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Logistics: In consolidation mode - Views on News from Equitymaster
 
 
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  • Mar 8, 2002

    Logistics: In consolidation mode

    Denying slowdown, domestic courier industry seems to be attracting global majors. After an initial round of consolidation, where organised players in the industry captured into the market share of unorganized sector, the industry seems to be in for another round of consolidation. DHL, the world’s largest express company today announced acquisition of majority control in DHL India from AFL express through which it had presence in the country. Recently, Blue Dart acquired two south based logistics company to consolidate its position in the South India.

    Global Logistics Major- Sensing opportunity
    International Majors Domestic Partner
    DHL AFL Express
    Fed EX Blue Dart Express
    UPS/ TNT Elbee Services

    Logistics management is emerging as the fastest growing segment in the express industry. The key to success for logistics companies is to provide complete logistics management instead of vanilla delivery services. The concept of ‘Just in time’ inventories is gaining importance in the supply chain system and thus regional presence is getting important for logistics companies.

    On the other hand with corporates outsourcing complete supply chain management smaller players are facing entry barriers in terms of technology and requisite infrastructure, which includes multi modal transportation facilities and hubs. Leading courier companies in the industry now use a combination of transport networks comprising road, rail, sea and air for undertaking door-to-door delivery of documents and packages. The multi-faceted distribution system is supported by infrastructure comprising various offices across cities, hubs, warehouses, IT technology and human resources. However, as the industry is still at a nascent stage, new avenues of growth are abundant for specialised companies. Thus, one hand there is huge companies who are sensing opportunities, smaller players are on the winding mode.

    To summarize, consolidation in the industry is bound to happen for traditional players with only serious players surviving and organised players entrenching into the market share of regional players. Though the courier industry as a whole is expected to grow at a compounded rate of 15-20% in the next few years, companies with an edge on technology and service are expected to far outperform the industry growth rates.

     

     

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