By Hector Patel
Even as we come to terms with the rising challenges brought about by the pandemic pandemic, the pharmaceutical and healthcare supply chain has come under the limelight as the singular saving grace for supply of life-saving medicine, oxygen concentrates, and vaccine distribution. For long, the Indian pharma, and the overall cold supply chain infrastructure had been underutilised and under-developed. And while the pandemic has accelerated the growth and the focus on the sector, it has also highlighted the challenges and potential for growth, even in the post-COVID world.
Driven by the pandemic, the national cold chain sector is expected to grow at over 20% CAGR by 2025, as per a recent report by JLL. The main factor for this growth, as per the report, is the transformation of the otherwise un-organized conventional cold storage to a modern storage space, with an opportunity for organized cold storage/palletized cold storage in Tier-I cities like Mumbai, Delhi NCR, Bengaluru, Chennai, Pune, Kolkata, Hyderabad as well as Tier-II cities like Lucknow, Kanpur, Ranchi, Patna, Bhubaneswar, Goa, Aurangabad, Ahmedabad, Kochi and Coimbatore. Some of the key factors that are instrumental in this growth, can be highlighted as under:
1. Accelerated digital adoption: Digital adoption has been a key factor driving change and disruption across sectors, with logistics and supply chains being at the forefront. Automation in the logistics sector has been rapidly adopted across both traditional and new age service providers, with specialized warehouse automation or cold storage facilities, tracking and monitoring of temperature sensitive cargo, on the move as well as the use of emerging tech like AI, ML and IoT for crucial supply chains like vaccines and medicine transportation.
2. Modern infrastructure and expansion of reach: With the adoption of technology, the Indian logistics and supply chain is further strengthened by focused infrastructure development, with focus on rail and road transport. The expansion of reach, essentially brought about by the massive vaccination drive, has further helped speed up the development and adoption of multi-modal logistics and dedicated logistics parks with well-equipped cold storage facilities.
3. Skilled and trained manpower: With the digital adoption, there is also a renewed focus on training and up-skilling staff handling sensitive medical material, like vaccines and medicines. This is an area that had been largely ignored in the past but given the national and global emergency brought on by the pandemic, logistic service providers are focusing on up-skilling and training staff –both on ground and managerial staff, on effective handling of life -saving cargo, optimizing tech-enabled warehouse and supply chain operations and focusing on digital literacy for the blue-collar staff.
4. Logistic start-ups and 3rd Party LSP: Along with a rise in organized logistics and shift of established players towards cold supply chain, now termed as a ‘Sunrise sector’ for its potential growth, there has also been a number of start-ups who have risen up to the current challenge and provide value-added and innovative services for logistics and cold supply chain. From app based tracking and monitoring services to creating a digital infrastructure for one stop shop solution for documentation, payments, dispatches etc., the Indian start-up ecosystem is playing a major role in disrupting the sector, for good!
5. Policy push for FDI: Last but one of the most important impetus for growth of logistics and supply chain is the recent government decision of conferring infrastructure status to logistics as a sector and approval for 100% foreign direct investment (FDI) in the storage and warehousing sector. This decision is set to enable industry players to reach out to gain access to the much-needed funds for modernization and expansion, at lower rates, and longer tenures. This decision will enable companies in the logistics and warehousing sector to access large sums under the external commercial borrowing (ECB), at a lower cost, and longer tenure.
While all of the above factors are key drivers for growth of the sector, largely brought about due to the global pandemic, the renewed push for manufacturing and vocal for local initiatives are going further to ensure there is a continuous impetus for growth, in the post COVID era.
Hector Patel is the executive director and Board Member at Jeena & Company.
(DISCLAIMER: The views expressed are solely of the author and ETHealthworld.com does not necessarily subscribe to them. ETHealthworld.com shall not be responsible for any damage caused to any person/organization directly or indirectly).