Logistics industry world wide is relieved that oil is back to $45 (In fact, now we are speculating when it will touch $30!!). I argued some time back that oil at $147 is in a way good for the industry as it will make it more efficient and less wasteful.
So what now? Unfortunately for the industry, oil is where it is because nobody needs to fill their trucks as there is NOTHING TO MOVE !! Even in India, there has been a marked slowdown in trucking activity due to industrial slowdown.
In spite of recent reduction in diesel prices, the short term future of modern logistics is uncertain. There has been a rethink on plans to expand "modern" logistics services. The trend towards transporters becoming logistics service providers has come to a halt. The reason is auto and organized retail- the two drivers of modern logistics are in bad shape.
Both these industries require large scale movement across India and require consolidation/ consolidation services in a timely manner- the very reason for logistics service providers.
Thus, it remains to be seen how the industry responds to the downturn- whether oil is $35 or $147.
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