India continues to be among the top five markets for DHL Express, the global logistics major, with the company witnessing a strong “double-digit growth” here (February to date), John Pearson, Global CEO, DHL Express, told businessline. 

The company is investing over ₹1,800 crore (€200 million) in India over the next five years. Global economy and trade are weak but these are “bottoming out”. 

According to him, India continues to be an outlier in comparison to most global markets (barring the USA). The country is drawing in more foreign investments and these investments have now started materialising into “shipments”. 

Another DHL group company, DHL Supply Chain has already committed to a €500 million investment (₹4,500 crore plus) over five years. 

“India is already the fifth largest economy in the world and is posting a GDP far over anyone else. Then you put that against the backdrop that India is already one of our top five markets. And it is already growing in double-digits for February, year to date……. What it is doing now is important. Now it is one of the fastest growing large markets in our networks and that’s for sure,” Pearson said. 

According to him, “not many countries seem to be on their stride in economic and policy sense”, when compared to India. 

“India has attracted more inward investment than every other country apart from the USA….people are putting their money on the India horse. Some of that investment was made two years ago and have started to produce shipments for us now. So, India happens to be a very important market, it is growing fast and has a lot of potential,” he added. 

‘China +1’ beneficiary 

While acknowledging the emerging trend of diversification from China, Pearson said, India stands out as a primary beneficiary of the ‘China +1’ strategy. Although the trend is modest and there are implications on the supply chain, India is attracting multinational corporations seeking to mitigate risks and diversify manufacturing bases.

A ‘China +1’ strategy does not mean that a company has picked up its manufacturing (facilities) and moved away. Rather it meant having the new facility somewhere else. 

Apart from India, Vietnam, Philippines and Thailand are seen as strong backups for those diversifying their supply chains within Asia. 

“Over the last 2-3 years, maybe 3-4 years also, even since this China+1  strategy has come in some countries are becoming the beneficiaries of this supply chain de-risking…… and India is certainly a beneficiary or one of them,” he said adding that “….but India has its case to sell with make-in-India and investments in the National Logistics Policy.” 

The benefits of the National Logistics Policy are expected to play out “over a long period”, cause the policy is dealing with “things may not be generational, but certainly a decade”. 

China, however, will continue to have prominence as a global supplier, but any significant shifts are expected to occur gradually. 

“Don’t forget the phrase, the next China is China. It (the manufacturing shift) is a fraction of what China does and what it has built-up over the last 30 years,” he said. 

Growth drivers 

According to Pearson, sectors like e-commerce have been driving growth for DHL Express here.  One of every three outbound shipments is for e-commerce, while $ 1 out of every $ 5 earned is from the segment. B2B is another major category for the logistics major. Globally, one out of every two shipment is an e-commerce one, while for 25 per cent of earnings are from an e-commerce customer. 

In India, SMEs (small and medium enterprises) account for a major share of the business.

Sectors driving growth include  engineering and manufacturing, technology, automobiles (including electric vehicles) and fashion-wear. 

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