RS Subramanian, country manager at DHL Express India spoke to FEs Nikita Upadhyay on expansion plans, competition and the anticipated growth in international express business.
DHL has a domestic express business with Blue Dart, a global freight forwarding business and supply chain division. How do you work together as one brand name
We deal with each other on an arms' length. We are separate legal entities in India. When a client needs a bouquet of services, then we can easily stitch up a solution with our sister companies. We help each other to provide end-to-end solutions to a customer when needed. Mumbai is also the headquarters for South Asian operations.
What growth do you anticipate this year
Normally, express business grows in multiples of the GDP growth, at about 15-16%. The total express business market in India is worth about $700-800 million. We have a 40% market share. We think the market will grow at 16% this year and we have to grow faster than that.
What are the margins that you enjoy in this business
Compared to other businesses in supply chain arena, express has the greatest margins than the rest. It is not just because of prices here but also because we have to incur high amount of investment, be it in skilled manpower or investment in infrastructure. So, these investments do pay off. Over the last few years, DHL Express has invested more than a billion euros in the country, including the Blue Dart acquisition.
This international express business has four large players and one is relatively stronger that the other. So, how is the competition in this space
Yes, competition is strong and quite predictable. There is continuous battle for greater share of customer wallet. During the last few years, the competition has intensified. The big India story is strong and noticeable with healthy GDP growth. The challenge is how fast we deliver it and what kind of additional services like handling paperwork and customs clearance could be takem up. Inbound traffic has a larger pie in India with an import to export ratio of 70:30.
What are your growth plans
We have five years outlook for the business internally. There is no volume that we can take from others in the market. So, it will be a combination of taking care of the growing Indian industries, different lanes in the market, service quality, and taking action that will drive the express category. So far, BFSI is the largest vertical for us. India is a big focus market for us and it will be the same for coming many years. It will figure in the top 3 or 5 markets globally.
Has the slowdown in international trade impacted the business
Even during the global recession, the impact was not huge and after the recession, the rebound in the express business has been quite strong. Traditionally, the West was the largest market for us. But now APAC, Middle East and Africa are slowly changing this picture. Europe and the US have not declined in volumes but in total pie of the cake, they have declined and other areas have picked up.
Greece has an impact but not so much. Whatever they do to pull out of the crises, the industry will have an impact. Maybe there will be some caution in the next 3-6 months.