Domestic Express Industry

Nurturing the growth of India

India is one of the fastest growing economies of the world today. This growth is fuelled by growth in
infrastructure, booming manufacturing sector, EXIM trade, retail and agricultural related activities amongst others.
This, in turn, has resulted in increased demand for world-class logistics services. It is one of the most important
infrastructure requirements which is essential for the expansion of opportunities and plays an important role in

making or breaking the competitive positioning.

The logistics sector has been growing at an impressive CAGR of 8 per cent. The industry has been valued
at USD 125 billion in 2010 and is expected to continue this growth for the next 3-5 years. With rising disposable
income, changing lifestyle, focus of government and private sector, logistics has received special attention in the
past two to three years. Development of transportation infrastructure / warehousing infrastructure, thus, remains at
the core of the government’s plan to enable growth of the logistics sector. Logistics will be one sector which will be
the backbone of flourishing trade activity and infrastructure development, and will receive special attention by the
government / private sector in coming years. The accelerated growth of the logistics industry, coupled with
emerging trends of 3PL services, logistic parks, cold chain and warehousing activities, has made India a vast and
untapped market.

Despite the impressive growth rates, the logistics sector in India is fraught with much inefficiency.
Logistics cost in India is fairly high – at around 13 per cent of GDP, which is much higher than that in USA (9%),
Europe (10 %) and Japan (11%). These inefficiencies of the Indian logistics industry can be attributed to factors
such as a complicated tax regime, fragmented market structure and inadequate infrastructure. It may be noted that
although, lack of infrastructure acts as an inhibitor, but the dearth of adequate infrastructure also presents unique
opportunities to players who are ready for the situation and understand the market. Infrastructure developments like
the railway dedicated freight corridors, road development projects and modernization of over 37 operational airports
will increase India's handling capacities, thereby enhancing logistical performances.

Express Cargo Industry : Need

In today's business big or small , domestic or global, the value of time is clearly immense. Business today
is focusing on how it can deliver goods and services to global markets in a timely and reliable manner. Besides
efficiency in pick up, timely delivery, timely information and availability of other infra structural facilities for
efficient handling of cargo transportation have become the need of the day. In other words prompt customer
service is what gives competitive edge to the players of the cargo transportation industry in today's rapidly
changing environment. It was this need which stimulated the growth of the express cargo industry worldwide.
The express cargo industry is judged primarily on the following key parameters:

 Speed of distribution
 Network
 Security and reliability
 Value added Service
 Customer care

To meet the above needs, the express industry is developing effective use of information technology,
which forms the backbone of the industry. Right from the pickup point, the precise status of the consignment
needs to be monitored at every stage of its journey. Secondly the use of multi modal services assumes importance
in order to provide turnkey solutions to the customer. Also, guaranteed timely delivery gives the required
confidence to the customer to reduce his inventory positions at various levels of distribution.

Indian Scenario

Today the Indian customer's standard and the level of expectation have gone up dramatically. They have
become world class customers and thus expect world class services. Hence it is customer service which is going
to give the competitive edge to any industry in the future.

The domestic express cargo industry is meeting the customer satisfaction needs by providing speedy and
safe delivery of cargo like documents, packages, samples, exhibition material etc. Domestic market for door-to-
door express cargo market is more than Rs.400 crore and the current rate of growth is in a region of a healthy
35% per annum. The industry has been making an increasingly important contribution to the economic growth of
the country by providing logistics to the cargo movement.

Sector-wise Market Share- Express Cargo

Express cargo can be segmented in four categories as Organized Sector, which operates in domestic as well as
international markets, semi organized sector, and unorganized sector and EMS speed post, which is express arms
of the postal department.
 Emerging Trends in Indian Logistics Industries

Growth within the organized sector

The express industry in India, till now, has been highly fragmented and characterized by the presence of numerous
unorganized players. A large number of players have been providing services in individual segments like
transportation, warehousing, packaging etc. In 2007, organized players accounted for only 6 per cent of the total
US$ 100 billion Indian logistics industry However, changing business dynamics and the entry of global third party
logistics players (3PL) has led to the remodeling of the logistics services in India. From a mere combination of
transportation and storage services, logistics is fast emerging as a strategic function that involves end-to-end
solutions that improve efficiencies.

Recent Trends in Indian Logistics Industry

Air transport industry contributes over 0.2% of the GDP keeping the prices constant.
Domestic air cargo has growing at CAGR of 12.80% where as international cargo traffic has been moving at 13%.
According to the planning commission, country’s cargo movement would grow about CAGR of 11.5% from2007-08
to 2011-12.
Marine sector contributes over 0.2% of the GDP at constant prices (1999-2000) major ports in India have handled
about 463.84 tonnes of cargo in 2006-07 a growth of 9.51 that of the previous year. According to the planning
commission of India, the shipping fleet will be increased up to 15mGRT by the end of 2011-2012.
The major plan of Indian railways is to develop Logistic parks which it has a potential to optimize the supply chain
and reduces the cost .The Indian railways would have to innovate the new train services so that the customer shifts
from road to rail.
Almost 80% of the products in India is transported through roads.

Overall analysis of express cargo

Express cargo industry is undergoing phenomenal growth due to the rising popularity of e-commerce. There is
bound to be conspicuous diversion of low volume, high value tiny packages from traditional cargo to express
mode in the coming years. Keeping that in view, there is lot of scope to flourish the express cargo industry in
Indian scenario. To yield the fruit of these positive changes it is important that the industry works in close tandem
with the regulatory agencies and the role of the latter should be of a facilitator rather than that of a regulator.