FEaTuRE Logistics
of-the-art cargo handling facility in Nagpur, Dart chose a different model. According to India. “We had a successful operation of
Central India will serve as the hub for his op- Blue Dart’s Khanna, “We found that that this these two freighters regularly on the Chen-
erations and will connect the metros as well model works well when you have a large fleet nai-Delhi route,” he says. “While operating
as tier two and tier three cities through an of aircraft. If you have only a few aircraft, [them], we realized certain commercial bot-
air and surface network. Deccan 360 will be- you end up losing capacities. We restudied tlenecks and therefore decided to close the
gin operations in October with three Airbus operation for the time being.”
aircraft and a network of 30 franchisees (for
surface transport, warehouses and collection Competing Approaches
points). At first, Deccan 360 will offer next- Others have made their own moves. In
day connectivity to 30 cities in India. Within
Gopinath,
2007, Blue Dart earmarked a five-year in-
a year, Gopinath plans to increase the air
is creating
vestment of US$250 million to go to aircraft
fleet to five Airbuses and four aircraft from
French-Italian manufacturer ATR, ramp up
India’s
acquisition as well as strengthening its air
and ground infrastructure. Last year, to mark
the franchisee network and offer next-day
first hub-
the company’s 25th anniversary, Khanna an-
connectivity across 75 cities. “No logistics
and-spoke
nounced 25 initiatives to upgrade the prod-
player in India has the hub-and-spoke model uct range and improve quality.
that we are setting up,” says Gopinath. “Like distribution At TNT India, managing director Abhik
in the case of Air Deccan, I am establishing
model for
Mitra is working toward expanding the reach
a different model ... that will both increase and strengthening TNT’s network in tier two
the reach and bring down the cost for the
express
and tier three cities. “We also want to invest
customer.”
logistics.
in the infrastructure in our hubs and depots
It may not be all that simple. The hub- and take them to the next level of efficiency,”
and-spoke model, though new for India, was he says. TNT was the first multinational ex-
introduced years ago by the global major Fe- press distribution company to enter the In-
dEx. It is a tried-and-tested model the world this model once again a few years ago, and dian market with a direct subsidiary. TNT
over. Yet in India, Blue Dart, which holds again found it to be unfeasible.” came to India in 1994 for international oper-
43% of the air express market, does not Others who tried running cargo airlines ations. Over time, it realized that the domes-
follow this model. Instead, it flies three dif- gave up. Gati, a multimodal player with more tic market was a much bigger part of the pie.
ferent routes: crescent (Chennai to Kolkata than 4000 vehicles and six marine vessels, is In 2004, TNT made its domestic foray, and
via Bangalore, Mumbai and Delhi), zigzag among them. Mahendra Agarwal, managing in 2006 it went a step further, acquiring road
(Hyderabad to Mumbai via Ahmedabad) and director and CEO, attributes the decision to
direct (Bangalore to Delhi). “commercial bottlenecks.” Gati, he says, ini-
Blue Dart studied the hub-and-spoke tially wanted to have its own cargo aircraft. Blue Dart
model closely before starting operations. It However, faced with regulatory issues and a
43%
hold in the Air
even had a sales alliance with FedEx at the lack of expertise in running cargo aircraft, it Express market
time. Despite the close association, Blue chose to outsource two freighters from Air
48 MARCH/APRIL 2010 www.supplychains.com
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