FEaTuRE Logistics
express firm Speed- Kolkata and Mumbai
age Express. plus a network of
Safexpress, mean- slightly smaller distri-
while, has zeroed bution centers across
in on warehousing. 10 other cities in India.
The company has Srinivasan plans to first
more than five mil- approach his own ven-
lion square feet of dors for business. Over
New Study
warehousing space the next 12 months, he
across the country aims to spin this off as
Says 6.2%
and is planning to set a separate and neutral
In their February 2010 Strategic Analysis
up 32 state-of-the- logistics company and
of Indian Logistics Market, Frost & Sulli-
art logistics parks secure other IT dis-
van (F&S) has found that logistics costs
and add another five tributors as customers.
Vineet Kanaujia, Safexpress actually account for 6.2% of India’s GDP,
million square feet in But Srinivasan’s ambi-
“With the phasing out of the less than original estimates. The market
the next two years. central sales tax, we expect a tion is not limited to IT
earned revenues of US$75.19 billion in
Five of these parks
huge demand for world-class
distribution and ware-
warehousing.” 2009 and is expected to reach US$120.42
are already operating. housing. Redington
billion in 2014, meaning a compound an-
Says Kanaujia of Safexpress: “With the buys products from vendors and sells
nual growth rate of 9.9%. Transportation
phasing out of the central sales tax, we to a vast network of channel partners.
segment accounts for close to 62.0% of
expect to see a huge demand for world- Srinivasan wants to leverage this exper-
the total market reiterating the fact that it
class warehousing in the country.” tise and become a third-party logistics
is the most important logistics function
Redington, a leading distributor of service provider across industries.
for all industries.
IT products, is also eyeing the logistics Analysts say industry players’ at-
Furthermore, the agricultural sector ac-
space and is setting up a state-of-the- tempts to expand their reach, offer
counts for slightly over half of the total
art automated distribution center in industry-specific solutions and work
logistics market in India, owing to the ex-
Chennai. Spread over 11.6 acres with toward more integrated operations are
tensive storage and transportation activi-
the latest very-narrow-aisle technology, moves in the right direction. Meanwhile,
ties associated with agro products within
it is one of the most advanced distribu- what role Gopinath plays in transform-
the country. According to F&S, the steady
tion centers in India. Managing direc- ing Indian logistics remains to be seen,
expansion of operations by large domes-
tor R. Srinivasan plans to set up simi- but his entry into the segment will no
tic industrial groups as well as an increas-
lar distribution centers in New Delhi, doubt accelerate the pace.
ing number of global majors in industries
ranging from automotive to pharmaceu-
Republished with permission from Knowledge@Wharton, (http://knowledge.wharton.
ticals have been targeting spots in this
upenn.edu), the online research and business analysis journal of the Wharton School
highly lucrative Indian market.
of the University of Pennsylvania.
While the report admits that manu-
facturers and logistics companies are still
hindered by the problem of poor infra-
structure connectivity in rural areas, it
concludes that multimodal transportation
solutions are becoming possible with the
development of inter-connected transpor-
tation infrastructure facilities. This posi-
tive trend especially applies to dedicated
freight corridors by railway and improve-
ments in coastal shipping facilities. Simi-
larly, the construction of logistics parks at
key distribution hubs are helping to meet
specialized warehousing needs of indus-
tries. These developments are encourag-
ing companies to increasingly outsource
their logistics functions, stimulating mar-
ket growth.
www.supplychains.com MARCH/APRIL 2010 49
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