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Logistics Services Market India

January 2013

Executive Summary
Market

Share of Logistics Services in Total Logistics Market in India was estimated to be c1% in 2011 and is expected to
reach c6% in 2016
Logistics services accounts for around c% of the total logistics market
Courier, Freight Forwarding, 3PL and Reverse Logistics exhibits significant market potential in India

Drivers

Drivers &
Challenges

Technology
Adoption

Challenges

Global Trade Boom

Rapid Economic Growth & FDI in Logistics
Growth in Retail Sector
Rise in e-Tailing
Increased demand for Consumer Electronics and Durables
Expansion of Auto & Auto Components Sector

Poor Infrastructure
Lack of Skilled Manpower
Warehouse Space Deficit

Identification Technology Barcode, RFID

Enterprise Application ERP, eBizNET

SC suite, Vin eRetail

Communication Technology - Global
Positioning System (GPS) Tracking

Material Handling Technology - Automated

Guided Vehicle System (AGVS) , Information
directed System

Software Solution Providing Companies

Technology Adoption by Leading Players

Major Players

Competition

Player A

Player B

Player C

Player D

Player E

Player F

Player G

Player H

Player I

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Introduction
Evolution
Market Overview
Advantages of Services
Segments & Features
Distribution Channel
Role of Regulatory Bodies
Drivers & Challenges
Key Issues
Technology Adoption
Competitive Landscape
Transactions
Strategic Recommendations
Appendix
LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Logistics sector primarily deals in transportation and storage

operations and is significantly aided by logistics services
LOGISTICS
SECTOR

TRANSPORTATION

STORAGE

Container Rail Transport

Warehousing

Road Transport

Logistics Park

Express Logistics

Inland Container Depot

Coastal Shipping

Container Freight Station

Air Cargo

Cold Chain

Project Logistics

LOGISTIC SERVICES

Courier Service

Freight Forwarding

3PL/ 4PL
Reverse Logistics

Port

Logistics services also include import/export management, customs clearance, clearance, freight forwarding, customer
service, rate negotiation, order processing, assembly/installation, distribution, order fulfillment, reverse logistics,
consulting services that include distribution network planning, site selection for facility location, fleet management,
freight consolidation and logistics audit amongst others
LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Logistics Services - Segmentation

Logistics services has significant business earning potential in business services that require courier; movement of heavy
commodities that require freight forwarding, outsourcing of logistics activities by business houses as well as logistics companies
that boosts 3PL and returns processing that involve key sectors that has built a favorable position for reverse logistics

Courier Service

Freight Forwarding
Services of any kind relating to the carriage,
consolidation, storage, handling, packing or
distribution of the goods with ancillary and advisory
services in connection therewith, including but not
limited to customs and fiscal matters, declaring the
goods for official purposes, procuring insurance of
the goods and collecting or procuring payment or
documents relating to the goods

A Courier is a person or company that is engaged in

transporting, dispatching and delivering messages,
packages and mail at some extra cost

Third Party Logistics (3PL)

Reverse Logistics

Third Party Logistics (3PL) involves outsourcing

activities related to logistics and distribution

Process of planning, implementing, and controlling

efficient and cost effective flow of raw materials, inprocess inventory, finished goods and related
information, from point of consumption to point of
origin, for purpose of recapturing value of proper
disposal

3PL industry includes Logistics Solution Providers

(LSPs) and shippers whose business processes they
support.

Key

Courier Service

Freight Forwarding

3PL

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Reverse Logistics
5

Evolution of Courier Services

1980s
1977

1837
Organized Courier
came into existence
1774

Introduction of
India Post Office
Act

Courier industry
started gaining
momentum

Indian Postal System

came into existence

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

The logistics market is growing at a CAGR of X% of which c%

is comprised by Services segment
Logistics Market Size and Growth

Logistics Market Segmentation

INR units

c%

25

X%

20
15
10
5

X6

X1

X2

X3

X4

X5
a%
b%

0
20--

20--

20--e

20--e

20--e

20--e

Share of Logistics Services in Total Logistics Market in India

20--

20--

20--e

20--e

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

20--e

20--e

Growing business opportunities in India is driving the need

for time bound service
Courier Market Size and Growth India

Market Overview India

The courier/ express courier market is highly fragmented
with numerous small unorganized players
The market was valued at INR a units in 20-- and is
expected to reach ~INR f units in FY 20- The market is estimated to maintain a steady growth rate
of around A% between 20-- to 20- With over a lakh of pin codes in India, only around 10,000
are connected by courier service

It thus makes the lesser known players very significant in the
market as they take upon the responsibility of providing last
mile service for large organized players

INR units
400

f
A%

300
200

e
d

100
0

20--

20--

20--e

20--e

20--e

20--e

Revenue Split of Courier Sector

Express/ Courier Categories in India

Government
Administered

India Post

Global
Integrators

UPS, FedEx, TNT and DHL

Large Indian
Companies

Regional Players

o%

m%

n%
Blue Dart, DTDC, First Flight etc.

Other Small Courier

Companies
LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Freight forwarders exhaustive understanding of transport

business ensures cost effectiveness for its clients
Freight Forwarder
Forwarders offer flexibility with customers
Able to customize their services to specific requirements because they do not need to fill planes or ships each day
Freight Forwarders have competitive advantage on the human resources front
Many forwarders reward employees based on area level profitability, attracting more quality people to freight forwarding
Better understanding of cost and effectiveness of transportation business
Forwarders are far less complex because they focus on the basic factors such as sales, terminal operations, procurement of transport
services etc

Factors Favoring Freight Forwarder

Control of the end-user customer as asset
operating air and container carriers increasingly rely
on forwarders wholesaling capacity

Flexibility of services across different carriers and

modes of transportation

Ability to provide better supply chain information to

customers

Ability to attract and retain high quality clients due

to higher growth and profitability

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

SAMPLE

3PL Providers Types Based on their Functions

Types of 3PL Providers

Based on Transportation
Services extend beyond transportation
to offer a comprehensive set of
logistics offerings
Leveraged 3PL service providers use
assets of other firms
Non-leveraged 3PLs use assets
belonging solely to the parent firm
Examples: Ryder, Schneider Logistics,
FedEx Logistics, UPS Logistics

Based on Warehouse/Distribution

Many have former warehouse and/or

distribution experience
Examples: DSC Logistics, USCO, Exel,
Caterpillar Logistics, IBM

Based on Forwarder

Very independent middlemen with

forwarder roles
Non-asset owners that provide a wide
range of logistics services
Examples: AEI, Kuehne & Nagle, Fritz,
Circle, C. H. Robinson, Hub Group

Based on Financial Issues

Based on Information

Provide freight payment and auditing,

cost accounting and control, and tools
for monitoring, booking, tracking,
tracing, and managing inventory
Examples: Cass Information Systems,
CTC, GE Information Services,
FleetBoston

Significant growth and development in

this category of Internet-based,
business-to-business, electronic
markets for transportation and logistics
services
Examples: Transplace, Nistevo

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

10

3PL Distribution Channel

SAMPLE
Supplier

Transaction

Transaction

Third
Party Logistics
Provider

Third
Party Logistics
Provider

Logistics Services

Manufacturer

Retailer/
Buyers

Logistics Services

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

11

Role of Government: Summary

Ensuring
Competitiveness

Laws

Infrastructure Development

Role
of
Government

India Post Office

Amendment Bill

Foreign Direct
Investment

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

12

Drivers - Summary

SAMPLE
Common Drivers

Key

Impact

Global Trade Boom

Rapid Economic Growth & FDI in Logistics
Growth in Retail Sector
Rise in e-Tailing
Increased demand for Consumer Electronics and Durables
Expansion of Auto & Auto Components Sector

Courier

Financial
Institutions
Dependence on
Courier
Growing Business
of Private Telecom
Sector
Seasonal Business
Upsurge Due to
Occasions

Freight Forwarding
Diversification into
Logistics Business
Improved
Transportation
Infrastructure

Rising
Competitiveness
among Domestic
Companies

3PL

High cost of
Logistics in India

Phased
implementation of
VAT

Government
Infrastructure
Initiatives

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Reverse
Logistics
Government
Concern for
Sustainability
Garnering Customer
Satisfaction
Growing
Consumerism
among Indians
Economic Viability
of Reusing Goods
Growth of Pharma
Market

13

Reverse logistics is plagued by mismanaged returns, high

distribution cost and retailer-manufacturer conflicts

SAMPLE

Key
Issues

Mismanagement
in Segregating
Returns

Retail outlets and showrooms are often not systematic enough in smoothly
segregating the articles to be sent to manufacturers that leads to loss of time for
reverse logistics service providers

High Distribution
Costs

Transportation, warehousing, distribution and inventory management are the

major cost components of reverse logistics
If companies find that total costs associated with reclamation
efforts exceed total costs of new materials or products, firms would have no
financial incentive for implementing a reverse logistics system
So it becomes very important for logistics service providers to provide services at
competitive rates

RetailerManufacturer
Conflict

Conflicts arise between retailers and manufacturers due to reasons involved in

product recall
Retailers perceive that every product damages happen in the process of logistics
or in the production process, so every product demands full compensation
Manufacturers, on the other hand, perceive that recalled products may be
damaged by retailers, so every recalled product should not be given full
compensation
The above factors result in confusion of reverse logistics process initiation

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

14

3PL is witnessing better productivity with rising investments

in A, B, C & new supply chain tools

Identification
Technology

Competitive
Advantage

Communication
Technology

Material
Handling

Direct data entry into

computer
Technologies x, Y, Z,
magnetic strip and A are
used
Used for tracking rail cars
and carton movement

Enterprise
Applications

IT implementation comprises
mainly ZZ packages
A is one of the most popular IT
tool being used across logistics

Communication plays a
key role in logistics
business
Ensures speed and
accuracy in customer
service
Helps in bringing in
competitiveness among
service providers

Loading, unloading and storage

of goods in warehouses
Reduces need of labor force
Automated material handling
becomes useful in areas of
hazardous goods
LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

15

Public: Domestic Company Player A (1/3)

Company Information
Corporate Address

Player A
5th Road, 6th Street,
City A 700 xxx

Tel No.

91 22 6679 xxxx

Fax No.

91 22 6679 xxxx

Website

www.playera.com

Year of Incorporation

19--

Ticker Symbol

53xxxx (BSE)

Stock Exchange

Bombay Stock Exchange

Offices and Centres India

City X

Head Office

Products and Services

Category

Products/Services

Key People
Name

Designation

Person A

MD

Person B

CFO

Person C

CEO

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

16

SAMPLE

Public: Domestic Company - Player A (2/3)

Financial Snapshot
Total Income

INR mn
40,000
30,000
20,000
10,000

Key Ratios
Net Profit/Loss INR mn
34,381.0

35,858.4

3000

28,803.1
2000

20,836.4

1000

2009

2010

2011

2012

Financial Summary
The company earned a net profit of INR 2,345.9 mn in FY 2012, as
compared to net profit of INR 2,228.7 mn in FY 2011
The company reported total income of INR 35,858.4 mn in FY 2012,
registering an increase of 4.3% over FY 2011
The company earned an operating margin of 8.78% in FY 2012, a
decrease of 0.19 percentage points over FY 2011
The company reported debt to equity ratio of 0.86 in FY 2012, a
decrease of 1.63% over FY 2011

Key Financial Performance Indicators

Indicators
Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR)
PE Ratio (Absolute)

Value (09/01/2013)
xx
xx
xx
xx

Particulars

y-o-y change
(2012-11)

2012

2011

2010

2009

-0.19

8.78%

8.97%

7.61%

8.01%

Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets

0.06

6.54%

6.48%

5.76%

6.24%

-0.15

8.44%

8.58%

7.77%

8.13%

0.48

15.42%

14.94%

13.74%

13.07%

14.71%
13.18%
50.35%
10973.56%
8.27%
7.95%

13.53%

13.95%

46.22%

36.95%

1.52
-11023.91
0.32

8.07%

8.62%

4.55

16.76%

12.20%

19.68%

23.75%

0.19

91.11%

90.92%

92.34%

91.90%

17.24

17.24%

0.00%

6.07%

8.64%

0.03

1.65%

1.62%

0.68%

1.12%

-48.94%

1.00

1.95

1.82

2.13

-43.37%

0.26

0.47

0.63

0.83

Cost Ratios
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)

Liquidity Ratios
Current Ratio
Cash Ratio

Leverage Ratios
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio

-1.63%

0.86

0.88

0.70

0.52

-20.15%

0.27

0.34

0.24

0.17

-3.90%

5.39

5.61

11.27

7.20

Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover

35.97%

2.53

1.86

3.39

3.77

3.01%

1.25

1.21

1.39

1.37

36.26%

5.10

3.74

3.59

3.11

-21677.73%

-1655.74

7.67

7.97

5.86

2.23%

2.33

2.28

2.37

2.07

Improved

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

Decline

17

Public: Domestic Company Player A (3/3)

Key Business Segments

Key Geographic Segments

100%

100%

50%
0%

50%
0%

20--

20--

Business Highlights
Description

News

Overview

Recent Transactions

Reverse Logistics

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

18

Appendix

SAMPLE

Ratio

Calculations

Ratio

Calculations

Operating Margin

(Operating
Income/Revenues)*100

Current Ratio

Current Assets / Current

Liabilities

Net Margin

(Net Profit / Revenues) *100

Cash Ratio

{(Cash & Bank Balance +

Marketable Securities) / Current
Liabilities)}

Debt to Equity

Total Liabilities / Shareholders

Equity

Debt to Capital Ratio

{Total Debt / (Shareholders

Equity + Total Debt)}

Interest Coverage Ratio

EBIT / Interest Expense

Fixed Asset Turnover

Sales / Fixed Assets

Asset Turnover

Sales / Total Assets

Profit Before Tax Margin

Return on Equity (ROE)
Return on Capital (ROCE)
Return on Working Capital

(Income Before Tax / Revenues

*100
(Net Income / Shareholders
Equity)*100
EBIT / (Total Assets Current
Liabilities)*100
(EBIT / Working Capital) *100

Return on Assets

(EBIT / Total Assets)*100

Return on Fixed Assets

(EBIT / Fixed Assets) *100

Operating Costs (% of Sales)

(Operating Expenses / Sales)

*100

Current Asset Turnover

Sales / Current Assets

Administration Costs (% of
Sales)

(Administrative Expenses / Sales)

*100

Working Capital Turnover

Sales / Working Capital

Interest Costs (% of Sales)

(Interest Expenses / Sales) *100

Capital Employed Turnover

Sales / (Shareholders Equity +

Total Debt)

LOGISTICS SERVICES MARKET IN INDIA 2013.PPT

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Logistics Series.
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