Blue Dart Express Ltd made it through the downturn without having to lay off even one of its 7,000 employees. However, its parent company Deutsche Post DHL and its competitors such as UPS and FedEx had to conduct lay-offs globally. The company did conduct ?cost rationalisation? measures in other areas. The managing director Anil Khanna, in an interview with FE?s Malvika Chandan, speaks about how the company managed to stay afloat in volatile 2009. Excerpts:
What were the cost-rationalising measures taken that did not include lay-offs?
McKinsey helped us with an India domestic strategy that increased innovation to generate new revenue and efficiencies. Focusing on broader reach, transit times, automated warehouses and installation of GPS in our vehicles helped us in efficiencies. For instance, last year we expanded to 130 new locations and have also been able to reduce our transit times, where it was 72 hours to 48 hours, and from 48 hours to 24 hours. We now have customised transport services for temperature sensitive products such as those used in clinical research and pharmacy.
What is the genesis of Blue Dart?
The company started in 1983 with a capital of Rs 30,000 and three promoters. Initially ?service excellence? was Blue Dart?s main mission, profit and innovation came later. In 1984 we partnered with Jalco and through them with FedEx, through which we served the international segment. With the advent of liberalisation we could see that domestic demand would pick up and decided to go after this segment. Instead of dealing with commercial or cargo airlines, we bought our own carriers in 1996. The company also made another strategic change in 2002 when it ended its partnership with FedEx and tied up with DHL, whose parent DP-DHL went on to acquire 81% stake in Blue Dart.
What is the market make up within express courier and logistics?
Currently Blue Dart holds about 43% market share in the air express segment. We currently clock 2.5 lakh shipments per day. Our competitors are DTDC, Overnight and First Flight. In the ground express market, which has Gati, we held 5% market share in 2007, 8% in 2008 and we expect it to grow to 10% in 2009. Last year was bad for the industry, though we are seeing a revival in the last two to three months. BFSI is one of the biggest verticals for the air express sector and so naturally we feel the domino effect. We also saw a significant decline in consumer goods and IT package shipments. Since we have high fixed costs, an impact on ?volumes? or our ?premium pricing? can adversely impact our bottom line. Somehow in 2008 we were able to maintain our top and bottom line, but we are not sure if we will be able to accomplish our top line in 2009.
What are some of the bottlenecks for air and ground express players?
In air express one of the hurdles is having just 45 minutes to load and offload consignments. The government has been contemplating a ?ground handling policy? that would authorise the Airport Authority and two others, including Indian Airlines, with the task of handling packages at the airport. So far this is applicable to passenger and cargo airlines. Express carriers like Blue Dart and other do not come under this purview. In ground express we hope the ?postal amendment Bill? will be dropped by the parliament.