Continuing with a consistent growth of around 8-9% every year, the country?s logistics market is poised to cross revenues of $200 billion by 2020. In 2011, the market is likely to witness buoyant growth similar to 2010, thereby reaching revenues of about $90 billion, says Frost & Sullivon, in its yearly sectoral analysis on the Indian transportation and logistics sector.
The logistics market recorded revenues of about $82.10 billion in 2010, witnessing a growth of about 9.2% over the previous year. Strong growth of key manufacturing industry sectors such as automotive, engineering, pharmaceuticals, food processing, and textiles, among others, contributed significantly to this growth, the analysis said.
The sector is likely to witness a consolidation wave, considering the reviving fortunes of the sector with booming end-user industries. Industry experts report that even private equity and venture capital firms are eyeing a slice of the logistics sector, which saw testing times for the last 12-16 months.
According to Frost & Sullivon, the year 2010 saw a few notable acquisitions in the Logistics Industry, such as FedEx?s acquisition of AFL Logistics, and Transport Corporation of India?s (TCI) 51% equity stake acquisition in Infinite Logistics Solutions. Apart from these, companies such as Toll Global Logistics, Allcargo Global Logistics, and F H Bertling have been actively seeking to expand their size in India through the inorganic growth mode.
In addition, private equity firms and leading finance organisations have been actively investing in Indian logistics companies. International Finance Corporation (IFC) had invested $5 million in Snowman Frozen Foods, a Bangalore-based company that transports, stores, and distributes frozen and chilled foods. Similarly, Eredene Capital, a UK-based fund house that invests in logistics projects in India, took 90% stake in MJ Logistics, a 3PL cold storage service provider for processed food and retail industries.
The total logistics spend (total logistics market size) in India represents around 6.2% of the country?s GDP. However, it represents about 11.6% of services GDP (contribution of the services sector in the total GDP).