Slower Biscuit Sales, Delayed Footwear Orders–Transport Strike Hurts Manufacturers
The nationwide truckers’ strike has started pinching manufacturers in Asia’s third-largest economy.
The indefinite strike, which entered the eighth day, has disrupted the flow of goods and raw materials, hurting the logistics cycle of the makers of consumer goods, chemicals, footwear and automobiles. While the impact has so far been localised, companies said it could become worse if it continues for a few more days.
“Of course, it’s having an adverse impact on all our businesses—be it chemicals, textiles or consumer products,” said RS Jalan, managing director of GHCL Ltd, said in an emailed reply. “Our customers, many of whom run continuous process industries, are suffering and there’s now a possibility they may have to shut down temporarily.” Jalan said the strike is hurting their customers’ exports as well.
While transporters continue to supply essential items, the majority of the 93 lakh trucks have been off the road since July 20. Their demands include scrapping daily revision of diesel prices, cheaper third-party motor insurance premium and a simpler e-way bill mechanism under goods and services tax, according to Ashok Goyal, vice president (west zone), All India Transporters Welfare Association, and managing director of BLR Logistiks Ltd. The supply-chain disruption threatens to slow down manufacturing activity— measured by the Nikkei India Purchasing Managers Index— which rose at its fastest pace in six months in June, after having fallen off its December peak.
Automakers are among the worst hit. “Our members are facing unprecedented crisis as it is affecting the movement of vehicles and components supply because of the strike," Society of Indian Automobile Manufacturers Deputy Director General Sugato Sen said in a statement. Many of domestic consignments are held up on roads, which has disrupted the supply chain and completely derailed the production at assembly lines of some companies, newswire PTI quoted him as saying.
Ford India President and Managing Director Anurag Mehrotra, according to another PTI report, had admitted that the transport strike is impacting both domestic movement of parts and vehicles. “We expect it to soon impact exports too, with the container association joining the strike.”
Skoda Auto India’s Aurangabad plant was closed yesterday due to parts shortage, the report said quoting its spokesperson who expected normal production to resume today.
Tata Motors advanced weekend holidays at Pune, Maharashtra and Sanand, Gujarat plants and will compensate for it later, PTI reported quoting an unnamed person. India’s largest truckmaker has yet to respond to BloombergQuint’s emailed queries.
Consumer goods maker Britannia Ltd. said “the prolonged strike has adversely impacted its stock movements despite mitigatory actions”. The maker of Good Day and Bourbon biscuits said in an emailed response that sales have slowed in the last few days. “The strike has also resulted in factory stoppages in some locations. If the situation does not improve, we’ll have irreversible losses.”
Kishore Biyani’s Future Supply Chain Solutions Ltd. agreed that the flow of many major commodities has been disrupted. The strike has been manageable till now, according to Sheshadri PV, chief executive officer at the logistics firm, but “further delays could have adverse impacts”.
Potential losses from a delay in shipping a large order has left footwear maker and retailer Khadim India Ltd. worried. The Kolkata-based company said it received an order from the Directorate of School Education, Uttar Pradesh to supply 15 lakh pairs of footwear and 60 lakh pairs of socks. That may not be delivered on time due to the strike and the company will face a penalty.
“We’ve written to the department explaining our situation,” Chief Financial Officer Indrajit Chaudhuri said over the phone. “We’re unable to service dealers from our Kolkata warehouse due to the strike. Nearly 250,000 pairs of footwear are stuck in the Agra-UP-Delhi region.”
Pesticides maker PI Industries has already taken a 10-20 percent hit on its monthly revenues. “The peak kharif sowing season has started,” said company’s spokesperson Bini Lal in an emailed response. “But we can obviously recover the numbers if the strike gets called off in the next few days.”
No Impact On Ports, For Now
The strike’s impact hasn’t been felt at Mumbai’s Jawaharlal Nehru Port Trust, the largest container port in India, at least as of now.
“There have been no movement issues because the movement of trucks happen from container freight stations,” Unnikrishnan Nair, manager (traffic) at JNPT, said in an email. “No areas specifically have been disrupted. Things are normal in their geography.”
Even the Haldia port in the east was unaffected. “There’s been no impact due to the strike,” said AK Dutta, general manager (management and services), Haldia Dock Complex, over the phone. “Business of carriage outwards and inwards hasn’t suffered yet.”
That relief may not last for long though. “The actual ramifications of the strike will be felt if it extends beyond this week,” said Sandeep Anand, chief executive officer-projects and equipment, at Mumbai-based Allcargo Logistics Ltd. “As of now, there’ll be adequate stocks of consumer goods, so the impact’s localised.” But, he said, it will eventually lead to congestion at ports.