ANALYSIS OF LOGISTICS

INDUSTRY

By:- Group No. 7Prijo Mathew

SivaramakrishnanSuvrata NandyGaurav Verma

Dhinesh Kumar

Objectives

• To study in detail about the Global Logistics Industry

• To study in detail about the Indian Logistics Industry

• To find out the areas where Logistics Industry in India is lacking

• To compare the Global Companies (UPS, FedEx and DHL) with the Indian Logistics Companies (Gati, DTDC and First Flight)

INTRODUCTION• What is Logistics?

Management of flow of goods and services

Integration of information, transportation, inventory etc

Reduces operational cost, improve delivery performance and enhance customer satisfaction

The importance of logistics is growing and now the logistics industry has become highly recognized in the global scenario

Evolution of Logistics Industry

Global Scenario of Logistics Industry

• Size of the Global Logistics Industry

Annual logistics cost of the world is USD 3.5 trillion The annual logistics cost in any country varies in between 9%

to 20% of their GDP Logistics market in US is 10% of its annual logistics cost Global Logistics industry is estimated to be worth USD 300

billion Largest service providers are located in Europe Biggest market - US

Current Status and Dynamics of the Industry

• Issues – Pricing pressures, high cost of operations, low returns on investment, hiring and retaining talent and pressure from the client

• Role of service providers have become very important to complete supply chain integration

• Demand for third party logistics providers is increasing

• Growing at a very fast rate in South-East Asian countries

Technology used in Global Logistics Industry

• Warehouse Management System• Material Flow Control System• Portal Application• Automated Storage and Retrieval Systems• Mini Trolley System• Lean lift Systems• Sorter Systems• Light to Pick• RFID• Global Positioning Systems

MERGERS AND ACQUISITIONS• Tibbett & Britten Group acquired by Excel logistics• Deutsche Post World Net took over Excel Logistics• Bax Global was taken over by Deutsche Bahn• A.P. Moller acquired P&O Nedlloyd• Apollo Management took over TNT Logistics

Pros of Mergers and Acquisitions• Growth and Coverage

Cons of Mergers and Acquisitions• Integration of two different cultures

Top 10 Logistics Companies In The World • UPS• FedEx• DHL• A.P. Moeller• Nippon Express• Ryder• TNT Post Group• Expeditors• Panalpina• Exel

Indian Scenario of Logistics Industry

Size of Indian Logistics Industry

• Annual logistics cost is estimated to be 14% of GDP• Out of the total cost 99% is accounted by the unorganized

sector• Is growing at a very fast pace of 12% per annum• The market is estimated to be around USD 100 billion• Has generated employment for 43 million people in the

industry• Third Party Logistics Solutions is expected to grow at 16% in

2011

Indian Logistics Industry

Pie Chart showing the total logistics market of India

Current Status and Problems in the Industry• Is in nascent stage• Is considered to be a weak link of Indian Economy• Is a high cost, low margin business• Economies of scale is absent• High tax • Lack of trust and awareness among the Indian shippers• Poor physical and communication infrastructure• Stiff competition from international firms• Lack of skilled labor• Lack of technology being used

Positive Trends Seen In Indian Logistics Industry

• The industry has got the desired momentum• Logistics has become a strategic source of competitive

advantage• Huge investments are made by foreign investors• High investments are made by government to improve the

infrastructure• Companies are re-engineeering their supply chain to make it

more responsive• India is becoming the auto hub of the world

Technology Used By Indian Logistics Industry

• Online Tracking• E-pod• E-mail Updates• Toll Free Number with 24 x 7 service• SMS Updates • Enterprise Management System• Business Accounting Software• Customer Relationship Management Software

Top Logistics Companies In India • TNT Express• AFL• DHL• Blue Dart• Gati• Safexpress• Ashok Leyland• Agarwal Packers & Movers• DTDC• First Flight

Corporate Social Responsibility

• Green Mission• Reduction in Greenhouse gas emission• Carbon Tax• Fun Bus• Driver Training Centre• AIDS Awareness

Market Analysis• Pricing Strategy

Driver of the performance of the Logistics Industry Is decided on the basis of the competitive strategy Overall Trade off: Increase firm profits Everyday low pricing versus high low pricing Fixed prices versus menu pricing

• Nature of the Market

Industry is homogenous It is a oligopoly Industry HH Index is 1004 (UPS, FedEx, DHL, A.P. Moeller) Concentration Ratio of the first four companies in India is around 65% (TNT Express,

AFL, DHL and Blue Dart)

Advertising Strategies• Press• Media• Print Ads• Interviews• Internet

Promotion• Efficient Distribution Network• Provides Supply Chain Solutions

Comparison of Logistics Industry of the Developed Countries and the Developing Countries

Graph showing the LPI of India and its Neighborhood Countries

Diagram showing the LPI of the different countries and is ranked accordingly. India is ranked at the 47th position

Company overview of DHL

• DHL is the global market leader in international express, overland transport and air freight, • It is also the world's No.1 in ocean freight and contract logistics, • DHL's international network links almost 220 countries and territories worldwide, • Around 285,000 employees are dedicated to providing

fast and reliable services that exceed customer’s expectations in 120,000 destinations in all continents

Overview of Gati

• Gati Limited is a pioneer and leader in the Express Distribution and Supply Chain Solutions in India

• It has grown into an organization with more than 3500 employees and a turnover of Rs 630 crore

• 19 Million Packages Handled Annually• 1 Million Sft Warehouse Space • Capabilities to Deliver at 622 out of 626 districts of India • Best of the IT in Logistics Industry

PESTL Analysis

P – Political and L - Legal

Legal permit to cross the national and state borders Excise duties and tariffs are charged Regulations for transporting dangerous goods by

Road – ADRAir- ICAOSea – MCA

Motor Vehicle Act

E - Economic • The annual logistics cost in any country varies in between 9%

to 20% of their GDP (US being 9% and India being 14%)• In India, logistics industry has created employment for more

than 43 million people• Exchange Rate and Demand Risk

S – Social• E-Business• Switch to alternative fuels to reduce emission of green house

gases

T – Technology• Logistics Industry has become technology driven industry

Porter’s Five Force Model

Threat of Entry – High

Intensity of rivalry – High

Substitutes – Medium

Bargaining Power of Buyers – High

Bargaining Power of Suppliers - High

Future Prospects of Indian Logistics Industry• Many large Indian corporate are been attracted by the

potential of this sector• Large express cargo and courier companies such as Transport

Corporation of India (TCI) have started logistics operations• Growing interest among entrepreneurs to venture into this

business• Indian shippers are gradually becoming more aware of the

benefits of logistics outsourcing• Faster growth rate of Indian GDP• The Indian government has focused on infrastructure

development• In India, 100% FDI is allowed in logistics

THANK YOU

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