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Monday, June 29, 1998

FedEx plans to invest $50 m over next five years in India 

Manju Menon  
MEMPHIS (Tennessee), June 28: Asia and India may currently be figuring low on international investors' charts, but the $11.5-billion international express-transportation company, Federal Express Corporation (FedEx), is one exception. It is still very bullish on India, and plans investments of around $50 million over the next five years. "India is a very big market and we feel it has the potential to grow even bigger," says FedEx's executive vice-president and chief operating officer David J Bronczek.

To increase its presence and market share in the country, FedEx plans to invest in several areas, including customer service, sales resources, marketing, promotional campaigns and advertising.

"Our major problem in India is lack of brand awareness and visibility," says Bronczek, adding that the company will take up research studies to get over this hurdle. "We also want to tell people how high technology can be used to improve their businesses," he added.

Although the domestic express market (known as thecourier business here) registered a growth of around 14-15 per cent in 1997, against FedEx's projection of 30 per cent, the company expects the industry to double its growth in the current fiscal.

The additional investments planned in India will not come at the cost of investments slated for other south-east Asian countries, Bronczek hastens to add. FedEx's annual world-wide investments amount to around $2.2 billion.According to FedEx's managing director for the Indian sub-continent, Arun Kumar, the company's $50-million investments in India are intended to expand market share. "We are keen on increasing our market share, but have no immediate plans to enter domestic operations," he says. In the domestic market, the company faces competition from companies like United Parcel Service (UPS) and DHL.

FedEx, which has been associated with Blue Dart, a domestic express company, for the past 14 years, signed a new agreement with the latter in June 1997. Under the agreement, FedEx will take care of overseasdeliveries, while Blue Dart manages the domestic deliveries. FedEx entered the Indian international express market through a new FedEx-managed operation.

The company, which has a staff of 160 in India (against 2,500-2,700 employees of Blue Dart), plans to strengthen its sales task force in the near future. Relying on its core strength of technology-driven customer service, it plans to introduce all its `solutions' in India.

Kumar says the company will introduce the supertracker and customer operations services master online system (Cosmos)) facility in the country soon. The facility helps the customer track the current status of a shipment quickly.

The facility is being implemented in all the four metros. The company, along with the the Express Industry Council of India (a forum of all express companies operating in the country) has approached the government to hike the limit for export shipments requiring customs clearance. At present, it is mandatory for export shipments of a value above Rs 5,000 toobtain custom clearance.

"FedEx is different from other express companies because we understand the business needs of the customer and try to streamline their distribution activities accordingly," claims Kumar.

In a bid to expedite custom clearance and, thus, provide faster service to Indian customers, FedEx is lobbying with the government and the customs department to provide clearance to its cargo before it is imported or exported from the country.

"The customs department will be informed in advance about the load we intend to carry, so that the goods which need not be inspected are cleared without any delay," he said.

Keeping its promise of reaching `the world on time', Fedex has just announced an around-the-world-flight, thereby reducing transit times from Europe to Middle East, the Indian subcontinent and Asia.

In March this year, the company launched Saturday delivery to Indian shippers for their consignments below 32 kg to America. The service offers pick-up on Thursday from the four metros.According to FedEx's senior vice-president, worldwide marketing, customer service and corporate communications, David B Shoenfeld, the pricing strategy in India will be related to the service provided, as has been the case world-wide.

Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.


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