Third Party Logistics - India

November 2009

Executive Summary
Total market for Third Party Logistics (3PL) in India is valued at INR XX bn in 20- -; Estimated to reach INR YY bn in 20- Third party logistics (3PL) market in India is at a nascent stage Market comprises of two major segments:
Asset-based 3PLs Non-asset based 3PLs

Market

a% of companies are outsourcing services like supply chain management and warehousing

Drivers:

Drivers & Challenges

Economic Growth High Cost of Logistics in India Phased Implementation of VAT Government Infrastructure Initiatives Growth in Auto Sector Growth in Retail Sector

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Challenges:
Infrastructure Congestion Lack of Trust and Awareness

Competition

Market comprises of public sector, private sector and foreign companies Majority of 3PL Players are currently providing disintegrated services Many 3PL players are investing to become end-to-end integrated players Express cargo and courier companies like Compan1, Company 2 and Company 3 also offer 3PL services

THIRD PARTY LOGISTICS INDIA.PPT

Introduction Market Overview Drivers & Challenges Competition PE Investments Key Developments

THIRD PARTY LOGISTICS INDIA.PPT

3PL firm acts as a third party facilitators between manufacturers and the buyers
Transaction Transaction

Supplier

Third Party Logistics Provider

Logistics Services

Manufacturer

Third Party Logistics Provider

Logistics Services

Retailer/ Buyers

Logistics is a three-way relationship between a buyer, the supplier of goods and a logistics service provider

Logistics

First Party
Shipper or Supplier

Second Party
Buyer

Third Party
Firm acting as a Middleman

Third Party Logistics

Source:

Third-party Logistics is the use of an outside company to perform all or part of the firms materials management and product distribution function

THIRD PARTY LOGISTICS INDIA.PPT

Third party logistics is fast gaining popularity in the Indian logistics market
Overview
Third party logistics (3PL) market in India is at a nascent stage Companies in textile, automotive, pharmaceutical, manufacturing, retail and FMCG sectors are increasingly opting to outsource their logistics requirements to specialized service providers
Engineering, automotive & retail sectors were top revenue earners

Overall Market Size and Growth

INR bn
200 150 100 50 0

According to a recent survey of 3PL service providers

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% Non-Asset Based
20 15 10 5 0

Z b% Y X

2005

2008

2012e

Share of 3PL firms in Logistics Industry

W V U

3PL Market comprises of two segments Asset Based Own some of the assets used in supply chain management which often include trucks, distribution centres and warehouses

Does not own such assets

2005

2008

2012e

Source: THIRD PARTY LOGISTICS INDIA.PPT

Drivers & Challenges

Drivers
Economic growth High cost of Logistics in India Phased implementation of VAT Government Infrastructure Initiatives Growth in Auto Sector Growth in Retail Sector

Challenges
Infrastructure Congestion Lack of Trust and Awareness

THIRD PARTY LOGISTICS INDIA.PPT

There are few 3PL players with nationwide presence with majority of players providing disintegrated services
Competition Overview
Currently, there are only a few 3PL players with a national network Majority of 3PL Players are currently providing disintegrated services

Local Firms Outsourcing Logistics Services

%
60 50 40 30 20 10 0

3PL service providers are expanding their basket of services as companies are now looking beyond transportation of their products and raw materials Many 3PL players are investing to become end-toend integrated players

Indian corporates like Company 4 and Company 5 have entered the 3PL business

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Global average stands at c%

1998

2008

Market Structure
3PL Market

Initially these corporates had divisions to handle internal logistics

Large express cargo and courier companies like Company 1, Company 2 and Company 3 have also started offering 3PL services

Public Sector Companies

Private Sector Companies

Foreign Companies

Source: THIRD PARTY LOGISTICS INDIA.PPT

Major Players Private Sector Companies (1/5)

Players Business Description It offers domestic and international cargo handling services, complete logistics solutions which includes sourcing raw-materials to exporting finished products, and documentation support It owns more than x cubic meters of storage space It has its own Custom House Agent License to facilitate the customs clearance of imported or exported cargo Financials: It reported net sales of INR A mn and a net profit of INR B mn in FY 20-- - - The company is based in Mumbai It provides supply chain solutions, value added services, warehousing and packaging solutions It is planning to double its current warehouse space to T mn sq. ft. It provides container freight services , warehousing solutions and project logistics It entered into a strategic alliance with Hind terminals for setting up, commissioning, operating , managing and commercially running container freight stations at location 1, location 2 and location 3 Planning to invest INR C bn in order to set up d logistic parks at location 1, location 2, location 3, location 4 and location 5

Company 1

Company 2

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Company 3

Source: THIRD PARTY LOGISTICS INDIA.PPT