Logistics giants casting their eyes on India’s retail potential
In the past six months, India has been drawing the attention of some of the world's biggest logistics service providers, according to a story in Friday's Economic Times.
The newspaper reported that Schenker (along with BAX Global, which it acquired in 2005), Expeditors International and Aiko are among the more than one-dozen international players that have consulted with local logistics firms on how to effectively enter the Indian market.
'The sector is receiving good response from international companies,' Akil Hirani, managing partner of Mumbai-based law firm Majmudar & Co., told the Economic Times. 'We have been approached by four to five multinational warehousing companies, enquiring about the existing legalities in setting up warehouses, FDI norms, etc.'
Evidently, foreign retailers who are increasing their stakes in India are drawing their logistics and warehousing partners into the fast-growing Indian market. Indian retailers are also eyeing more foreign strategic advice from logistics providers abroad. Local logistics firms, with on-the-ground experience, are also looking at their opportunities to tie up with the foreign big boys.
It's a key point in the development of the logistics sector in India as major global retailers — like Britain's Tesco, France's Carrefour and Wal-Mart — seek to tap into the spending power of India's growing consumer class. It's expected that India will gradually reduce restrictions on these foreign retailers — currently, they can only control up to 49 percent of a joint venture with an Indian company — leading to a massive influx of logistics services.
The Economic Times also reported that the profits of Blue Dart, India's largest courier, were down 4 percent from the same period a year ago, despite strong increases in revenue from higher rates and a 24 percent jump in shipments.
The company, which was acquired in 2004 by DHL, blamed the lower profits on an unusual amount of one-time costs for new aircraft and the construction of new aviation hubs. Additional capacity brought on by the new aircraft also decreased Blue Dart's load factors, the report said.