Last mile logistic companies scale down operations, thanks to demonetisation

Post demonetisation, e-commerce shipments took a blow and their volumes went down drastically. This forced multiple last mile logistics companies to scale down operations. In the last few months, logistics manpower companies such as IKYA Human Capital Solutions, owned by Quess Corp, G4S, and last-mile delivery companies such as Wow Express and Connect India have reduced the number of centres.

"All companies working on an employee outsourcing model took a hit. Between November and February, there was a 4045% drop in volumes from e-commerce companies," L Sridhar, founder of logistics network company Connect India, which works with local stores and pharmacies in tier-II and III cities and rural areas to create a partner network for delivery in these locations, told ET.

He said that the company has scaled down operations from 95 cities and rural regions to 45 all thanks to the reduction in e-commerce volumes and lower rates being negotiated by e-commerce players in an effort to reduce burning cash per delivery.

"The volume has come down from 1 million to 4,00,000 shipments per month over the last three months," Sridhar, told ET.

"We understand the seasonality of the e-commerce business and are now entering into short-term contracts for the peak delivery seasons with the ecommerce players. The planning of manpower in these companies is aligned to the peak. When our contracts end at the end of the peak season, we are moving our delivery staff to other verticals such as agro or FMCG to ensure that they are not out of jobs.We is doing this for the first time in the year 2016-17," Guruprasad Srinivasan, president special projects and logistics at IKYA, told ET.