Regulation GST, “Make in India” initiative, Push on transport infrastructure, and burgeoning e-commerce market will prompt the Logistics Service Sector in general and Express Industry ahead in the coming years.
According to recently published report of Stats and Reports “India Express Logistics Market Outlook, 2021” the organized sector is holding major share of the Indian express market. The major players involved in the same consist of BlueDart, Gati, Safexpress, TCI, Indian Railways, and Indian Post etc. The unorganized players are the local regional players who deliver the parcels and at a very low cost who also acquire a large share of the market. The express industry stood more than USD 3 Billion in 2015. The organized express market had recorded a CAGR of more than 14% till 2015. The organized segment is expected to exhibit a faster growth in terms of value than the unorganized in the total express market.
Growth in the logistics industry depends on infrastructure availability and involvement of private players and increased government spending which will catalyze the growth in the industry. Currently, more than half of express shipments are delivered through road network. With push on Logistics infrastructure and specifically on road connectivity the efficiency is expected to improve in future. The overall speed of travel still remains low at 35-40 kilometers per hour for India compared to global average of 60-80 kilometers per hour. Companies in India currently outsource an estimated 52% of logistics, and 3PL represents only 1% of logistics cost. As of now, the 3PL activity is limited to only few industries like automotive, IT, telecom and infrastructure equipment. E-commerce giants will slowly enter the hyperlocal or express delivery segment, in the critical battle to reach customers faster competing with on-demand startups that promise to deliver products within an hour, typically by tying up with local stores.
Outsourcing will obviously make (deliveries) cheaper. It is also to the advantage of logistics companies, who can cooperate with such clients and, therefore, be more efficient in their utilization of resources. Implementation of Goods and Service Tax (GST) is expected to streamline the processes and reduce a lot of these delays. With GST, multiple tax regimes with different rules and rates across states will merge into a single tax structure. This will reduce the need for check posts and improve efficiency of operations for the Express service providers by reducing delays and paper-works. Express Industry is nimble in terms of growth in market size along with concomitant improvement in policies and infrastructure. The industry can be classified broadly based on the mode of transport it uses, surface having predominance. Auto, engineering and hi-tech industries have been the market drivers so far. However, it is expected that the blooming e-commerce market and relating 3PL and hyper local space will prompt the Express market in coming years.