Business Daily from THE HINDU group of publications
Monday, May 07, 2007
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Business Daily from THE HINDU group of publications Monday, May 07, 2007 ePaper |
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Logistics
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Interview India has `high potential' but many `infrastructure challenges' Santanu Sanyal
FedEx started operations in India 10 years ago and has since expanded in the growing Indian market. Mr Hemanth D.P., Senior Manager, Sales, FedEx, India, Middle East and Africa, recently spoke to Business Line on the company's operations. Excerpts from the interview: How big is FedEx? Globally FedEx is a $32-billion company. What's unique about FedEx is that we offer a wide variety of services. Ours is a worldwide network of companies providing flexible and specialised services covering an array of supply chain, transportation, business and related information services And in India... We started in 1997 with four offices and at present we are active in 35 locations in the country. We operate our own aircraft, MD11, out of India, offering 16 flights a week — 10 out of Delhi and six out of Mumbai. None of our competitors offers such wide connectivity. Recently we acquired Prakash Air Freight Pvt Ltd in India, which has more than 384 offices and depots serving nearly 4,400 destinations. What kind of services do you offer in India? Ours is an integrated carrier. We carry everything from a single piece of document to packages of very heavy weights for delivery between 24 and 48 hours in most parts of the world. The FedEx worldwide network links you to more than 220 countries and territories, often within one to two business days. We offer express products such as International Priority, International Priority Freight, and International Priority Direct Distributions. How do you assess the Indian market? With high potential. It is not without reasons that global logistics services providers are strengthening their presence here. In freight forwarding there were only three multinational corporations (MNCs) in the top 10 during the 1990s. That increased to seven in 2005; in international express business, there were no MNCs in the 1990s but now all the top four are present. The MNCs are focusing on the domestic express business also. For example, DHL has acquired Blue Dart, and FedEx has bought over Prakash Air Freight. In airport and seaport infrastructure, the MNCs are coming through the PPP (public-private partnership) route. India has a total of 125 airports and 11 of them are designated international. The country has 12 major and 185 minor ports and most of them are doing quite well. The country's road network, 33.4 million km, is world's second largest. The National Highway Development Programme (NHDP), when completed, will provide further boost to road connectivity. There are now 14 Special Economic Zones (SEZs) with 61 more in the pipeline. And the growth of FedEx business in India... We publish only worldwide financial results, no country-specific results. But you can easily guess the kind of growth we've achieved from the expansion of the facilities. In 1997, as I've already told you, we started with four cities — Delhi, Mumbai, Chennai and Bangalore — three branded retail outlets and one clearance outlet. In 2002, we covered eight cities, established 36 branded locations and nine clearance locations. We also introduced FedEx branded couriers and vans and a centralised call centre. Right now, we're present in 35 cities, we operate our own aircraft out of Delhi and Mumbai, we have 16 clearance locations, 74 branded retail outlets, a regional trucking network... We now offer world-class services out of India. And the air services... Our West-bound flights first go to Dubai, which is our West Asia Hub, then Paris, our European hub, and then to the US. From Dubai we have services to cover West Asia and parts of Africa. From Paris, we cover Europe and in the US from Memphis, Anchorage, Newark and other hubs and gateways we connect the whole of North and Latin America. In the eastward direction, our services from India are linked to Shanghai (China) and Narita (Japan) and we operate our hub in Subic Bay in the Philippines. We are now developing a massive facility in China and from 2008, Guangzhou will be the Asia-Pacific hub. Do you have plans to launch air services from other Indian cities? We don't decide, the customers decide. We'll certainly introduce services from other cities depending on the business growth and the customers' demand there. For example, we started air services out of Delhi in 2005 and offered 10 services a week — five east-bound and five west-bound. That was the market demand. What kind of items do you handle in air exports out of India? Various types of items such as auto-components, textiles, garments, gems and jewelleries, pharmaceuticals, leather goods, handicraft, high-tech electronic goods, all kinds of fashion goods, the list can be fairly long. How stiff is the competition? The competition is fairly stiff but we're not afraid of it. In fact, we welcome it because it helps improve our services. Also, the customers benefit. What is the biggest challenge you face? The challenges are many in infrastructure and other fields but in a growing economy such as India there will always be such challenges. How do you take on the challenges? In several ways. For example, we have cut out our dependence on commercial air services by introducing our own aircraft. FedEx Surface Networks are aligned to our flights gateways and we ensure faster access times, later cut-off times and faster customs clearance. We have increased sales penetration into top cities. Our acquisition of the Indian company too is aimed at gaining control over the supply chain. We constantly watch the market and reinvent ourselves to meet the new challenges that the market might throw up from time to time.
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