Industry Sheet - Indian Express Logistics Industry - As on 30 March 2021


Customer Segments

Customer Segments for Express Logistics Industry can be divided as-

1. Type of Customer – B2B, B2C, C2C
2. Industry – Auto, Apparel, FMCG, Pharma etc.
3. Mode of Transport – Rail, Road, Air and Water
4. On the basis of location – Metro, Tier 1, Tier 2 and Rural
5. On the basis of Company Size – Corporate & SME

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Customer Gains and Pains

Major Customer Requirements are –
1. Fast and Time bound Delivery
2. Low Delivery Cost
3. Secure delivery
4. Door to door service

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Products and Services

Different Products and Services offered by the Industry are –
1. LTL
2. FTL
3. Express Logistics
4. Rail
5. Air Express
6. 3PL
7. Warehousing
8. Value Added Services – Knitting, packing, Boxing

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Activities and Participants

Value Chain

Key Activities to be performed –
1. First Mile Pick-Up
2. Local Collection Center
3. Aggregation and dispatch to Sorting Centers.
4. Warehousing and Value Added Services
5. Transportation
6. Fleet Management
7. Distribution
8. Last Mile Delivery

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Industry Map

Source: ZebraResearch 

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Demand- Supply Scenario

Demand for Express Logistics is directly related to the sectors that they are serving and the health of these sectors. So, demand is linked to –
1. Automobile and its parts
3. Pharmaceuticals
4. Apparel and Lifestyle
5. Industrial Equipment

On the supply side, the lead time for new supply in transportation is very low, however, in warehousing, it takes time.

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Industry Characteristics

Market Size

Express Logistics Market Size in India(FY19) – Rs. 25000 crores

Domestic Express – Rs. 19500 crores
Air Express – Rs. 5500 crores

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Market Stability

Common Sized Revenue Share of listed companies in the space has been indicated above and no major share shift is seen.

The Industry can be called a Stable One.

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Pricing Power

As per RIVIGO Freight Index, the logistics industry is very competitive on prices and prices fluctuate to the extent of changes in Fuel Prices.

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Competitive Life Cycle

The Industry seems to be in Growth Stage as-
1. Increase in Sales at a quick pace.
2. Increase in Profitability.
3. Increase in Fleet Size.

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Disruptive Forces

Key Disruptive Forces acting on the industry are –
1. New Business Models coming up.
2. Rise of Aggregators
3. Fleet Related Technological Upgradations.
4. Rise of Logistics Tech

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Key innovative Factors affecting the industry include factors relating to Technology, Cloud, Automation, Robotics, Drones and Payment Methods.

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Logistics is not a regulated sector directly. However, a lot of licenses are required to operate in the space.

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Porter's Profit Forces

Supplier Power

Low Supplier Power

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Buyer Power

Moderate to High Buyer Power

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Threat of Substitution

Low Threat of Substitution

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Threat of New Entrants

Moderate to High Threat of New Entrants

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Threat of Competitive Rivalry

High Competitive Rivalry

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Financial Health of Companies in the Industry

ROE and DuPont Analysis

TCI Express Ltd (FY20) – 9% x 2.40x x 1.28 = 26%
Gati Ltd. (FY20) – (-5%) x 1.08x x 1.88 = (-10%)
BlueDart Ltd(FY20) – (-1%) x 1.20x x 5.38 = (-9%)
VRL Logistics(FY20) – 4% x 1.74x x 1.97 = 15%

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High to Moderate Growth amongst players in the Industry.

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Investment Needs

TCI Express – Company is able to manage good free cash flow.
GATI – Low Fixed Investments Required
Blue Dart – Heavy Fixed Investments met by CFO.
VRL – High Cash Investments

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Trends in Industry

Industry Specific Risks

Risks faced by the Industry are –
1. Limited Traffic on routes in Tier 2 and below.
2. Shortage of Vehicles and Drivers
3. Slowdown in Customer Sectors directly affects the industry
4. Change in Crude Oil prices.
5. Technological Risk.
6. Shortage of Quality warehouses.
7. Government Regulations Risk.

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Growth Factors

Major Growth Factors for the Industry are –
1. GST leading to shift to Organized Players.
2. Growth in E-commerce
3. Growth in particular sectors that are customers centric – FMCG, Auto, Apparel.
4. Investment in Infrastructure by Government.
5. Increase in Logistics Outsourcing.
6. Increase in Value Added Services.

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Variables for success in Industry

Key Variables to Success in the Industry –

1. Volume on the routes (Fill ratio of Trucks)
2. Extensive Network of Branches and Sorting Centers
3. Industry (Customers) Served
4. Geographical Focus of companies
5. Cost Advantages

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Additional Notes

Cost Structure of Industry

Evolution of Industry

General Evolution of Indian Express Logistics – From Angadias to Digital.

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