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The DHL business of logistics

Monday, March 14, 2011

The Indian logistics industry is poised for a significant leap and is expected to grow at a 13% Compound Annual Growth Rate (CAGR) to $54 billion by 2012.With its many firsts to introduce customized solutions and innovative expansion strategies, DHL has been growing above the market average in the last 30 years in India and could continue to be a leader in the industry. Under the aegis of R.S. Subramanian, Country Head, DHL Express India, the company is expanding across every vertical. But Retail is the prime focus for the company. Speaking to Mayura Shanbaug a confident Subramanian says “We’re well positioned with both Blue Dart and DHL Express and especially with DHL’s supply chain unit.  I believe we are poised to grow in retail.”

Your take on the logistics scenario in India…
In India, the logistics sector is on a high growth trajectory. In the last few years, the demand for world-class logistics and warehousing facilities has grown tremendously. The Indian economy is being driven by domestic consumption. This is opening up a whole new world of opportunities in distribution from mobile phones, credit cards to pharmaceuticals and auto components.

 The industry is poised for a significant leap going forward in the years to come. Factors like the proposed introduction of a common Goods Sales Taxes (GST) will create a favourable environment for the logistics industry. I anticipate a lot of growth in Tier-II and Tier-III markets as large number of customers and shippers are going into these markets.
 
What’s the size of the sector?
 The size of the logistics industry is pegged at around $30 billion and is expected to grow at 13% CAGR to $54 billion by 2012. The sector has emerged as a major service sector that caters to a wide range of segments including FMCG, automobiles, pharmaceutical and the fashion industry. The main drivers that will fuel the growth in the logistics market include the upcoming freight corridor project, building of logistics hubs and warehouses, port development, technology up gradation, investment by private players and also the impending industry status for the logistics sector.
 
Will an increase in fuel prices impact your business?
DHL follows the Rotterdam Index any change in the index will reflect on our charges.
 
What impact would the current international crisis in the Middle- East have on your business?

Yes, there is impact but we are routing through other countries. As per international guidelines we cannot comment.

Will it impact your product prices?

The DHL product prices change as per international guidelines and are in keeping with regional changes.

What are the company’s future plans?
As the logistics industry and economy is growing, DHL has massive expansion plan for its retail outlets in India and has lined up substantial investments for this year. Currently our retail segment contributes 8% to 10% of our total business. The company forecasts that the retail segment will contribute as much as 20% in the next 3 to 5 years. We have 350 retail outlets in India and plan to take the number to over 1,000 through a variety of formats such as tie ups, alliances and partnerships. We’re very excited about retail in India. I think as economies become less dependent on exports and more focused on domestic markets, you see the emergence of retail. Hence more global players are willing to get involved in the local markets and we see local players getting bigger.

Any new initiatives launched?
2011 is an exciting year for DHL. On the anvil there are a lot of new product launches. Such as Express 9:00 and 12:00-which works best when the shipment needs to reach on the next business day ,and you can count on DHL Express 9:00 and 12:00 which is now launched in two new locations Cochin & Kolkata.
The other product which is particularly revolutionary is Jetline. It is for mission critical international shipments that need immediate pick up and door to door delivery within a 48-hours time frame.

Comment upon DHL's involvement with the fashion industry…
Through more than 50 years in fashion, DHL has provided speedy response, excellent quality and convenient delivery that the industry demands, especially in this era of multiple sales channels and online retailing. DHL has developed specific logistics solutions to meet the demanding needs of this dynamic sector.

How big is the business potential?
Fashion is the definition of a fast moving industry. Lead times, accuracy, availability and reliability are all of critical importance. With the fashion industry witnessing phenomenal growth, DHL takes its role as a trade facilitator rather seriously.
 
Elaborate on the logistical support to students going abroad?

DHL offers a gamut of services for students contemplating studying abroad. With Express Easy Student, the student gets all round support for sending application forms, study material and other baggage requirements. From the time that a student decides to embark on an overseas education, we are right by their side. Dispatching time critical application forms to universities is key to all admission process and often the make or break for a student. We also have specific product offerings for the students which can help them in the new cities.
 
Your ‘Jetline’ service facilitates time critical deliveries. Yet, candidly, in a large number of countries, ground service may be best described as lackadaisical or tardy?
The ‘Jetline’ service is by far one of the most superior services that we offer for mission critical documents. DHL ensures that we receive all our approvals and clearances before the material is flown to the destination. To ensure this is done we have a very efficient team who takes care of this aspect to ensure the process is seamless and smooth. One of the USP’s of Jetline is that it offers a dedicated support desk for shipment handling.

The ‘Jetline’ service caters to segments like engineering, automotive and oil & gas. These appear to be ‘heavy’ segments. Is it cost-effective to send such materials by air?
Jetline is a specific service that we offer for mission critical materials, which offers the fastest pickup and delivery via a dedicated delivery network. We identified a need in the market for such a service and hence realized it was an opportune time to launch it. Whether it’s an emergency or a deadline that can’t be missed, DHL Jetline offers door-to-door pickup and delivery to over 220 countries and territories worldwide on the next flight out. For customers in an emergency where time is of the essence, Jetline is the best option even though the cost might be at slight premium.
 
Your ‘Mango express’ seems to be interesting.

The Mango Express is one of our most awaited products. Typically for this product the custom clearance process differs from country to country. We assist our customers with the necessary paperwork like Phyto Sanitary certificates along with procurement of quality grade Alphonso mangoes. We offer a simplified solution to our customers to send mangoes overseas. We cover parts of Europe, Asia and the Middle East.

What are the geopolitical factors that affect/hamper your operations?

The regulations of countries in accepting perishable products are strict. This hampers our potential to reach out to many other locations.

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