Asia-Pacific Institute of Management

30% of Winter Project

Titled
Supply Chain Management and Competitive marketing strategy of
major courier companies in India.

Submitted to:
Dr. A. N. Sarkar(Area Chair person IB)

Submitted by:
Arun Kumar Shukla
2k81/IB/09
GLOBAL LOGISTICS SCENARIO:

In a move to cut down costs, producers are exploring around the globe in search for the lowest
cost exporters/suppliers. Lured towards developing countries in south-east Asian region for
lower-wages, transportation industry is stretching its reach longer than ever before. Major
players are focusing overseas markets for outsourcing cheap manufacturing as well as expanding
their businesses. This result in outbound logistics. And acceleration in manufacturing capacity is
driving many producers to shutter superfluous plants. The rest of the plants are gaining the
developing rhythm, but must export overseas now to sustain their positions in the market.

Boom in the Internet based services made overseas suppliers capable to match foot with local
suppliers. Web-based sales, services and supplies are emerging vertically. The expanding reach
has compelled logistic industry to spur cross-border trade. Regardless-of this outbreak of
activity, it is commonplace also for expert managers of local logistics to get acquainted with the
complexity of international trade logistics. Global transportation and relevant services includes
much complex documentation than for domestic shipments. It almost includes longer delivery
times. Evaluation of the arrival times of international shipments is just a magic than solid fact.

The business players always look for just-in-time shipments, thus it aspires enhanced build to
order model and lot-size-of-one shipments, which results more pressure on logistics industry.
Logistics industry has usually been old-fashioned traditions. Usually, the shipping personals
would decide for carriers, customs agents and so on. Normally, their search doesn’t go beyond
the initial service providers who cover all the minimum requirements. Once the shipment kicks
off its journey towards its destination, it is really hard to assume reaching time.

For example, a ship that started its journey from Asia could meet harsh weather, which may
delay its reaching on the West Coast for three days. On the other hand, the trucks at the West
Coast would have to wait and sat empty and ideal for the three days, which would certainly
result in big loss. These kind of unpredictable losses are usual in international logistics. Thus,
even the largest multi-national companies avoided logistic services on a worldwide basis. They
opt to establish their operations in each country and let them to manage logistics individually.
The boom in Internet services changed international logistics rapidly.
At present, vendors can cater massive numbers of global shipments. Complying with this, they
create and uphold substantial databases, which cover country-specific laws and regulations.
Factually, thousands of combinations of containers, ports, and so on are likely counted for
moving a shipment.
International logistics vendors also maintains cost and route information on hundreds of
hundreds carriers, which are operational in dozens of regions, which offers both lower freight
bills and cutting of delivery times.

A biggest disadvantage in international logistics is the vagueness in arrival times. Materials

managers have had modest choice, so they had get around by adding more safety stocks.
Thus, the costs of inventory management in the overseas parts are naturally higher. The
uncertainty of delivery time is due to not tapping of international shipments closely and step by-
step. This is easier said than done. However vendors are now offering tracking system, which is
necessary in continuous tracking of both international logistics network, and electronic visibility
in each yard and carrier. Although there is much to be done to achieve this stage, the pieces of
the puzzle are gradually coming together. Even though vendors are offering a worldwide
network, significantly added and dedicated, equipment is still required. For example, tracking
completed products needs a yard management system, which recognizes each container in the
yard and its placement.

The radio frequency Identification (RFID) tags in containers, whose place is detected by
antennas located in the yard. Maintaining the clear vision also needs tracking the containers as
soon as they leave the yard. This tracking is possible by Global Positioning (GPS) systems and
satellites, however, use of these systems are not usual at present. As a result, the industry does
not provide step-by-step tracking of container.

An important trend among logistics services providers would aid the industry. Logistics industry
veterans unveil that logistics service providers are extending reach worldwide and expanding
their services too. Regardless of understandable limitation, global logistics should obviously
improve. Web-based companies and technically ground-breaking carriers such as UPS Logistics,
Ryder, and others will carry on showing the way. Global logistics in near future should be
distant more faultless and reasonably priced than ever.

Size of the global logistics industry:

Currently the annual logistics cost of the world is about USD 3.5 trillion. For any country, the
annual logistics cost varies between 9% and 20% of the GDP, the figure for the US being about
9%. US-based Armstrong & Associates, Inc. tracks the issues and trends in the world logistics
market and in the US logistics market, in particular, in their annual surveys of top 25 global
LSPs. According to the firm, the global logistics market sizes in 1992, 1996 and 2000 were USD
10 billion, USD 25 billion and USD 56 billion, respectively. In 2003 and 2004, the
corresponding figures were USD270 billion and USD 333 billion, registering high growth rates.
Though most of the large LSPs are headquartered in Europe, the US logistics market is the
largest in the world capturing one-third of the world logistics market. In 2003, it was about USD
80 billion.
In 2004, it grew to USD 89 billion, and in 2005, it registered an impressive growth rate of 16%
to cross the USD 100 billion mark for the first time and reach USD 103.7 billion (Foster and
Armstrong, 2004, 2005, 2006). However, considering the fact that the logistics market in the US
is about 10% of its annual logistics cost (Foster and Armstrong, 2006), there is still immense
potential for growth of 3PL in the US in particular, and in the world in general.

SIZE OF THE LOGISTICS MARKET IN INDIA:

Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size and is the
backbone of Indian Economy. Our industry is growing at a rate of 8-10% annually and has been
a crucial contributor in the growth and development of the Indian economy. In the near future,
Traditional Logistics services like Transportation and Warehousing would continue to growth at
a good rate. However, the big ticket growth would come from the Value Added Logistics
services in the near future.
At present, Outsourced Logistics accounts for only one-third of the total Logistics market in
India, which is a significantly lower proportion vis-a-vis the developed markets. Growth in this
industry is currently being driven in India by over USD 300 billion worth of infrastructure
investments, the phased introduction of VAT, the development of organized Retail and Agro-
processing industries, along with a strong manufacturing growth. In addition, we expect strong
Foreign Direct Investment inflows in the Indian markets, which would lead to increased market
opportunities for providers of Third-Party Logistics in India. Therefore, India possesses
substantial opportunities for growth in the Supply Chain & Logistics industry in the coming
years, notwithstanding the temporary jolt due to the economic slowdown.

Courier Industries:

Couriers are basically a service for sending money or goods at some extra cost. It involves a
person or a company engaged in transporting, dispatching and distributing letters, parcels and
mails. In a rather layman term, it can be said that, compared to normal mail service, a courier
possess many added features. A courier is much faster, safer and secured than ordinary mail. It is
a specialized service with authenticated signatures. It has 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.
The courier industry specializes in time-definite, reliable transportation services for documents,
packages and freight. This is done via a combination of transport networking that includes road,
rail, sea and air for door-to-door delivery. This extensive distribution system is supported by
infrastructure that comprises hubs, warehouses, IT technology and human resources, as well as
offices in various cities.
More and more courier companies appear on a regular basis, and you may have noticed different
courier logos and branding on vans and planes across the world. Many of these courier
companies operate independently, where as others rely on some of the larger courier companies
when it comes to providing international deliveries.

One of the main reasons for the increase in courier companies is the boom in global trade,
probably largely down to the Internet. Couriers have to deal with all sorts of requests from
delivering simple mail documents to large electronic items like computers, printers and
televisions. Simply put, the courier market has grown due to demand from customers and
businesses.
SALIENT FEATURES OF THE INDUSTRY

 The courier industry specializes in time-definite, reliable transportation services for
documents, packages and freight.

 The industry has exhibited a growth of about 30% over the past four years and is
expected to grow at 25% for the next two to three years, making it one of the fastest
growing segments in the transportation of cargo.

 International express cargo holds 6% of the express cargo industry, but is

forecasted to reach 40% by 2017.

 The domestic courier industry with a turnover of Rs 20 bn is still at a nascent stage

as compared to developing countries like China where the industry is five to six
times bigger.

 Currently there are about 2300 courier companies in India, but four major players
in the premium organized segment dominate the industry.

COURIER SERVICES IN INDIA:

The courier industry has world over been recognized as an essential and indispensable part
of any economy. In India, various factors like growth of the industrial segment, growth in
exports and imports and overall economic scenario of the country have contributed to the
growth of the courier industry. Domestic courier industry with a turnover in excess of INR
22 bn is still in a nascent stage. India has more than 2,300 courier companies. It is a highly
disintegrated industry with nearly 20 players in the organized sector, 2,000 in the semi
organized sector, and the rest in the unorganized sector. There are a few major players in
the organized sector who have a combined market share of 90%.
Indian courier industry was initially limited to all the four metros. The reason was the
airport connection these metros were having. The industry had its start some 15-20 years
ago. But with changing economy and technical advancement seen on a daily basis, the
industry has extended fast to several metropolis, township and even rural areas. Train, bus,
motorcycle and even bicycle have helped the industry in this regard. Industry has traveled
a long way and now it has become a very common sight to see an office of Courier
Company in the nearby locality. Owing to the growing demand for reduced transit time
and early deliveries the industry is forecast to grow at 25% for the next two to three years,
making this one of the fastest growing segments in the transportation of cargo.
International express cargo holds 6% of the express cargo industry, but is forecasted to
reach 40% by 2017.

These are some key players in Indian Courier Industries:

1. Blue Dart
2. DHL India
3. FedEx India
4. First Flight Couriers
5. AFL
6. Gati
7. Elbee Express
8. Overnite Express
9. TNT India
10. UPS India

Blue Dart Express Ltd. (Blue Dart) is the market leader, with a 36% market share in the
domestic market, and Elbee Services Ltd., the second largest player, has a 20% market
share. AFL-DHL is primarily focused on the international segment, where it is the market
leader, whereas Gati Corporation Ltd. (Gati) is the market leader in the domestic packages,
ground distribution segment. In the domestic air packages segment, Blue Dart, having
developed its own air network and aircraft operations, is currently the market leader.
Revenues of Major Player in the Indian Market (Rs. bn):

The organized segment dominates the package and the premium document business since it
requires a strong infrastructure and resources, while the low-yield document business is the
domain of the unorganized sector. However in value terms the share of the organized sector is
64% and of the semi-organized and unorganized sector is 36% inspite of the large volumes it
handles.

Revenue Distribution:
Rationale behind doing this project:

In the transport segment, courier companies are playing major role to provide services in
India. There are three crucial elements which are involved in the supply chain management
of the courier companies. 1. Procurement 2. Process and 3. Delivery. In a comparative
business environment the companies will have to manage these things with low-cost,
customer satisfaction and just-in-time. If any company fulfils customer satisfaction with
low cost strategy and just in time, the company will be effectively more competitive. So at
the managerial point of view, it is very good opportunity for me to learn that how the
courier companies manage the above things.

The project report is useful to courier agencies in relation to improving the operational
efficiency, timeliness of the delivery scheduling and overall customer satisfaction. The
courier companies can analyze the efficiency and time management through this project.
And they will also well aware about their strength and weaknesses in comparison to other
courier companies.

Objectives and scope of study:

 1. In-depth study of the supply chain structure, operation linkages and process
integration.

2. Testing of the marketing strategy based on ‘just in time’ concept of the supply
chain.

3. Marketing and growth strategy of the courier companies with focus on cargo
operation and improving service quality.

4. Comparison of Service quality the companies for customer satisfaction.

RESEARCH METHODOLOGY:

The objective of the present study can be accomplished by conducting a systematic market
research. Market research is the systematic design, collection, analysis and reporting of
data and findings that are relevant to different marketing situations facing the company.

The marketing research process that is adopted in the present study consists of the
following stages:
1. Defining the problem and the research objective :
The research objective states what information is needed to solve the problem. The
objective of the research is to study the Indian Logistics industry growth drivers and its
comparison with the other countries.
2. Developing the research plan:
Once the problem is identified, the next step is to prepare a plan for getting the
information needed for the research. The present study adopted the descriptive approach
wherein there was a need to gather large amount of information before making a
conclusion.

3. Collection and Sources of data:

Primary Data:
Primary data will be collected from the customers through the questionnaire.
The sample size will be 200 from the five representative courier companies.

Secondary Data:

Secondary data will be collected from the authorized agents of the companies,
magazines, newspapers and internet.

4. Analyze the collected information:

This involves converting raw data into useful information. It involves tabulation of
data, using statistical measures.
Statistical Tools:
➢ Bar Diagrams
➢ Column Diagram etc.

5. Report research findings:

This phase marks the culmination of the marketing research effort. The report with the
research findings is a formal written document.

BLUE DART:

Blue Dart is South Asia's leading integrated air express carrier and premium logistics-
services provider. It has the most extensive domestic network covering over 13,880
locations, and service more than 220 countries and territories worldwide through its Sales
alliance with DHL, the premier global brand name in express distribution services.

BLUEDART’S vision is to establish continuing excellence in delivery capabilities focused

on the individual customer. In pursuit of sustainable leadership in quality services, they
have evolved an infrastructure unique in the country today.

It’s Competitive Advantage lies in:

 Blue dart’s vast and unparalleled Domestic Network:
Linked by some of the most advanced communications systems and positioned to offer a
consistent, premium, standardized quality of service.
 A spectrum of services to provide customized solutions.
Blue dart is the only express carrier in the country today which offers an entire range of
services that extend from a document to a charter-load of shipments. Its services are
relentlessly monitored to deliver a net service level of 99.96% (as on February, 2005).
 It’s Customs and Regulatory expertise
Company had a dedicated team of specialists who provide the expertise for customs as well as
regulatory clearances at all States within the country, to support seamless service to the
customer.
 It’s Technology
Designed to enhance the reliability of our operations and process efficiency, and add value to
the customer through time and cost savings.
 It’s Air Network
The only one of its kind in the country today, that is focused on carriage of packages as its
prime business, rather than as a by-product of a passenger airline. A dedicated aviation system
to support Blue Dart's services is self-sustaining, with its own bonded warehouses, ground
handling and maintenance capability.
 Its financial credibility
Fitch Ratings India Pvt. Ltd. has assigned the highest "F1+ (Ind)" [F one plus (Ind)] rating for
their short term debt programme of Rs. 30 crores. Further, ICRA Ltd. has also assigned the
highest "A1+" (pronounced A one plus) Rating for their Commercial Paper Programme of Rs.
25 crores.
 Its People force
Committed, diverse and over 4,000 strong are company’s most valued asset. All company’s
achievements have been possible because they have a team who believes in themselves and
their company, a team with a winning attitude. Blue dart is a learning organization, valuing
self-development, and most of company’s managers are homegrown.
DTDC:

DTDC is India’s Largest Domestic Delivery Network Company offering various

custom made services ranging from Domestic to International. DTDC delivers to the
remotest places in India with the help of 4,000 business partners spread across the length
and breadth of India.

DTDC Courier & Cargo Ltd. (DTDC) was incorporated in 1990. Within a span of 17
years, through its business associates DTDC expanded its delivery network across the
length & breadth of the country, thereby creating the nation's Largest Domestic Delivery
Network. Today DTDC is one of the largest Indian company in the Express industry.
DTDC can also be credited with pioneering the franchisee concept for the courier industry
in India, and today has the largest franchisee network.

Its headquarter is at Bangalore, with 4 of its Zonal Offices at Delhi, Kolkata, Chennai &
Mumbai, DTDC currently serves around 10,000 pincode areas and has over 4,000
Franchised outlets, supported by 176 offices, which includes its Branch offices, Regional
offices, Area offices, Hubs and Sub-offices. It handles 10 million consignments every
month. DTDC serves over 240 international destinations.

First Flight:

First Flight Couriers came into being on Monday, 17th November 1986. It all began with
the setting up of three offices at Kolkata, Mumbai and Delhi.

The overwhelming response from customers, was not just a dream come true, but the fruits
of an early realization and recognition of the tremendous potential that the Indian
subcontinent offered in terms of market size.

It was the foresight and dynamism of the Founder Chairman and Managing Director, O. P.
Saboo which created a spring board for the organization to catapult into what it is today –
India’s Largest Domestic Courier Company.

930 First Flight Offices across India

2208 Authorized Collection Centers
452 Franchisee Locations
Serving over 5000 Pincode Destinations across India
Dedicated Worforce of over 10000 plus employees
Strategically located 8 own International Offices
Serving over 220 countries globally
The fast paced growth and widening network is the outcome of four basic beliefs:

Speed
Safety
Reliability
Economy

As a natural corollary to its growth endeavor, First Flight is in the process of setting up a
large scale integrated Logistics Division to offer an entire gamut of Warehousing,
Inventory Management, Supply Chain Services and Distribution Channels, thereby
providing total end-to-end solutions to customers.

In keeping with times, First Flight continues to invest substantial effort in building a State-
of-the-Art Super Information Technology highway.

First Flight’s commitment to corporate excellence and its yearning for making it a common
household name opens floodgates of opportunities and challenges and to meet it head on,
shall be the corner stone of its philosophy.

FedEx India: