Statewide Lockdowns Disrupt Supply Of Grocery And Consumer Goods

Large-scale shutdowns to contain the new coronavirus pandemic triggered panic buying as people turned to the internet to stock up everything from medicines to grocery. Even before the country went into a complete lockdown barring essential services, supplies are either running short or stuck.

Grofers is staring at a backlog of deliveries to about 2 lakh households after 30 states sealed their borders on Monday. “In certain areas, our warehouses were shut by local authorities and in certain cities the entry is getting stopped due to the lockdown,” Albinder Dhindsa, co-founder of the Softbank-backed online grocery startup, told BloombergQuint over the phone. The company, he said, is not facing supply issues yet but the confusion has marred their operations.

On Tuesday, the company’s warehouse in Faridabad was closed by local law enforcement, Dhindsa said in a tweet. “While we understand they are doing their duty, essential items will be denied to more than 20,000 households in Faridabad and Delhi every day. We need help in sorting this out.”

The novel coronavirus has so far infected more than 3 lakh people worldwide and killed over 14,000. The number of confirmed cases is nearing 500 in India, including ten deaths. Starting a few days ago, lockdowns have now been announced in 548 districts, alongside travel bans, shutting down businesses temporarily in Asia’s third-largest economy. Only sale of essential commodities such as foodgrains, milk and medicines are allowed. On Tuesday night, Prime Minister Modi announced a nationwide 21-day lockdown.

Despite the restrictions, Grofers is running at 70 percent capacity. Grofers said to clear the backlog, the company would start round the clock doorstep deliveries, which would be zero touch, from Thursday.

For others, things are worse. Milk and grocery delivery startup SuprDaily was only able to run at a capacity of less than 10 percent, a spokesperson said in a text response. The Swiggy-owned firm was also forced to de-list stocks because warehouse executives were not able to reach amid movement restrictions within the cities.

Deliveries of BigBasket, India’s largest online grocery firm, were stopped as well but it expects the issues to be resolved soon. “The firm is working to boost its capacity to meet the huge surge in demand,” Hari Menon, co-founder of BigBasket, told BloombergQuint over the phone. “It takes time to build capacity in the country. We are in the process of hiring people for deliveries, warehouse, wherever we need and trying to increase the storage capacity.”

Meanwhile, the company acquired milk delivery startup DailyNinja for an undisclosed amount to expand its subscription-based service bbdaily.

Amazon.com Inc—which operates a quick delivery service Prime Now and a grocery delivery service Amazon Fresh—too, is struggling to meet the surge in demand. “We continue to make changes to our logistics, transportation, supply chain, purchasing, and seller processes to prioritise stocking and delivering priority products like household staples, health and hygiene products, sanitizers, baby formula, and medical supplies,” the world’s largest online retailer said in a statement.

Online grocers, however, aren’t alone in facing issues regarding transportation of goods amid the pandemic.

A chief executive officer at a fast-moving consumer goods maker said there was no clarity on how to transport not just finished goods but also raw materials. Transportation even within the state is impacted, the executive told BloombergQuint on the condition of anonymity.

At least essential items like food should be allowed across state borders and the supply chain should not be disrupted, the executive said. Though India’s Ministry of Consumer Affairs had urged states to allow deliveries to ensure essential supplies, but lack of clarity is creating confusion, the person said.

India’s largest FMCG company said in the last couple of days, there had been a significant amount of difficulty in running the factories and transportation of goods. “The government has rightly permitted food, vegetables, groceries and medicines to be excluded from the lockdown. However, clear instructions need to be provided to the enforcement authorities across states so that these essential items and the supply chain around it, is allowed to function,” Hindustan Unilever Ltd.’s spokesperson said.

According to Nestle India Ltd., the operations in some of the locations (manufacturing, distribution centres/ warehouses, offices, suppliers) are scaled down or suspended in view of the lockdown in many of the states/union territories. “As the company is in the manufacture and sale of food and beverage products, it is in discussion with the authorities to continue operations in the factories/distribution centres where the operations have been suspended,” the maker of Maggi instant noodles said in an exchange filing.

The company is also closely monitoring the situation and will take all necessary measures as directed by the central and state governments and authorities, from time to time. The impact on the operations of the company cannot be assessed at this point, it said.

Two other senior FMCG industry officials BloombergQuint spoke with said they were assessing the situation internally and are in talks with the government to understand the best ways to make sure the supply of goods isn’t impacted.

According to distributors of fast-moving consumer goods, the average stock with them has reduced to 10-15 days as consumers stocked up ahead of lockdowns.

The All India Consumer Products and Distributors Federation has written to the Finance Ministry seeking a slot during the week to supply stocks to grocery stores as 60-70 percent products sold through such outlets are FMCG goods. To be sure, retailers usually have an inventory that lasts five to six days.

The federation has also written to companies to not push distributors to meet targets and also sought time to make payments till the situation stabilises.

The Retailers Association of India, too, asked state governments to allow all food and grocery stores within malls or outside—air-conditioned or not, small or large and online or offline—to stay open during the lockdown period, according to a media statement. It wants home deliveries be allowed to prevent people from stepping out, so as to contain the spread of the infection.