Covid-19 impact: Restrictions on movement still a pain point for FMCG firms

Logistics and movement of goods continue to be the pain point for FMCG companies who are considering improving operations this month after May 17.
 

According to the Federation of West Bengal Truck Operators’ Association (FWBTOA), truck availability has only improved marginally around 10 per cent of a total 9 million trucks in India. “The situation with regards to availability of trucks and movement of goods is improving with each passing day, but it is still a struggle given the continued shortage of drivers and trucks," Shahrukh Khan, executive director (operations) at Dabur India, said.
 

Harsh Agarwal, director at Emami, said, "While truck shortage may have improved marginally, it still needs to improve more. Manpower situation, too, has improved." Executives from the fast-moving consumer goods (FMCG) as well as other sectors like cement said movement of trucks were restricted owing to the containment measures in red zones.

"While factory areas are mostly in green zones, red zones, where movement is extremely restricted, fall on route to take goods to the market. It is here that the major logistical challenge is coming up," an executive from the FMCG sector said. Nearly all of the FCMG companies - HUL, ITC, Marico, Nestlé, Emami and others - have resumed operations and have plans to scale up operations in the near-term.
 

"Production in most of our manufacturing units has started and it will be scaled up gradually. Even though few units continue to grapple with local restrictions and labour unavailability, we are hopeful that the situation will progressively improve over the course of time," a Marico spokesperson said. Sajal Ghosh, general secretary at FWBTOA said there was a serious shortage of drivers as most of them have returned home and are unwilling to come back until situation eases. "Despite Centre's notification asking states to honour passes, the state police are unwilling to let the trucks in, posing a major problem in movement of goods. Obtaining travel permits is a tiresome process," Ghosh said.

According to sector officials, considerable amount of power on movement and logistics has been given at the micro-level, right to the panchayats to enforce the lockdown. "That is where the problem has been cropping up as each panchayat is taking its own decision based on the Covid-19 situation and thus seamless logistical movement is getting affected," a sector official said.

Faced with such challenges, FMCG firms are increasingly tying up with delivery platforms and aggregators to deliver goods to consumers.
 

Marico has also introduced tele-servicing and an app for retailers, which enables retail partners to feed in their requirement digitally or through a phone call.
 

Market tracker Nielsen expects FMCG industry growth for the second half of 2020 to be in the range of 5-6 per cent, which is marginally higher than the growth rate in the first half of the 2020 calendar year.