Indian express encounters postal delay

Global express and courier major TNT has pledged investment of Euro 100 million in India in the next five years. Blue Dart Express, in which DHL took a 68% stake in 2004, will induct two of the latest generation 757 aircraft into the Indian market in June taking its fleet size to 7. First Flight Couriers will also ramp up its fleet in June as part of a Rs 50 cr infusion. Even Anil Ambani controlled Reliance Capital recently acquired a 44% stake in the Rs 150 cr DTDC.
With such large investments in the pipeline, the Rs 4,000 cr express and courier industry is vociferous in its protest against a government move to yet again table the Indian Postal Act Amendment Bill which will allow the department of posts the authority to regulate the industry and also to reserve the business in the below 500 gms category for India Post only.
Growing at a healthy 20% per annum, the industry has pinned its hopes on the 8.5% growth posted by the Indian economy and the prediction that by 2020, about 67% of the global GDP will come from emerging markets.
The Planning Commission announcement indicating that the country will invest Rs 15,000 cr in the next five years in asset creation and infrastructure development, has triggered a spate of investments into the country.
Explains Peter Bakker, CEO, TNT, "India is at the center of Asian development. With liberalisation there is a role for the market in a strong way. The discussion glis not whether or not market forces should be allowed to operate but the pace at which it should be allowed to grow."
Malcom Mionteiro, managing director, Blue Dart Express Ltd says, "The organised domestic cargo business is growing at a healthy 20% with documents accounting for 35% and packages 65% of the business in revenue terms." This is an across-the-board growth in an industry that has been taken to court by various post master generals of states on the ground that they violated the Postal Act which gave the right to distribute letters solely to the department. But no court has ever upheld any plea.
Yet, the postal department has been losing revenue steadily. Explains RK Saboo, secretary of the Express Industry Council of India (EICI), "The fall in postal revenues have been due to a change in lifestyles of people. Technological advances such as e-mail, SMS, chat, telephony have reduced the dependence on posts. The Postal department has not tried to keep pace with the market."
Postal departments in other countries too faced a similar situation. Deutche Post, for instance, first evolved strategies to work in the new environment and then started acquisitions to grow inorganically as well. Today it is a strong market player.
"The postal potential can be harnessed usefully," says Bakker. He joined the Dutch Postal Company in 1991, saw it break even and now it is not only posting profits but even acquiring private players. "Protectionism is the worst answer to this problem," Bakker says from his experience at the Dutch Postal Company.
The global majors are now offering to work with the Department of Posts in India to help evolve similar situations. Probably because the India investment process has already begun. There are approximately 60 organised and semi-organised players in the market and almost 2,500 local or regional players in the unorganised market, the EICI estimates.
The domestic express market constitutes about 59% while the international express market share is 41%.
While domestic players such as First Flight have chosen to remain Indian and opened branches in major hubs around the world such as London and New York, global players such as TNT have ventured into the domestic market by strengthening ground networks. In Europe and US about 80% of transport in the express business is by road. "Asia has not traditionally developed a good road system" explains Bakker. But as Asian countries do so, the express and courier industry too is moving in that direction. "The Golden Quadrilatral in India will reconfigure supply chains," predicts Bakker.
But all these investments come with a pre-supposition-that the market will be allowed to operate with a level playing field. The Postal Act can only upset the equilibrium and reduce levels of service, explains a market analyst. The need is to find the synergies between the public and private sectors and upgrade efficiency of the public system.
Taarek Hinedi MD, Indian Subcontinent Operations, FedEx Express Does the improvement of infrastructure in India and China lead to growth of your business? For FedEx, Asia continues to be one of the fastest growing international regions, and China is the fastest growing market in Asia. In September last year, we launched an East Bound Round The World (EBRTW) flight which connects Delhi with China and to Asia as a part of our around the world flights operations. Today, India and China cannot be mentioned without each other. While China has a strong industrial and manufacturing economy, India has a growing service economy and a significant future role in global commerce. Can the postal department and the express industry be partners Express Industry and the post can work collaboratively and cater to varied needs of customers in India. While the post has largest network to cater to the domestic needs, at Fedex, we focus on providing international express transportation services to our customers in India. Are there untapped segments of the market? We foresee rapid growth in the segments of drugs and pharmaceuticals, fashion, gems and jewelry, engineering goods, and precision tools.
Peter Bakker CEO, TNT How will better transport infrastructure impact business? Supply chains in the country have traditionally been designed around the limitations of the logistics provider. Once those limitations are removed, supply chains will be redesigned. Will TNT invest in transport hubs too? The move to create a cargo hub in Nagpur is encouraging. If the facilities such as hubs and depots need to be strengthened, we would consider such investments but that would be in addition to the Euro 100 million investment already planned.
Malcom Monteiro MD, Blue Dart Express Ltd Which segments of the industry are driving growth? We are seeing booming growth in segments such as banking and Global express and courier major TNT has pledged investment of Euro 100 million in India in the next five years. Blue Dart Express, in which DHL took a 68% stake in 2004, will induct two of the latest generation 757 aircraft into the Indian market in June taking its fleet size to 7. First Flight Couriers will also ramp up its fleet in June as part of a Rs 50 cr infusion. Even Anil Ambani controlled Reliance Capital recently acquired a 44% stake in the Rs 150 cr DTDC.
With such large investments in the pipeline, the Rs 4,000 cr express and courier industry is vociferous in its protest against a government move to yet again table the Indian Postal Act Amendment Bill which will allow the department of posts the authority to regulate the industry and also to reserve the business in the below 500 gms category for India Post only.
Growing at a healthy 20% per annum, the industry has pinned its hopes on the 8.5% growth posted by the Indian economy and the prediction that by 2020, about 67% of the global GDP will come from emerging markets.
The Planning Commission announcement indicating that the country will invest Rs 15,000 cr in the next five years in asset creation and infrastructure development, has triggered a spate of investments into the country.
Explains Peter Bakker, CEO, TNT, "India is at the center of Asian development. With liberalisation there is a role for the market in a strong way. The discussion glis not whether or not market forces should be allowed to operate but the pace at which it should be allowed to grow."
Malcom Mionteiro, managing director, Blue Dart Express Ltd says, "The organised domestic cargo business is growing at a healthy 20% with documents accounting for 35% and packages 65% of the business in revenue terms." This is an across-the-board growth in an industry that has been taken to court by various post master generals of states on the ground that they violated the Postal Act which gave the right to distribute letters solely to the department. But no court has ever upheld any plea.
Yet, the postal department has been losing revenue steadily. Explains RK Saboo, secretary of the Express Industry Council of India (EICI), "The fall in postal revenues have been due to a change in lifestyles of people. Technological advances such as e-mail, SMS, chat, telephony have reduced the dependence on posts. The Postal department has not tried to keep pace with the market."
Postal departments in other countries too faced a similar situation. Deutche Post, for instance, first evolved strategies to work in the new environment and then started acquisitions to grow inorganically as well. Today it is a strong market player.
"The postal potential can be harnessed usefully," says Bakker. He joined the Dutch Postal Company in 1991, saw it break even and now it is not only posting profits but even acquiring private players. "Protectionism is the worst answer to this problem," Bakker says from his experience at the Dutch Postal Company.
The global majors are now offering to work with the Department of Posts in India to help evolve similar situations. Probably because the India investment process has already begun. There are approximately 60 organised and semi-organised players in the market and almost 2,500 local or regional players in the unorganised market, the EICI estimates.
The domestic express market constitutes about 59% while the international express market share is 41%.
While domestic players such as First Flight have chosen to remain Indian and opened branches in major hubs around the world such as London and New York, global players such as TNT have ventured into the domestic market by strengthening ground networks. In Europe and US about 80% of transport in the express business is by road. "Asia has not traditionally developed a good road system" explains Bakker. But as Asian countries do so, the express and courier industry too is moving in that direction. "The Golden Quadrilatral in India will reconfigure supply chains," predicts Bakker.
But all these investments come with a pre-supposition-that the market will be allowed to operate with a level playing field. The Postal Act can only upset the equilibrium and reduce levels of service, explains a market analyst. The need is to find the synergies between the public and private sectors and upgrade efficiency of the public system.
Taarek Hinedi MD, Indian Subcontinent Operations, FedEx Express Does the improvement of infrastructure in India and China lead to growth of your business? For FedEx, Asia continues to be one of the fastest growing international regions, and China is the fastest growing market in Asia. In September last year, we launched an East Bound Round The World (EBRTW) flight which connects Delhi with China and to Asia as a part of our around the world flights operations. Today, India and China cannot be mentioned without each other. While China has a strong industrial and manufacturing economy, India has a growing service economy and a significant future role in global commerce. Can the postal department and the express industry be partners Express Industry and the post can work collaboratively and cater to varied needs of customers in India. While the post has largest network to cater to the domestic needs, at Fedex, we focus on providing international express transportation services to our customers in India. Are there untapped segments of the market? We foresee rapid growth in the segments of drugs and pharmaceuticals, fashion, gems and jewelry, engineering goods, and precision tools.
Peter Bakker CEO, TNT How will better transport infrastructure impact business? Supply chains in the country have traditionally been designed around the limitations of the logistics provider. Once those limitations are removed, supply chains will be redesigned. Will TNT invest in transport hubs too? The move to create a cargo hub in Nagpur is encouraging. If the facilities such as hubs and depots need to be strengthened, we would consider such investments but that would be in addition to the Euro 100 million investment already planned.
Malcom Monteiro MD, Blue Dart Express Ltd Which segments of the industry are driving growth? We are seeing booming growth in segments such as banking and finance, pharma, textiles and readymades, IT and telecom and automobiles. Are you seeing a shift in express cargo movement from ground to air or vice-versa? As the value of the product decreases, the customer switches from air to road freight. We advice customers on how to encashour security and reliability of delivery to reduce inventory. In high-value products this has resulted in upto 40-50% savings.

finance, pharma, textiles and readymades, IT and telecom and automobiles. Are you seeing a shift in express cargo movement from ground to air or vice-versa? As the value of the product decreases, the customer switches from air to road freight. We advice customers on how to encashour security and reliability of delivery to reduce inventory. In high-value products this has resulted in upto 40-50% savings.