Safexpress will need to proactively align with global best practices, says Pawan Chabra of B&E
If one goes by the numbers, the future of logistics in India certainly looks dazzling. In fact, according to a study done by Cushman & Wakefield, the Indian logistics industry is anticipated to grow at a healthy rate of 15-20% per annum (way above the average growth rate of 7-10% that the sector have had between 2002 and 2007) to reach a whopping $385 billion by 2015. According to a KPMG report, India’s spend on logistics activities is equivalent to 13% of its GDP, compared to less than 10% in almost all the developed nations. But then this necessarily doesn’t mean big business! The key reason for this astonishing big size is relatively higher level of inefficiencies in the system, with lower average transportaion speeds, higher turnaround times at ports and high costs of administrative delays. Players like Safexpress will need to take the lead in correcting this anomaly.
Moreover, the Indian logistics industry is dominated by unorganised players. Transporters with fleets smaller than five trucks account for over 75% of the total trucks owned and operated in India and make up 80% of revenues. Even the freight forwarding segment comprises thousands of small customs brokers and clearing & forwarding agents, who just cater to local cargo requirements. So, considering this, the biggest challenge for organised players like Safexpress will be to take the growth forward. In fact, “one can even see a major phase of consolidation in the sector in the coming times,” avers Pradhan.
No doubt Safexpress has generated a decent level of loyalty and trust towards the brand in the past few years, but with the sudden flurry of international behemoths like FedEx, DHL, TNT, et al, and considering their edge over domestic players, particularly because of their big pockets, players like Safexpress will definitely find it hard to retain clients.
If one goes by the numbers, the future of logistics in India certainly looks dazzling. In fact, according to a study done by Cushman & Wakefield, the Indian logistics industry is anticipated to grow at a healthy rate of 15-20% per annum (way above the average growth rate of 7-10% that the sector have had between 2002 and 2007) to reach a whopping $385 billion by 2015. According to a KPMG report, India’s spend on logistics activities is equivalent to 13% of its GDP, compared to less than 10% in almost all the developed nations. But then this necessarily doesn’t mean big business! The key reason for this astonishing big size is relatively higher level of inefficiencies in the system, with lower average transportaion speeds, higher turnaround times at ports and high costs of administrative delays. Players like Safexpress will need to take the lead in correcting this anomaly.
Moreover, the Indian logistics industry is dominated by unorganised players. Transporters with fleets smaller than five trucks account for over 75% of the total trucks owned and operated in India and make up 80% of revenues. Even the freight forwarding segment comprises thousands of small customs brokers and clearing & forwarding agents, who just cater to local cargo requirements. So, considering this, the biggest challenge for organised players like Safexpress will be to take the growth forward. In fact, “one can even see a major phase of consolidation in the sector in the coming times,” avers Pradhan.
No doubt Safexpress has generated a decent level of loyalty and trust towards the brand in the past few years, but with the sudden flurry of international behemoths like FedEx, DHL, TNT, et al, and considering their edge over domestic players, particularly because of their big pockets, players like Safexpress will definitely find it hard to retain clients.
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