockdown in New Zealand began at Level 4, putting the country into a nationwide lockdown. People were instructed to stay indoors, in a safe ‘bubble’. Travel, public gatherings, and all businesses, except essential services were completely banned.
It was then moved a notch down to Level 3 at 11:59 PM on April 27, partially lifting some lockdown restrictions. People were instructed to stay home, other than for essential personal movement including for work, school, or for local recreation, keeping travel restricted to only short distances around local vicinities.
This will be Level 2 in New Zealand’s COVID-19 eradication strategy, lifting the rest of the lockdown rules while maintaining physical distancing. New Zealand’s COVID-19 battle has been successful due to its quick response to the pandemic, and the effective approach towards flattening the curve.
New Zealand’s remote location was also an advantage. It is a relatively remote island nation, and only a few flights transit through New Zealand. The country had halted international trade immediately after the first case was recorded on 28 February.
'Decisive action, going hard and going early, helped to stamp out the worst of the virus,' Ardern said in a statement. The country seems to be COVID-free as of now, but the battle against the pandemic will continue until there is a vaccine.
Like every other country today, the pandemic has caused drastic changes in the buying habits of the Kiwis. The immediate reaction to lockdown was rushing to supermarkets, pharmacies, and convenience stores to stock up on essentials. The pandemic is redefining the way people shop, the way they pay, and the things they buy, and probably for the long-term.
The demand for home deliveries, cashless transactions, and online purchasing of groceries has increased dramatically, adding to logistical pressure in the supply chain. People are also concerned about the quality of fresh foods, fruits, and vegetables, more than ever before, and are demanding more transparency in the food and groceries supply chain.
Supply chain enterprises must take cues from here, and prepare better for the future. Businesses must show agility by introducing omnichannel distribution services and paperless transactions to meet customer demands. Companies that can leverage technology to speed up deliveries, monitor quality and safety standards of goods in transit, and improve visibility in logistics will have a better chance of performing well post the pandemic.
E-commerce deliveries resume in Green and Orange Zones
The 733 districts in India are now divided into three zones - Red, Orange, and Green, based on the severity of the outbreak. There are 130 districts in the red zone, 284 districts in the orange zone, and 319 districts in the green zone.
Hotspot regions with the highest number of positive cases and with a high risk of the disease spreading further are categorized as Red zones. Green zones are districts with minimal confirmed cases till date or no confirmed cases in the last 21 days, whereas the Orange zones are the districts that are neither defined as 'green nor red zones' and are relatively safer compared to the Red zones.
The government has eased lockdown restrictions in Green and Orange zones, whereas Red zones will still remain under strict control. Air and train travel, metros and local trains, and inter-state movement of people are prohibited across the nation, except for medical and security purposes.
All activities, except the ones prohibited nationwide, are now open in Green zones, and buses can run at 50% capacity. In Orange zones, buses are still not allowed to run. However, taxis, autorickshaws, and cabs can operate with not more than two passengers.
At the same time, E-commerce home deliveries which were so far only allowed for essential items are gradually opening up. E-commerce companies are now allowed to restart the delivery of non-essential items in orange and green zones, needless to mention with utmost hygiene standard protocols. Red zones will continue the delivery of essential items only until further notice.
E-commerce players are seeing this as a positive sign of economic recovery. Although more than 50-60% of E-commerce sales come from metros and large cities, which are mostly in the Red zone, this gradual transition to business-as-usual is being welcomed by E-commerce players and retailers within the country.
As E-commerce home deliveries resume in Green and Orange zones, and people continue to place piled up orders of non-essential items, a strong logistics system is needed to cater to the high volume demands of customers. Currently, the majority of initial orders are being placed for electronics, phones, and kitchen appliances post the lockdown.
The problem, however, is that most E-commerce players have warehouse and fleet capacities in Tier 1 cities, from where goods are transported to Tier 2 and 3 cities. Since most Tier 1 cities, including Mumbai, Delhi, Kolkata, Hyderabad, Pune, Bengaluru, and Ahmedabad are under the Red zone now, E-commerce players will have to plan zone-based delivery routes smartly, in order to ensure on-time last-mile delivery to Green and Orange zone customers.
Companies that can leverage logistics technology for network optimization and adopt smarter dispatch practices such as the hub and spoke distribution model will have a better chance of achieving on-time deliveries and ensuring maximum customer satisfaction.
Locus now offers Zone-Based Delivery Planning tool to E-commerce enterprises for cost-effective and smart delivery planning in Green and Orange Zones during Lockdown 3.0. Get in touch with our logistics experts now.
Vietnam reopens after three weeks of lockdown - Things crawling back to normalcy
There have been no new cases of COVID-19 in Vietnam in the past one week, making it a low-risk region and allowing the government to ease the lockdown policy. Officials have stated that even though the country seems to be out of danger as of now, the transition will be gradual.
People are now allowed to return to offices and restart normal ways of living. However, fines will be imposed for not wearing masks in public and gathering in groups of over 20 members. Buses, taxis, and domestic flights will restart in the country, and schools will gradually reopen in some provinces as of now. Luxury or entertainment activities such as visits to malls, bars, zoos, and cinema theatres will still remain prohibited.
Vietnam’s efforts are being praised worldwide as a successful low-cost pandemic prevention model. The reason behind Vietnam’s exemplary response to COVID-19 is due to its strategic preparedness even before its first case was recorded. The Vietnamese government had canceled all international flights, sealed its borders, and imposed a mandatory 14-day quarantine for anyone who had entered the borders during the initial stages of the outbreak. Moreover, the country’s well-organized military and security services allowed them to keep a strict neighborhood watch to keep the spread of the disease under control.
Just like any other Southeast Asian nation, Vietnam too faced some obvious disruptions in its supply chain, exports, imports, international trade, and travel and tourism due to restrictions on cross-border movements. At the same time, there has been a surprisingly rapid growth of E-commerce since the outbreak as consumer buying trends have changed dramatically.
According to Vietnam Briefing, people have reduced their frequency of visits to supermarkets by 50%, and the online demand for essentials such as groceries, medicines, and food deliveries has shot up. Big C, one of the largest shopping centers in Vietnam, stated that its stores reported 3000 online orders in March, up by 1,000 from the previous month.
Traditional brick-and-mortar stores in Vietnam saw an underlying opportunity in this growing demand for online shopping. Food businesses too quickly remodeled their offerings and introduced fast and hygienic delivery of food packages. A number of small and medium retailers have stepped up by creating a presence online, extending safe home delivery services, and introducing hyperlocal delivery of essentials to meet the demands of locked down consumers. The COVID-19 outbreak has reinforced the fact that omnichannel is the way to go in order to remain competitive in the market.
Locus offers innovative tech solutions to enterprises in E-commerce, retail, food, and grocery delivery to ensure last-mile fulfillment at minimal costs. Get in touch with our experts to Schedule a demo
“Green Recovery” to combat coronavirus, says UN Secretary-General, to mark 50th International Earth Day
“We must act decisively to protect our planet from both the coronavirus and the existential threat of climate disruption. The current crisis is an unprecedented wake-up call. We need to turn the recovery into a real opportunity to do things right for the future,” he added.
The former Prime Minister of Portugal, who took over the top UN office in January 2017, also proposed six climate-related actions as the way forward. The proposals were centred around green jobs, sustainable growth, ‘grey to green’ economy and on incorporating climate risks and opportunities into the financial system and public policy.
“Public funds should be used to invest in the future, not the past, and flow to sustainable sectors and projects that help the environment and the climate. Fossil fuel subsidies must end and polluters must start paying for their pollution,” said the statement. “Greenhouse gases, just like viruses, do not respect national boundaries. On this Earth Day, please join me in demanding a healthy and resilient future for people and planet alike.”
How green logistics could play an important role in the near future?
A crucial component in combating climate change is green logistics. The need for sustainable logistics will only increase going forward as the COVID-19 pandemic has pushed logistics to the center of attention. The world is heavily dependent on logistics today.
For example, when the coronavirus was spreading in China, Cainiao, Alibaba’s green logistics arm, was at the forefront by delivering the necessary drugs and medical equipment to the needy in the most efficient and eco-friendly way.
Going forward companies will aggressively shift to more sustainable logistics by using eco-friendly and recycled packaging, optimizing routes using tech to reduce emissions and fuel consumption and also using electric transportation to manage their logistics operations.
Green logistics is catching up across the globe and implementing sustainable logistics strategies will be crucial in the days to come so as to reduce environmental impact.
Locus helps businesses across retail, food, grocery, and e-commerce manage supply chain operations efficiently with AI. Get in touch with our experts to Schedule a demo.
Indonesia declares COVID-19 as a ‘National Disaster’. Is a food crisis likely to follow?
As of April 16, the number of positive cases has crossed 5,516 in the country. Hotspot regions in the country including Jakarta; Bogor, Depok, Bekasi, Pekanbaru, Tangerang, and South Tangerang are under large-scale social restrictions.
The pandemic has impacted normal ways of living across the globe and slowed down the economy and supply chains in Indonesia just like any other ASEAN country. Around 1.6 million Indonesian workers have either been laid off or placed on unpaid leave since the outbreak began in the country. The government has imposed travel bans, intensified border control inspections and implemented nationwide lockdowns.
While lockdown policies and restricted movement within and outside the country is an effective measure to contain the spread of the disease, this economic crisis is posing a major threat to Indonesia’s food and nutrition security.
Currently, the Indonesian government has assured that there are over 1.6 million tonnes of rice secured in the Indonesian Bureau of Logistics’ warehouses all over the country and soon the harvest season will follow, adding another 5-7 million tonnes to the supply.
However, the country largely depends on Thailand, Argentina, Brazil, United States, and China for most of its other food supplies including staples such as sugar, wheat, beef, and soybeans. Restriction on cross-border movements is a matter of concern for Indonesia if Coronavirus continues to disrupt global supply chains for a longer time.
Moreover, officials are concerned that the Coronavirus panic buying behavior among people in exporting nations could cause a shortage of food supplies and a rise in food price inflation in Indonesia. Sugar, garlic and onion imports to the country have already been delayed due to the global emergency, causing prices to skyrocket.
The Indonesian government has initiated social assistance programs such as the Family Hope Program (PKH), conditional cash transfers for poor families, people with disabilities, and senior citizens; Direct Cash Assistance (BLT); the Groceries Card (Kartu Sembako), as well as the additional grocery assistance program in the Greater Jakarta Area.
However, the distribution of food and essential groceries is a major challenge. The urban areas have stronger food security compared to rural areas. Indonesia’s food supply chain is quite complex, given its uneven geographical terrain comprised of over 17,000 scattered islands. The COVID-19 outbreak has made it more complex as transportation and logistics have become a challenge, and distribution channels are obstructed.
While a number of measures are being taken to control the spread of the pandemic and to ensure food and nutrition sufficiency in the country, what it needs more than ever before is a strong logistics system to keep the essentials supply chain moving.
This is the time for companies in the food and grocery industry to step up and adopt faster and safer delivery methods, and leverage technology in logistics to ensure that the distribution of food and essentials to millions of Indonesian consumers is not hindered during the pandemic.
Locus helps businesses across retail, food, grocery, and e-commerce manage supply chain operations efficiently with AI. Get in touch with our experts to Schedule a demo.
America’s food supply chain standing strong amidst the Coronavirus crisis?
The virus has taken a serious toll on everyday life in the United States with millions under lockdown, bars, restaurants, and public places being forced to close, and restrictions on normal travel and transportation across the country. All the initial panic buying left supermarket shelves empty, leaving Americans worried about the shortage of food supplies during the quarantine.
However, despite the worsening outbreak, officials are confident that America’s food supply chain will remain intact and there will be no lack of food and grocery supplies even with the Coronavirus outbreak. Some of the biggest retailers and wholesalers have confirmed that there is no need to worry.
“Amid all of the other anxieties triggered by the coronavirus, there is no need to fear a lack of access to affordable and high-quality food. There are tens of thousands of food workers, lawmakers, and regulators committed to meeting the country’s needs,” said Steven Spinner, CEO and Chairman of United Natural Foods, America’s leading grocery, wholesale food and meat distributor.
The United States has vast stretches of fertile lands and produces most of the food it consumes. The country also accounts for large shares of the world’s export market for several staples; about 60% for corn, 40% for soybeans, 25% for wheat, and 70% for sorghum. However, moving the food from the country’s agricultural centers to its population centers and export hubs is a major challenge in this time of global crisis.
America’s food supply network is highly complex and relies on a complex web of interconnected infrastructure comprising of intricate waterways, railways, and roadways. For example, a lot of grain produced throughout the Midwest is transported to the Port of New Orleans for export. Transport of fresh produce and cold-storage products is done by refrigerated trucks and most of America’s grain produce is transported through railway links.
In order to ensure that food and essential groceries reach hundreds of millions of locked down consumers, there is huge pressure on supply chain and logistics enterprises to go the extra mile. The demand for front-line workers, drivers and delivery partners has risen substantially and so has the need to digitize supply chain operations.
With the Coronavirus outbreak intensifying in the United States, it is high time companies in the food supply chain switch to smarter technology such as network optimization and automated route planning to ensure smooth transport and delivery operations with minimized human intervention.
Locus helps enterprises in the supply chain digitize every element of logistics with AI-based tech solutions. Check out our recent white paper and get material insights on how to prepare your supply chain to fight COVID-19.
How India is dealing with essential deliveries amidst an unprecedented lockdown
This has meant that E-commerce players like Flipkart and Amazon and E-grocery players like BigBasket and Grofers have had to deal with supply chain uncertainties due to the lockdown. The companies are trying to work with the local authorities to get things back on track. Most of their deliveries have resumed in the top cities.
A few states in the country have now started issuing passes to the delivery executives so as to ensure that they can safely deliver items without facing any pressure from the authorities.
Amazon India recently put out a blog stating, “To serve our customers’ most urgent needs while also ensuring safety of our employees, we are temporarily prioritizing our available fulfilment and logistics capacity to serve products that are currently critical for our customers such as Household Staples, Packaged Food, Health Care, Hygiene, Personal safety and other high priority products. This also means that we have to temporarily stop taking orders and disable shipments for lower-priority products.”
The company also added that it would be reaching out to customers to give them a choice to cancel their lower-priority orders and get a refund. These measures came into effect from March 24, 2020.
On the other hand, FMCG giants have written to the government on Tuesday seeking an immediate exemption from movement restrictions, according to a report in The New Indian Express.
“Companies that supply meat, milk and household staples are struggling to redirect the sprawling food supply chain to meet the surge in demand after the government imposed a lockdown to bring the coronavirus pandemic under control,” said the report.
“Seeking immediate exemption from movement restrictions, companies including Britannia, Parle, PepsiCo, Hindustan Unilever, Dabur, Coca-Cola, ITC, Nestle and Mondelez have written to the government on Tuesday through three separate industry bodies,” the report added.
E-pharmacies too are in a spot of bother and are working with the relevant authorities to get things up and running.
The clampdown has sent the existing supply chains of companies across sectors into a tizzy. While the government and the companies are working to ensure that the operations are smooth, the end customers are facing uncertain delivery timings. Hopefully, the processes will become more streamlined soon.
During these demanding times, route planning and optimization are of utmost importance. E-commerce and E-grocery players are also implementing contactless deliveries and cashless transactions to ensure the safety of both the delivery executive and the customer.
Live tracking of ground personnel and smart geocoding will help now more than ever in ensuring the swift delivery of goods.
We, at Locus, have developed an exclusive COVID-19 Delivery Guide to help businesses in logistics and supply chain so as to ensure smooth operations during this tough time. Get your copy now!
Coronavirus could be the shot in the arm for E-commerce companies across the globe
A recent eMarketer report titled ‘Concerns May Boost Ecommerce as Consumers Avoid Stores’, which quoted a Coresight Research survey, said, “Shopping centers/malls were expected to be the most-avoided places, but more than half of respondents said they would also avoid shops in general.”
This sentiment is leading people to furiously click their mouse buttons to land on E-commerce sites and shop. Why go out, when you can things delivered at your doorstep? And E-tailers and e-grocers have been quick to latch on to this.
Internet behemoth Amazon is blocking all shipments of nonessential products to its warehouse as it is seeing a significant increase in essentials orders due to the spread of the coronavirus, according to a Business Insider report.
The report said, “Amazon said in an email to sellers that it was now prioritizing shipment in the following six categories: baby product; health and household (including personal-care appliances); beauty and personal care; grocery; industrial and scientific; pet supplies.”
If Amazon is riding on the wave to make sure it has all the essentials stocked up, things are no different in India. According to a news report on CNBC TV18, “E-tailing platforms have seen a 15-20 percent spike in gross merchandise value (GMV) in the first 15 days of March compared to February, and a massive 50 percent growth in GMV in categories such as grocery, health and wellness, according to internet-focussed consulting firm Redseer.”
All this frenzied activity means that a huge strain is being put on the E-commerce firms’ supply chain thereby resulting in shipment delays, technical problems, and also labor shortages.
In a recent official blog post, Amazon has said that it is opening 100,000 new full and part-time positions across the U.S. in its fulfillment centers and delivery network to meet the surge in demand.
Amazon will also be paying an additional $2 USD per hour through April. This is on top of its present $15/hour. It is also adding C$2 in Canada, £2 per hour in the UK, and approximately €2 per hour in many EU countries. This move takes its investment to over $350 million in increased compensation for hourly employees across the U.S., Europe, and Canada.
An Amazon India blog also recently highlighted the increasing footfalls it is getting on its site, thanks to Covid-19. “As COVID-19 has spread, we've recently seen an increase in people shopping online. In the short term, this is having an impact on how we serve our customers. In particular, you will notice that we are currently out of stock on some popular brands and items, especially in household staples categories. You will also notice that some of our delivery promises are longer than usual. We are working around the clock with our selling partners to ensure availability on all of our products, and bring on additional capacity to deliver all of your orders.”
The CNBC TV18 report also added, “The spike in demand has led to staffing firms such as TeamLease getting increasing requests from ecommerce companies to provide manpower.”
Logistics has now become more important than ever for E-commerce firms. In these testing times, logistics can make or break customer satisfaction.
With increased demand, these firms will have to use the right technology to enable same-day and slot-based delivery for important essentials. The right tech platform can help in seamless route planning and optimization. It can also help with an optimal fleet mix to match the increased demand, while keeping in mind traffic, route restrictions, etc. One can also intelligently club orders based on properties such as preferred delivery time slots, priority orders, location preference, and order specifications. More importantly, it is now crucial to keep a close track on data so as to glean insights and quickly make changes, if necessary.
This is indeed the time for both E-commerce and logistics firms to step up and be counted during these uncertain times.
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Coronavirus could damage global economic growth says IMF
The IMF’s managing director is of the view that the full impact of the virus can be ascertained only when it is contained.
The virus, which has killed around 2,000 people, has already made a dent in the business world.
The Hubei province in China, where Wuhan, the epicenter, is located is often called the ‘optics valley’ and houses firms that make components for smartphones and telecoms. According to reports, around 10% of the global smartphone shipments could get impacted. Wuhan’s workforce is a crucial part of the global supply chain for sectors like fashion, pharma, auto, and electronics, among others.
From smartphone manufacturer Apple to car manufacturers like Hyundai and Nissan, the virus’ spread has impacted all their operations. A number of airlines have canceled flights to and from China. If all of this isn’t enough bad news, tourism has dropped too.
To make matters worse, a lot of Chinese factories haven’t opened shops yet, after the Lunar New Year celebrations, thereby leading to a lot of disruption in normal activity.
While ripples are being felt the world over, there really isn’t a number that economists can put on the business impact of Coronavirus. According to Kristalina, during the SARS (Severe Acute Respiratory Syndrome) outbreak in 2002, China’s economy was around 8% of the global economy, but now, it is 19%. This means the business impact of covid-19 could potentially be more severe.
With the situation being very uncertain, businesses world over are concerned about the impact it could cause in their operations and thereby their bottom line. There are also concerns that this could potentially lead to shut down of assembly and supply chain lines across the world due to a lack of China-made components.
All the delay and uncertainty in different sectors have translated to a drop in transportation and logistics too. With supply chains being affected, a lot of last-mile delivery challenges are bound to happen. The reach of the virus is now far and wide, across sectors and countries.
While the world is reeling under the impact of Coronavirus, all one can do is wait and hope that it is contained soon. According to some experts, the lost sales could potentially be made up once the outbreak is contained. Will it also mean a renewed vigor in logistics once the virus is contained? There is no answer, really. All of this is mere speculation. In this interconnected global world, it really is hard to predict effects accurately.
But, one thing is certain, the covid-19 virus will certainly impact businesses around the world. We can only hope for a scenario that isn’t very bleak.
Locus helps companies manage their supply chains by using artificial intelligence. Locus’ solutions help reduce costs by increasing efficiency, transparency, and consistency in operations. Visit www.locus.sh to know more.
Alibaba offers a helping hand to combat Coronavirus in China with Green Logistics
Meanwhile, Alibaba, China’s leading e-commerce player, has stepped up to fight the deadly epidemic with green logistics. The company has launched an e-commerce platform to connect medical suppliers worldwide with thousands of Coronavirus victims in China. This special B2B platform will source medical supplies from retailers worldwide and provide the supplies to organizations working towards treating the disease.
Alibaba’s green logistics arm, Cainiao, is ensuring that the necessary drugs and medical equipment are shipped to the needy in the most efficient and eco-friendly way. So far, Cainiao has more than 150 suppliers and has delivered medical supplies from over 15 countries in 18 hospitals across the country.
‘Green Logistics 2020’ is Alibaba’s green e-commerce initiative that aims to implement eco-friendly practices of material recycling, green packaging, effective route planning, and delivery methods throughout its global supply chain. This is a joint mission across several entities within the Alibaba Group, including its online retail stores Tmall, Taobao, Xianyu, as well as its on-demand food delivery site Ele.me.
The demand for sustainable logistics is only increasing and it is pushing supply chains worldwide to embrace similar ways of doing business. While sustainable development has been a focus for corporates in developed nations, there has been a significant shift towards eco-friendly business practices, especially green logistics in developing countries across Asia
Companies are taking effective measures in this regard; such as using eco-friendly packaging materials that can be reused and recycled, choosing vehicles that have low carbon emissions, load optimization to ensure efficient vehicle utilization for shipments and route optimization in order to save travel costs by taking the shortest routes, thereby reducing fuel consumption significantly.
The importance of eco-friendly practices in modern-day supply chains cannot be overlooked. Logistics operations hugely impact the environment in several ways. Implementing sustainable transport and logistics strategies can reduce the environmental impact caused by logistics activities including transportation, warehousing, inventory management, packaging, raw materials handling and forward and reverse shipment services.
2020 and the years to come will see more Asian companies in retail, e-commerce, 3PL and distributor services embrace green logistics. In fact, green logistics might become a key differentiator for enterprises in Asia’s supply chain in the near future.