Impact Of COVID-19 On Courier And Logistics Businesses In Kenya
The COVID-19 pandemic has caused disruptions to individual lifestyles as well as businesses and government services in Kenya since the first case was announced on 13th March 2020.
The government of Kenya implemented a nationwide curfew on 7th April 2020 as one of the measures to slow down the spread of the virus. Logistics companies, postal and courier operators were among service providers classified as offering essential services and were exempted from the curfew and county lockdowns where the latter existed.
They have since embarked on instituting changes in their operations to ensure compliance and health and safety of their customers, staff, and goods collected for delivery, fleet in use, facilities and retail outlets. This has ensured that essential goods are transported from point A to point B across the country. These goods include pharmaceutical products, medical samples and supplies, consumer goods, packaged foods, agricultural inputs, spare parts and raw materials for manufacturers, sensitive bank documents, legal documents, shipping documents and customs clearance documents, documents that require hard copy signatures, computers, laptops and accessories.
However, due to border closures, national lockdowns in different countries and restrictions on people movement, the volume of goods transported and processed for export and import into the country have gone down for air freight and sea freight shipments, as well as courier items.
Key areas that logistics companies, postal and courier operators need to focus on to stay afloat and survive post Covid-19 include:
1. Compliance to health and safety regulations – new regulations are more likely to come up. Reinforcement of existing rules and ongoing Ministry of Health and World Health Organisation guidelines will be fundamental in ensuring customers and employees are well protected.
2. Service level agreements- operators will need to review the lead times from point A to B with their customers in light of the changing business environment and operations constraints.
3. Liquidity- review and update cash flow management strategies in light of the uncertainty brought about by Covid-19.
4. Payroll management – work schedules have changed, and so has the modus operandi. The industry has experienced job losses; whilst some companies have send staff on paid or unpaid annual leave. Inevitably, an assessment of human capital and rationalization will be necessary.
5. Domestic e-commerce growth: as lifestyles change, there is an opportunity for increasing business by offering a wider range of products online for essential and non- essential goods. E-retailers can work jointly with courier service providers for last mile deliveries.
6. Tax compliance- The government has proposed a reduction of personal income tax top rate (PAYE) from 30% to 25%, 100% tax relief for persons earning up to Sh. 24,000/=, reduction of Vat rate from 16% to 14%, reduction of Turnover tax rate for SMEs from 3% to 1%. Companies need to ensure compliance to the measures to avoid financial implications later for unfulfilled tax obligations.
7. Customer service and experience management- Customers have a lot of questions now and they are wondering how the crisis will affect their business. Continuous engagement will help to keep customers reassured. The corona virus pandemic has forced large numbers of customer service and customer experience staff to work from home. Even in this scenario, best practice has to be followed to keep customers informed, guided and calm.
8. Technology- COVID-19 has further demonstrated just how important technology is in the 21st century, in terms of moving goods, connecting people safely and powering industry. Technology-led business models will emerge as more critical and important than ever and will play a key role in defining strategy as we re-imagine future courier and logistics operations. As an example, there is a need to reduce dependency on physical labor across transportation, warehousing, distribution and last mile delivery.
From an industrial perspective, the current situation is likely to keep changing in the near term. Hence the Deming Cycle of PLAN- DO- CHECK- ACT will be a useful tool for continuous improvement of processes and service provision in the courier and logistics sector.
As the pandemic unfolds, statistical indicators will be essential to get an actual sense of what is happening on the ground. Courier and logistics operators will need to analyze the patterns carefully to understand when and where the business closures and expansions and everything in between happen.
This article was written by a logistics and strategy expert Charity Ruth Mwanzia who is the founder of Ianstar Limited, a logistics and strategy consulting firm.