When lockdowns are lifted in India, experts expect a second wave of infections due to the increased human-to-human contact that is sure to follow. This will likely lead to another set of lockdowns to reduce the burden on India’s healthcare systems. It is important to ensure that these future lockdowns do not disrupt economic activity to the same extent as the first. One way of doing this is to ensure minimal disruption to supply chains to both essential and non-essential goods.
In both Takshashila’s National Reopening Strategy and the guidelines that State governments are coming out with, provisions are made for designating “zones” according to indicators such as the number of active cases. Under normal circumstances, transport of goods works as below, a “point-to-point” system:
Under a complete lockdown, or a lockdown that only allows certain goods designated as “essential”, the entire system is shut down. If goods are being produced in a zone free of infections, it is difficult to deliver them into a zone with infections as delivery systems are locked down. Similarly, if raw materials are being produced in a zone with some infections, under a partial lockdown, there is no way of delivering them into a zone without infections, disrupting manufacturing activity and impacting the availability of finished goods elsewhere.
We propose a system that does not completely stop the flow of goods except under cases of massive community spread. This can be done through a “hub-and-spoke” or relay system that moves goods from one zone to another via logistics hubs, with minimal human contact between zones. Goods from one zone are not moved directly to their destination in another zone, but to a logistics hub where they are unloaded by staff who stay within that zone. Next, they are quarantined, disinfected, and moved to their next hub. Finally, logistics providers within the destination zone transport the goods to where they need to be. By minimising human movement between zones, the risk of infections spreading through this channel is minimised.
However, it should be noted that COVID-19 is capable of surviving on surfaces for at least a few hours. Safe manufacturing and packaging protocols, and disinfection facilities at logistics hubs, may make this system more feasible. It should first be allowed for sectors and companies that are already able to enforce the measures discussed in our proposed advisory to industries and businesses in the next section. As more companies get used to working with these protocols, they can also be permitted to participate in this system.
While this system will slow the flow of goods and make them more expensive due to additional costs, it will ensure that supplies continue, thereby allowing greater production than otherwise possible.
To enable this in the short term, existing private and public bus stands and rail godowns can be converted into temporary logistics hubs, but transporters and warehouse workers will need to be trained. These hubs should be required to randomly test transporters coming in from other zones, as well as staff in each zone, and provide regular updates to the State Epidemic Command Centre.
The State should keep its involvement minimal, restricting itself to providing guidelines and clearly communicating the risks and potential fines in case the guidelines are violated and cause further infections. State governments can lease space to logistics providers, but in general let the private sector grow to service the demand – this will also be a useful positive externality in case of future lockdowns. The State should communicate projected increases to threat levels and upcoming lockdowns to businesses so they can insulate their supply chains well in advance.
As this system adds friction to already sub-optimal inland logistics, the government should also take this as an opportunity to rationalise and trim down all other inefficiencies – especially overlapping and conflicting GST regimes. Logistics is already considered “infrastructure”, allowing for high FDI, and multinational logistics companies were interested in the sector until quite recently. This is the perfect opportunity for the Union government to jump-start competition and improved efficiency in the sector, and it should also accelerate the construction of multi-modal logistics parks and dedicated freight corridors as part of a broader economic stimulus package.