Overview – Express Industry
Virtually worldwide, an effective door-to-door courier service plays an integral part in the success of many businesses. Providing the vital link between suppliers and consumers, courier express services enable cost-effective distribution of time-critical goods and documents.
A courier is much faster, safer and secure than ordinary mail. It is a specialized service with authenticated signatures. It has a tracking service with each service being treated as a specific individual case. Dedicated timely deliverance is its primary hallmark. These features do cost a bit extra but with so many features available, the cost gets leveraged.
Indian courier express industry has numerous huge and effective courier companies. In general, a courier express company performs on various scales. To begin with, it can be inter-city and intra-city. From there onwards, a courier company can work on regional, national and even international level. The largest companies in express and logic industry are Blue Dart, DHL, FedEx, Gati, etc. to name a few.
Today the huge global companies have their own fleet of trucks and aircraft solely for the purpose of transporting the logistics whereas the mode of operation in cities is influenced by bicycle and motorcycle. The transporting methodology involves truck owners operating in tandem with the major logistics companies. They normally cover the defined routes.
- Logistics is regarded as the backbone of the economy as it ensures efficient and cost-effective flow of goods and other commercial sectors depend on it.
- With an annual growth rate of 25%, the Indian parcel courier market is estimated to be in the tune of 4000 crores. It’s been phenomenal growth, before the Industrial era, messages were hand-delivered using runners, trained pigeons, riders on horseback etc.
- Courier & logistics industry can be classified into two types – B2B (Business to Business), B2C (Business to Customer).
- Rising eCommerce business & logistics providers- The ultimate game changer for B2C.
- All factors that influences GST rates can potentially influence stock prices of all Courier & Logistics companies.
- Government grants/policies with respect to – transportation, warehousing, and freight forwarding segments and logistics solutions will be the driving force behind warehousing market growth & this can influence market sentiments.
- The extent of digital penetration into India, especially mobile market penetration expanding into newer territories in rural markets is certainly an indicator that can influence e-commerce market boom, which in turn boosts the growth of courier & logistics companies.
The Government of India’s strong emphasis on manufacturing and initiatives such as “Make in India” is boosting domestic production, which is bolstering the logistics industry. Logistics companies are making concerted efforts to keep pace with this growth in demand by digitizing their solutions and offering online freight services. In addition to riding the digital wave, logistics companies in India are strategizing for the transition from indirect taxation to goods and service tax (GST). The simplified tax structure will benefit the warehousing industry and reduce logistics costs by up to 2.5%.
The CEP Industry (Courier, Express, Parcel) came into existence due to the failure of traditional postal companies to deal with the changing customer requirements without being able to provide faster services. As markets began globalized, The CEP firms then expanded into various countries, providing various other global services and capturing a major part of market share. Some of the global market leaders we know today are DHL, FedEx. Some of the local players who carved a niche for themselves in India are Gati, DTDC, BlueDart.
The Global E-commerce sales touched $1.5 trillion by end of 2016, with consumers in Asia-Pacific overtaking North America for the first time in terms of E-commerce sales; China would overtake the USA next year as the single largest E-commerce market. India does not rank in the top 10 countries in terms of e-commerce sales, however, India & China today are one of the fastest growing countries in terms of e-commerce sales. India’s E-commerce market, As per Goldman Sachs is expected to hit $100 billion by FY 2020.
The development of transportation and logistics-related infrastructures, such as dedicated freight corridors, logistics parks, free trade warehousing zones, port modernization, and container freight stations will help to improve efficiency. Technology adoption is likely to accelerate in the transportation, warehousing, and freight forwarding segments, and logistics solutions will be the driving force behind warehousing market growth.
With the implementation of GST, companies, which currently have small warehouses in several cities, can just set up a few in specific regions, following the hub-and-spoke model for freight movement from the warehouses to the different manufacturing plants, wholesale outlets, retail outlets, and various POS. The growth is backed by the boom in the e-commerce sector and expansionary policies of the FMCG firms.
The logistics industry is expected to reach over $ 2 billion by 2019. The rise of e-commerce logistics and increased domestic consumption will pave the way for the industry to grow further in the future. With the promise of steady growth and improvement, the service-oriented logistics industry is ready to expand beyond the horizons in the latter half of this decade. The logistics industry in India is likely to grow at a rate of 9-10% over the medium term, supported by underlying structural positives, as per an ICRA note.
As per Statistic, leading statistical survey company – Close to 329.1 million people are projected to buy goods and services online in India by 2020. This means that about 70.7 percent of internet users in India will have purchased products online by then. This growth in the volume of digital buyers has a reflection on revenue as well. Retail e-commerce sales in India are forecasted to grow tremendously, with projections to jump from around 16 billion U.S. dollars in 2016 to just over 45 billion U.S. dollars in 2021. In 2016, Amazon.in was the leading online store in India with net e-commerce sales of 437.7 billion U.S. dollars, followed by local competitors Flipkart and Snapdeal.
The usage of logistics services in different application such as manufacturing, retail, trade and transportation, government and public utilities, healthcare, media and entertainment, telecommunication, banking, and financial services, and information technology is expected to rise considerably.
The biggest challenge faced by the industry today is poor integration of transport networks, information technology, and warehouse & distribution facilities. Regulations existing at different tiers are imposed by national, regional and local authorities. However, the regulations differ from city to city, hindering the creation of national networks.
Trained manpower is essential for the third party logistics sector and the manufacturing and retailing sectors. It is lacking at the IT, driving, and warehouse as well as at the higher strategic level. The sector is in a disorganized state in India. The general perception of logistics being a manpower-driven industry and lack of adequate training institutions have created a crisis of skilled management and client service personnel. Poor facilities and management are reasons behind high levels of loss, damage of stock, mainly in the perishable sector.
Emphasis should be laid on building world-class road networks, integrated rail corridors, modern cargo facilities at airports. Logistics parks should be set up and accorded a status equivalent to Special Economic Zones.