PROJECT REPORT ON“UNDERSTAND THE BRAND RECALL OF

GATI BRAND IN COURIER AND CARGO NEEDS”

Submitted By:Abhishek Pattanayak

PGP-IB IB/06/001 Submitted To: Asian School of Business Management Bhubaneswar Under the esteem guidance of Mr. Mathew Joseph Prof. C.K. DashManager – All India Retail & Prof. in marketing Gati, Secunderabad ASBM, Bhubaneswar

Project Report Submitted in Partial Fulfillment for the award

Of degree in Post Graduate Programme in international Business

Asian School of Business Management Bhubaneswar

CONTENTS

(2006-08)

DECLARATION

I Sri Abhishek Pattanayak bearing the roll number IB/06/001, a student of Asian School Of Business Management, Bhubaneswar here by declare that this project report entitled “Understand the Brand Recall Of Gati Brand in Courier and Cargo Needs” is bonafied work done by me at Gati Ltd, Secunderabad in partial fulfillment for the award of degree in post graduate Programme in international business. This report has not been subjected to any other institution or university for award of any degree or diploma.

(Abhishek Pattanayak)

CERTIFICATE BY THE GUIDE

This is to certify that the project entitled, “UNDERSTAND THE BRAND RECALL OF GATI BRAND IN COURIER AND CARGO NEEDS” is a bonafied record of Interim report carried out by Abhishek Pattanayak at Asian School Of Business Management, Bhubaneswar, for the partial fulfillment of Post Graduate Programme In International Business2006-2008.

Signature of Faculty Guide Date:

Acknowledgement

I express my deep sense of gratitude to GATI for providing me an opportunity to undertake on-the-job training at the Head Office, Secunderabad.

I have great Pleasure in offering out profound respect heartfelt to Mr. Mathew Joseph, Manager- All India Retail, Gati for his kind consent and co-operation in providing me the support and valuable information regarding the topic.

I am very much grateful to Ms. Razia Sultana, Manager (HR) andMr. Madhu M, Executive (HR) for extending their heartily co-operation and timely support.

My special thanks to Mr. K. pradeesh. Executive (Retail), HO for his guidance and co-operation in providing necessary information in the area of my project study.

My regards to my faculty guide Prof. C.K. Dash for guiding me, providing valuable information and clarifying the doubts in the area of my project study.

I am also very much thankful to Mr. R.L. Dwibedi, Manager (Retail), all the executives (Retail) of Gati HYDN, Bowenpally and all the faculty members of Asian School Of Business management for their guidance during the project work. Last but not least, I am grateful to the people, the retailers, the industrialists, the executives and managers of different corporate houses which I have visited in Hyderabad city for their support during survey.

Thanking you a lot Abhishek Pattanayak

PREFACE

“A wise man recognizes the convenience of a general statement, but the bows

to the authority of a particular fact”.

With this brief, I had set out for on-job-training (OJT) in Gati Ltd, Secunderabad. It turned out as expected the kind of organizational

exposure I am looking at the Gati Ltd. Realizing that more I imbibe in theses few months, more confident and equipped me would be while entering to the corporate world. I was giving the responsibility of conducting a market research to find out market potential of Gati in Hyderabad. It has been a learning experience in this sector while conducting the market survey, but I was also enriched by their experiences that they shared with me. Here I got the opportunity and experience of preparing the questionnaire, collecting the primary and secondary data and analysis of the data. Along with this I also gave suggestions for restructuring the market potential of Gati in Hyderabad.

Executive summary

The birth of Gati practically represents the big change in Indian courier & cargo industry. The name Gati creates an image, reliability, tradition & faith. Except its express cargo division it started its courier division under the brand name “Gati Zipp” in the year of 1998. Now Gati Ltd. is a leader in Indian cargo service industry. The word “Gati” is derived from Sanskrit language which means speed with direction. Though Gati has proven its supremacy in Indian cargo sector, it is facing a low brand awareness in Indian courier market. Since the company is wanted to relaunch its courier service in tie up with Indian cargo a detail story of brand awareness and brand recall is very much needed. Keeping this thing in mind, we set out to find out the market potential and brand recall of Gati products and services.

For our survey purpose we selected Hyderabad. Before doing the survey we prepared a questionnaire of open ended questions for the mass market. The industry customers were interviewed formally.

Gati: An Introduction HR Initiatives at Gati Function of Different Department Services Offered By Gati Value added services from Gati Sales channel of Gati Gati Cargo & Gati Courier SWOT Analysis of Gati

GATI: Journey started in 1989

“I took the road less traveled by and that has made all the difference “

- Robert Frost -

Exactly the same has made all the difference when Gati rolled out the express cargo concept in India. Gati, the pioneer in India in mastering the idea of express cargo with a different feature of door to door and desk to desk pick up and delivery which was conceptualized as a premium transportation service with convenience and efficiency. It has made all the difference where the conventional transportation was the only way of delivering most of all corporate houses’ promise to their customer. In late 80’s India witnessed the liberalization policy that has changed the face and pace of India which triggered high economic growth in manufacturing and service sector. The competition among corporate to serve its customers first and fast become the key word of success in market place. Gati very proactively foreseen the vast changes that are going to trigger Indian economic growth.

The realization of, importance of logistics in creating a country’s wealth, Gati has taken a different route and that was resulted to the launch of Gati Desk to Desk Cargo in 1989 offering door to door pick up and delivery services.1989 witnessed the introduction of a different product line in transportation where time, technology, safety and customer service play the vital role.In 90’s, Consumer preference started changing as the information technology has taken front seat in providing highly efficient service at customer doorsteps. Time and speed became the essential ingredient

of success of any manufacturer who wants to deliver their products to end user on time and intact. Snail paced infrastructure development in India was the only road block to attain high speed in delivering our customer needs.

In 1996, Gati has made history by getting into a strategic alliance with Indian Airlines to leverage the highest network on air to provide the widest reach in surface with high speed delivery process to attain great customer satisfaction.

The industry growth and information tech boom has created high customer expectation; the intangible service started playing the key role in differentiating the tangibility of every product. It is like the service starts matters the cost.In 2000, a new millennium, Gati launched the first railway freight service from Mumbai to Delhi called “ Gati Millennium Train “ eying the optimum utilization of cost and grabbing all opportunities come across as the market dynamic changes. The new millennium witnessed the explosion of information technology and expansion of Indian service industry. India started acting global. The investment friendly business environment that has made international corporate’s entry into Indian market. It triggered stiff competition in market place and higher consumer expectations. All the company’s started to think on “optimum utilization “of all resources to meet customer expectation as well as the thinner bottom line to a thicker one. The conventional wisdom of “Revenue generation by sales and spent by distribution “has made a major shift to “effective distribution and SCM make company’s bottom line brighter”. This made – the back room logistic and distribution function to a strategic board room function. The black sheep becomes a profit pulling bull.In 2003, Gati introduced oracle based Gati Enterprise Management Solution, nick named GEMS to give all competitive edge to our customers in leveraging the market opportunities on time. Gati GEMS is one of the most effective tool to track and trace the shipment and enabling Gati in optimizing all resources.India became the fastest growing economy in the world with an aspiration to fetch a double digit growth in GDP. The pace that Indian logistic scenario moves ahead, Indian infrastructure like road, rail, ports Air ports development is not showing the speed that requires to support the faster development in logistics.Gati has already started investing heavily in improving the ware housing, IT, Hubs, Aviation, Customer service etc to move ahead to meet the market needs. Gati is going ahead in re-engineering of network through central distribution centre and express distribution centre. Now Gati offers distribution and warehousing solution in 592

out of 604 districts of India. Gati has expanded to Asia Pacific region by offering India- centric distribution solutions.

Change is very constant in market place. Gati always choose a road less traveled by and create a positive difference in market place. Recently Gati has undergone a transformation process and displaced the promise to “Ahead in Reach” from the statement of “We deliver anything anywhere”. Gati now have a global outlook and its brand design has changed to Vibrant new look. Gati has restructured to meet all B2B and B2C customer needs which enable to address the various requirement of corporate and mass market differently.

Gati’s ambition is to become a truly Indian multinational company to set a bench mark reference in customer sensitivity in express distribution and SCM company.

Milestones:

From inception, Gati have been obsessed with providing the best possible service. This obsession has resulted in setting the benchmarks for the industry. Here are the some snap shots of the glorious story of a leading logistic service provider of the country.

1989 Birth of cargo giant Gati as Gati cargo management services.

1989-1995Gati offers a money back guarantee on cargo services.Gati offers cash on delivery for convenience of customers.A toll free number is introduced for customers for first time in India.

1996

A strategic alliance with Indian airlines, India’s largest air network for faster delivery of shipments to its customers.

1997Introducing the third party logistics system in India and offering the complete logistics solution to its customers.

1998 Entering in to courier market under the brand name of Gati-Zipp.

1999

Expanding its services in to SAARC countries, ties-up with Bhutan and Maldives Postal department.

2001Introducing the first exclusive cargo train between Mumbai and Kolkata in association with Indian Railway.

2003 Bags the best logistic company 2003 in a survey conducted by Frost & Sullivan.Setting up a base at Singapore in order to reach out world faster.

2004Introducing mechanized racking system in the automated warehouse at panvel, Maharastra.

2006Awarded the “Best Logistics Partner” by HCL infosystems.Awarded the consumer super brand status in the logistic category for 2006-07Nominated for NDTV “business leadership awards” 2006 in logistics category.

Vision & Mission Be a globally preferred provider of India-centric supply chain

services and solution, and a leader in the Asia Pacific Region. Delight Customers with quality service by setting new trends

through innovation and technology. Be the most preferred organization for all stake holders. Be a responsible corporate citizen with unwavering commitment

to environmental protection and conservation.

Board of directors:

Mr. Mahendra Agarwal Mr. K.L. Chugh Dr. Ram S Taneja Mr. N. Srinivasan Mr. T.S. Rao Dr. P. Sudhakar Reddy Mr. Krishan Sehagal Mr. Sunil Kumar Alagh

HR initiatives at Gati

Gati believed in long tem employee relationship. Organizational commitment, win-win situation, multiskilling of employees, long term employeement is key ingredients of HR function. Attitude is given more importance in employee recruitment than qualification and expertise.

MD of Gati Mr. M.K. Agrawala on every possible occasion made it explicit that Gati is caring organization. For example, wherever possible, food was cooked and served to employees in all Gati offices. While the formal set and atmosphere worked well for quite some time major reforms were initiated during 2002-03, to enhance competitiveness of Gati in the changing business scenario.

MD of Gati Mr. M.K. Agrawala personally met the family members of an employee in the unfortunate event of loss of life of an employee in a major accident. This is a tradition, which is being systematically followed up. Of course today, wherever MD could not visit the family of the victim, a senior employee of the company is deputed for such a visit.

Most of the Gati employee (until 1994) was inherited from TCI. There was a need to enhance the competency level of employees at Gati. Management graduates and engineers were recruited across the campuses in the country and placed in executive and managerial cadre. To keep a check on the number

of employees, a performance based separation scheme was implemented. The separated employees were given an option, opportunity and financial support to work for Gati as entrepreneurs.

The gender mix in Gati was skewed towards male. Very few women worked for Gati. To bring an element of improvement in social behavior within Gati women employees were inducted as management and graduate trainees. The entry level qualification was increased from school pass to graduation.

Recruitment was need based. Advertisement, using manpower consultants and visiting campuses were the modes of recruitment. Understanding of service industry, ability to concept sell a product, innovativeness, business knowledge and exposure to functional areas of business, softer skills, sensitivity and ability to work in a team is a range of skills sought in a fresh recruitment.

Every new employee in Gati went through a seven-day induction course, at a place other than his/her place of posting. Standard training modules on marketing, customer orientation and service quality were routinely offered. Several executives were nominated for management courses in reputed Indian institutions.

The performance appraisal system was changed from managing director reviewing the performance with every regional manager to a broad based open appraisal system. Two broad based review committees did the appraisal. A centre review committee and a regional reviewed the performance of every manager along with the managing director in an open environment on a one-to-one basis.

The welfare measure included ad-hoc financial support on a need basis to staff. All employees and family including parents were covered on medical benefits and insurance policies. For staff all statutory requirements like accident insurance etc. were provided. The remuneration and perks for senior executives of Gati is comparable with the best in the industry.

Services offered by the Gati

Gati Express Gati Zipp Gati Saver Gati Priority Gati coast-to-coast Gati Logistic solution

Value Added Services

FOD – Option of paying at the time of delivery COD – Collection of cash against delivery from the customer

and remitting it to the supplier online through e-banking. DOD- collection of draft and cheque on behalf of customer at

the time of delivery. Holiday and sun day pick up Tamper proof packing Fragile goods packaging Safety Measures: special “suraksha” bags for safe handling of

high value of cargo. Octroi clearance facility

Gati Express

With the widest network, the best of cargo movement facilities and several value added services to choose from, Gati express is the preferred distribution solution provider today in India. Gati has a range of express services to choose from:

Express City : Same day deliveryExpress Zone : Ideal for secondary distribution needsExpress State : For regional distributionExpress national: Reaches the remotest corner of the countryExpress Bulk : For high density cargo and bulk cargo

Features of the Gati express:

On time departure of vehicles irrespective of capacity utilization Assured date of delivery Door pick-up and door delivery Weather proof containerized vehicles for safe movement One time lock for tamper proof transit Online track and trace facility Physical proof of delivery option E-billing

Gati Saver

An affordable surface product especially designed for non commercial packages.

Flat rate of Rs 89 per package ( up to 4kgs) ideal for samples, gifts, study materials and printed material.

Gati Priority

Speed, reliability and reach: Every operation at Gati Priority follows this principle. The large fleet of surface vehicles and a strategic alliance with Indian airlines helps Gati to meet every possible business need.

Features of Gati Priority: Reserved space in 34 designated air movement

sectors. 24*7 Service counters at major air transit centers. Multi modal connectivity for easy and quick transit

at non airport locations. Online track and trace facility Option of same day delivery Door pick up and door delivery

Gati Zipp

Zipp makes the difference:Gati goes beyond the normal courier service with zipp and

provides its customers with unique price and transit time option.

Features of Gati Zipp:

Express courier service 48-96 hours delivery for most locations in India Holiday and Sunday pick up and delivery option A pre paid payment option the form of zipp envelopes and

boxes. Cash-on-delivery facility

Gati coast to coast

Gati coast to coast is Gati’s shipping division. Set up way back in 1986, the CTC division was to become the preferred service provider for all sea bound cargo in the bay of Bengal, Andaman Island and Malacca strait. In the two decades of its existence, Gati CTC has followed this

vision with diligence and determination and has emerged as a complete solution provider for Indian seas.

Features of Gati Coast to Coast:

Sturdy and safe cellular container vessels mv Gati Suvidha mv Gati Zipp mv Gati-1 mv clarissa

Regular liner services between Chennai-Andaman Island-Chennai & Chennai-Yangon-Chennai.

Gati Logistics solution

Logistic and supply chain management are the integral part of Gati’s business. A sharp and steady focus on these key functions has helped Gati to gain a competitive edge over the rest of the market. Gati offers its service as a third party logistics service provider. A 3pl service allows a company to

Concentrate on core competency Create greater competitive flexibility and release working capital.

Gati’s warehousing facilities consists of completely modern storage system and material handling system. With it branches in all metros, semi metros, cities, Gati has more than 200 storage locations across the India. With over 6000 sq ft of warehousing space spread all over the country and serving the multiple clients, Gati is able to offer many more customer friendly solution:

Flexible hiring option Modern racking and handling system Reduction in material breakage and damage Ware house manage system

Sales Channels of Gati

Gati started its debut journey to India’s cargo market in the year of 1989 as a division of Transport Corporation Of India (TCI), another cargo giant of India. It became separated in the year of 1994 and by the that time Gati’s revenue was only 18 crore. By the year 2007 Gati’s sales turn over is 460 crore. Gati is targeting to become a 1000 crore turn over company by the end of 2009. To achieve this target Gati has its sales channel into four parts in order to get more revenue. Gati’s sales chhanel is divided into four parts. They are as mentioned above.

CCC-F

CCC-F is a service chhanel of Gati which stands for customer convince centre (Franchise). Gati is operating 594 districts out 602 in India. But it is difficult for Gati to open its offices, hub and EDC in every corner of India which is due to poor communication network and lack of modern infrastructure. But to get good revenue from Indian cargo market it has out sourced its business to local individual of a particular region who will work on behalf of Gati to strengthen Gati’s customer list where company employees and vehicles can not go due to poor communication. The franchise person will collect or delivery material from Gati’s customer and collect or delivery to nearest hub of the company. The franchise person will work on behalf of Gati to provide services to its customers in remote areas. There is a good incentive for franchise people from company if the particular franchise person generates a good business for Gati. Gati is the first company of India which has launched such kind of program. Gati is also getting its major revenue from CCC-F only.

Sales channel Of Gati

CCC-F CCC-K GA Café D’eliver

38

41

57

30

26North

West

South

East

Central

34

4243

30

11

North

West

South

East

Central

Gati’s CCC-F across the country

CCC-K

CCC-K is an another service channel of Gati which stands for customer convince centre (Kiosk). This service channel is developed by Gati to add new customer in its customer profile in semi metro and urban cities. The major difference between CCC-F and CCC-K is that in a CCC-F booking and delivery is done where as in CCC-K only booking is done.

Gati’s CCC-K across the country

Café D’eliver

This is a new service channel added by Gati in year of 2007. The main purpose of such chhanel is to branding and showcasing company’s image to the public. Generally café D’eliver is established mainly in metro and developed cities. Till now Gati has only three café D’elivers across the company which are in Secunderabad, Pune and Indore. Gati is planning to open six more café D’eliver in other major cities like Kolkatta, Mumbai, Nagpur, Bangalore, Chennai and Delhi. Café D’eliver is a unique service offered by Gati where its customers can book their material 24*7 basis with other facilities like fax, internet browsing, telephone and photo copy facilities. The prime objective of Café D’eliver is to make aware the people about Gati’s product and attract them towards it and keeping one step ahead always from its competitors in market thus creating a good brand recall of Gati among the people.

(Café D’eliver of Gati at Secunderabad)

GA

The Gas are popularly known as Gati Associates (GA). Each GA is assigned to a particular area where he will responsible for receiving and delivering of customer’s material. Apart from their job they book customer material on call basis on behalf of Gati for which they get attractive incentives apart from their regular salary for their contribution towards generating the revenue of Gati.

Gati Cargo

Gati, a leader in the express cargo distribution business, was started in 1989 as a division of TCI. It became a separate company after a period of six years i.e. 1994. In the same year it entered to the Indian cargo sector. Being a premiere logistics company of India Gati’s logistics distribution consists of 98% cargo distribution and 2% documents distribution. It is only India Company which provides cargo services in three modes i.e. surface, air, water. Gati is providing its cargo services in 594 districts out of 602 across the India. But Gati’s revenue mainly dominated by its express distribution.

Gati Express

With the widest network, the best of cargo movement facilities and several value added services to choose from, Gati express is the

Gati Cargo

Gati Coast-to-Coast

Gati PriorityGati Express

preferred distribution solution provider today in India. Gati has a range of express services to choose from:

Express City : Same day deliveryExpress Zone : Ideal for secondary distribution needsExpress State : For regional distributionExpress national: Reaches the remotest corner of the countryExpress Bulk : For high density cargo and bulk cargo

Features of the Gati express:

On time departure of vehicles irrespective of capacity utilization Assured date of delivery Door pick-up and door delivery Weather proof containerized vehicles for safe movement One time lock for tamper proof transit Online track and trace facility Physical proof of delivery option E-billing

Gati Saver

An affordable surface product especially designed for non commercial packages.

Flat rate of Rs 89 per package ( up to 4kgs) ideal for samples, gifts, study materials and printed material.

Gati Priority

Speed, reliability and reach: Every operation at Gati Priority follows this principle. The large fleet of surface vehicles and a strategic alliance with Indian airlines helps Gati to meet every possible business need.

Features of Gati Priority: Reserved space in 34 designated air movement

sectors. 24*7 Service counters at major air transit centers. Multi modal connectivity for easy and quick transit

at non airport locations.

Online track and trace facility Option of same day delivery Door pick up and door delivery

Gati coast to coast

Gati coast to coast is Gati’s shipping division. Set up way back in 1986, the CTC division was to become the preferred service provider for all sea bound cargo in the bay of Bengal, Andaman Island and Malacca strait. In the two decades of its existence, Gati CTC has followed this vision with diligence and determination and has emerged as a complete solution provider for Indian seas.

Features of Gati Coast to Coast: Sturdy and safe cellular container vessels

mv Gati Suvidha mv Gati Zipp mv Gati-1 mv clarissa

Regular liner services between Chennai-Andaman Island-Chennai & Chennai-Yangon-Chennai.

18%

11%

71%

Fuel Station

Coast-to-Coast

Express Distribution

Distribution Business Dominates Gati’s revenue Express (Source: - Financial Summary FY06)

Gati Courier

In 2000, Gati entered into courier sector of India by launching “Suvidha” a premium cargo (courier) product to be managed and operated by the same team which was in charge of cargo business. Suvidha was started as an extension of business cargo which essentially meant movement of documents. But the delivery team did not pay equal attention to small cargo, small parcels and small documents. Gati could not kept the delivery promises of Suvidha. For Gati courier was an extension of cargo business. But for the customers, it is a prime way of moving documents. Also, alternative vendors were available to customers. Initially Suvidha was a reasonable success. It provided operational excitement. Gati was one of the first company to use 2kg and 5kg boxes to capture retail courier market. This product was offered for a fixed price. This variation of Suvidha did not take off and as the time passed by because of lack of focused attention on Suvidha, the product was loosing market share. As Suvidha did not have the good brand recall, Gati decided to revamp the courier business and take it forward with strong brand image. In 2004 Suvidha was reorganized on several dimensions and re launched in brand name Gati Zipp. There was a separate team responsible for product positioning, pricing and promotion. The Gati Zipp specifically targeted three major segments viz. education (student), Pharma companies and e-business community. These are expected to be a big business opportunity in near future for Gati Zipp. Zipp business is expected to generate about 15% of Gati business in next 2-3 years. Presently Gati Zipp is giving only 1% of total revenue to Gati’s business. Even after restructured and re launched Gati-Zipp is failed to capture the leadership position in the courier market band still the Indian courier market is dominated by the presence of the courier tycoon like Blue dart, DTDC, XPS and First flight courier.

45,612

35,91930,61527,51425,25524,952

20,41716,245

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

Product Wise Income of Gati (Source-FS 06)

YEAR AMOUNT ( Rs/Lakh)1998-99 16,2451999-00 20,4172000-01 24,9522001-02 25,2552002-03 27,5142003-04 30,6152004-05 35,9192005-06 45,612

Total Sales Turnover Of Gati

76%

9%

10% 1%3% 1%Express

Priority

Logistics

Gati International

TS

Zipp

375

905809

430 410555

1449

2007

0

500

1000

1500

2000

2500

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

Total Income of Gati

Profit After tax

45,772

36,127

30,91927,634

25,30525,023

20,46516,290

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

3%

3%

4%

5%

7%

8%

8%11%13%14%

17%7%

Consumer Durables

Telecom

FMCG

Textiles

Electricalappliances

Engineering

Other manufacturing

Computerperipherals

Automotivecomponents

Electronicscomponents

Pharma&Chemicals

Others

Contribution of different products towards revenue of Gati (Source: Gati)

SWOT Analysis Of Gati

Strength:

Gati covers 594 districts out of 602 districts in India providing excellent cargo services to various customers.

Gati gives more priority to timely delivery than the cost of delivery reflected by vehicle under utilization.

Gati was the first company which offered value added services with highest quality to transport business which was once considered to be a routine business with no scope of value addition.

For the successful operation of its business it started a new concept with a group of front-end entrepreneurial delivery set up popularly known as Gati Associates (GA). This kind of concept was new to the cargo & courier industries in India.

Gati was giving assurance a net revenue of Rs 8000/- a month (in 1994) and a financial arrangement ensured over a period of time to all its GAs for the smooth and successful running of business.

In 2000, Gati launched the first railway freight service from Mumbai to Delhi called “Gati Millennium Train “eying the optimum utilization of cost and grabbing the major share in Indian cargo market.

Gati introduces oracle based GEMS package to give all competitive edge to its customers in leveraging the market opportunities on time.

It offers cash on delivery for convenience of customers. It is the first company which offers money back guarantees

policy on cargo services if the cargos are failed to deliver on time to customers.

For first time in India, It is introduced a toll free number for the benefits of customers regarding the queries on its products, services and operation.

Introduction of SMS based track system for convenience of its customers to track their shipment of materials.

It is introduced a special package named “ Gati Saver” in the courier market of India which enables its customers to send samples, gifts, study materials and printed material ( up to 4kg) at a flat rate of Rs.89 with service tax to any where within the country.

In 2006 Gati has redefined its brand name from “we deliver anything any where” to “ahead in reach” and changed its logo in order to hold the market leadership in Indian cargo market.

A leading logistics solution provider in third party logistics sector of India.

First company of India to introduce 7*24 hr booking system for its customers under the brand name “Café D’eliver”.

Provides opportunity to its customers for online track of their shipment.

Provides other additional services like door pick-up and delivery, holiday and Sunday pick-up.

Gati is handling 2.2 million of packages in a month across 29 states in India with assured delivery date on the docket.

It has developed the excellent connectivity across the country thus enabling it to provide unparalleled service to its customers.

Gati is also investing substantial resources in customer relationship marketing through regular customer meets and customer carnivals which is a new strategy to this industry and resulted in creating a unique market to Gati.

Gati has done an alliance with Indian Airline in order to provide services in 550 locations through 150 branches spread all over a single waybill.

Gati is operating a call centre on 24*7 basis to receive, respond and monitor customer complaints.

In the courier segment Gati was one of first companies to use 2kg and 5kg boxes to capture the retail courier market.

Gati is only one Indian Cargo company which runs its business in three modes i.e. surface, water & air.

Gati is the only cargo company of India which has its own sea cargo division named Gati coast-to-coast.

Gati has opened its branches in foreign countries like China, Hong Kong,Thailand & in SAARC Countries to strengthen its business.

Weakness:

Gati was a late entrant to generic cargo business. Gati took roughly four yearly to stabilize the differential

express cargo business from simple cargo business. Due to poor positioning Gati Suvidha was failed to attract the

customer thus getting low market share from courier business. Gati’s railway cargo project was failed as it was proved to be

highly expensive for Gati and did not fetch good revenue. Gati is still lagging in ware house management to its

competitors.

Opportunity:

Gati’s strategic alliance with Indian air line has created a huge amount of business in air cargo sector.

In July 2007 Gati is going to start its own flight operation in association with Indian for air cargo business.

Automotive industry in India is growing at 18% per annum creating a huge opportunity for Indian logistics companies like Gati.

Textile industry is growing 18-25% per annum in India. India’s auto export is growing 25% per annum. Indian retail sector is growing 25% annually creating US$

175-200 billion by 2016. Over 8.6 million productions of vehicles with a growth rate

over 35% per annum. The recent experiment on Alphonoso mango has created a

great business opportunity in packaging for Gati.

Threat:

Gati’s business model was cloned by several retail courier operators thus creating threat for Gati’s business.

Gati’s employees were recruited by its competitors with high salary and other perk and allowances.

AFL has ventured in premium cargo (Courier) in the brand name AFL “Wiz” thus creating threat for Gati’s courier arm Gati-Zipp and Gati-Savor.

Another major Indian logistics company Patel Road Ways has also entered into retail courier market in the name of Patel Retail Ltd.

Global logistics major “DHL” has opened its office in Gurugaon in order to start its business in north India.

First Flight, one of the premiere courier company of India is entered in to air cargo sector with its two own air craft between Delhi and Chennai and very soon entering in Hyderabad and Bangalore cargo market.

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Review of Literature* * * * * * *

* * * *

Logistics : A Brief Review Logistics & SCM: Global & Indian Trend Indian Logistics Industry Indian Logistics Industries structure

Opportunities and Challenges for Indian Logistics Industries Courier Industry Classification of Courier Industry Cargo Industry Classification Of Indian Cargo Industry Opportunities and challenges for Indian cargo

Industry Indian Express Industry: An Over View Gati’s Brand Recall as a Courier & Cargo Service

Provider

LOGISTICS ……A BRIEF REVIEW

Logistic is the art and science of strategically managing and controlling the flow of goods, energy, information and other resources like products, services and people, from source of production to the marketplace. Logistic is one of the oldest and also the newest activities of business management. It involves combining diverse functions and service providers who may be culturally and objectively different.

Logistics is about moving materials, information and funds from one business to another or from a business to the consumer. It is an

important part of the business economic system and is a major global economic activity. In fact 10-15 per cent of product costs is logistics related. Worldwide, logistics constitutes about $2 trillion a year. For any country, the logistics cost is estimated between 9 and 20 per cent of its GDP.

Logistics was defined by the Greeks as "the science of correct reasoning by means of mathematics". The first modern use of the term was in the military to identify the process of planning and co-ordinating the movement of army and weapon support systems. Good logistics brings out the ability to move faster and accurately to the battle front. If one applies the same to the business organization, it is one's ability to reach the product to the consumer at the right time, right place, right quantity and at the lowest cost. On similar lines, supply chain management will mean the network of organizations involved in the process by which goods are moved from producer to consumer and the counter flow of information, to manage the supply chain as a single entity.

A prominent application of logistics was in World War II where weapon movements were coordinated to ensure success. A recent instance of massive logistics initiatives is in the Gulf war. With increasing competition in the market place, managements started focusing on customer services in the early 1950s in developed markets such as Europe and the U.S. In late 1960s some of the logistics concepts were tested. Following the oil crisis of the 1970s and the concept of just-in-time in manufacturing customer servicing standards were given more importance and new integrated logistics models and solutions were born. The emergence of organized distribution system by department stores and super fast courier service organisations gave a boost to logistics concepts and strategies. Today all businesses are looking for seamless transaction systems to co-ordinate their information and material requirements along the value chain.

Major Drivers of a Logistic

There are five major logistic drivers, They are as follows:

Production: This is typically related to issue on what to produce, how to produce and when to produce.Location: A number of issues regarding location such as where to locate a Plant, where to locate a ware house in order to reduce the cost of transport in logistics.Inventory: Here the decision and issues are concerned with how much to store, how much to make and where to store.Transportation: This involves how to move a product from one place to another place and by what mode of transportation. One needs to evaluate economies of scale in one hand and better customer satisfaction in another hand.Information: It is a very important for the logistics. It acts as a basis of making decision. It also act as a integrator. Unless information flow is not

Supplier Manufacturer

Distributor Customer

Schematic Representation of a Logistic

handled properly one may not get proper benefits from logistic.

Logistics management process

Michael Porter in his famous book "Competitive Advantage'' has spoken of the value chain approach and emphasized logistics as one of the most important tools for competitive advantage.

The various processes and elements that are part of logistics as a discipline are

Inbound logistics: Purchasing, Inbound transportation, Inventory Management.

Manufacturing: Production planning systems, Machine scheduling system.

Outbound logistics: Order booking process, Distribution management, Outbound transportation, and Warehouse management systems.

As customers started demanding improved servicing standards, fast cycle time has become the key factor for business success, whether it is custom made tailoring service in Hong Kong or development of a new car in Detroit.

A few industry applications

Until a decade ago, logistics was a word used only in commercial organisations. Now one hears the word daily. Take the case of conducting elections: What is logistics here? The ability of the Election Commission to arrange for ballot papers, polling booths, collection of votes, counting and other procedures in the shortest possible time.

Take the case of agriculture, in India there are seven layers between the agricultural producer and the consumer, whereas in the U.S. it is only two. Any good agricultural logistics system perhaps needs to have only two or three layers like manufacturing and marketing companies which have two or three layers. More layers means more delays, more wastage of resources, more cost brokers. A good logistics can eliminate all this. Milk distribution is a good example of efficient

logistics. Through the logistics tools and technology it is possible to do the same in any other sectors such as foods and vegetables.

The successful cement companies have focused on logistics and supply chain management to ensure higher margins and improve servicing standards.

In fact, the total cost incurred by these companies up to the manufacturing point is only a third of the selling price and the balance consists of logistics, selling commission, receivables and related aspects. One need not reiterate the importance of logistics and supply chain management for industries such as cement

A logistic process……

A Logistics Pyramid

Indian Logistics Market Projection

Logistics & SCM: Global and Indian trend

Logistics is the total course of activities involving moving goods from the place of origin to the place of destination in the timely and cost-efficient manner. The concept of logistics covers all activities relating to the procurement, transport, trans-shipment and storage of goods. Till a few years ago, the term Logistics simply meant movement of goods from one place to another. However, since the early nineties, there has been a sea change in the role of logistics solutions providers. Recognizing the need and the requirement of businesses today, logistics companies are now seeking to provide complete supply chain solutions to their customers. Therefore, in addition to the basic transportation, the companies are providing value-added services such as warehousing, inventory management, freight forwarding, and express services. The size of the logistic sector globally is $ 2 trillion, while size of Indian logistics industry is around $ 89.8 bn. The total revenue from logistics and supply chain management industry was estimated at $13.5 bn (approximately Rs 600 bn) in 2003 and is forecasted to reach $19.5 bn by 2009. Logistics cost as a percentage of GDP is higher at 13% when compared to an average of 10% in other developing countries and it is likely to come down to an average of 10% of GDP for India. This will be due to higher efficiencies and will not have any adverse impact on companies under coverage. An efficient logistics or transport system is a precondition for constant economic development. It is not only the key infrastructural input for the growth process but also plays a considerable role in promoting national integration, which is important in a large country like India. Serving a land area of 3.3 million square km and a population of one billion, India’s transport system is one of the largest in the world. It consists mainly of roads, railways, and air services. In a few states, inland water transport plays a small supplementary role. And with its long coastline, India has almost 200 seaports. The sector has expanded manifold in the first fifty years of planned development, both in terms of spread and capacity. Along with the increase in quantity, there have been several developments of qualitative nature, such as emergence of a multi-modal systemin the form of container transport, marked reduction in arrears of obsolete assets, improvement in the self- financing capacity of the sector and the establishment of new centers of excellence for manpower development. Even after this impressive growth, the

country’s transport system is far from adequate both in terms of spread and capacity and suffers from a large number of deficiencies and bottlenecks. The quality and productivity of the transport network and resources also needs improvement. Logistics is an important part of every economy and every business entity. Logistics cost average about 12% of the world’s GDP. The worldwide trend in globalization has led many manufacturing firms to outsource their logistics function to third party logistics (3PL) companies, so as to focus on their core competencies.

Evolution of Logistics industries

Third-party logisticsA third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials. More and more organizations worldwide want to develop products for global markets. At the same time, they need to source material globally to be competitive. The solution for this is outsourcing logistics or using 3PL to manage complex distribution requirements. Organizations have developed strategic alliances with 3PL companies all over the world to manage their logistics operations network. These alliances are also known as logistics or supply chain outsourcing and contract logistics.

Benefits of 3PL:

To save time: Outsourcing the logistics function can free up resources to focus on core competencies.

Because someone else can do it better: Even if you have resources available, another organization within the supply chain may be able to do it better, simply because of its relative position in the supply chain, supply chain expertise and economies of scale.

To share responsibility: 3PL companies can share responsibility for managing global supply chains, keeping customers and stores properly stocked, and delivering the perfect order every time.

To re-engineer distribution networks: Logistics outsourcing can be a quick way to reengineer distribution networks to meet global market demands and gain a competitive edge.

Global market for 3PL

The global market of 3PL service providers is estimated at over $70bn. North America – based service providers account for well over $50bn, of this $70bn.

Global 3PL examples:

FedEx: FedEx Express was given the responsibility of transportation of 630 tons of 504,000 bottles of 2004 Beaujolais Nouveau wine to Japan. It specially operated 7 FedEx charter flights to transport the famous wine, making it the largest shipper of the distribution from Lyon, France.

DHL: Talbots, a leading specialty retailer and e-tailer of women’s classic apparel, shoes and accessories, chose DHL@home business-to-consumer delivery service for a substantial portion of its US print and online catalog sales. In choosing DHL, Talbots identified an opportunity to reduce home delivery times on ground shipments from the company’s distribution centre to west coast from six to four, while safeguarding Talbots’ unconditional customer guarantee. With over 10,000 shipments a day, ensuring the excellent service for which Talbots is renowned, is vital to the company‘s bottomline.

Exel: The British manufacturing sites of Bayer Diagnostics, part of the worldwide Bayer AG group, required a logistics partner that could provide time-defined transportation service for its temperature

controlled range of blood testing diagnostic equipments. Exel provides a time-defined airfreight export service, from the UK to destinations worldwide. Shipments that are temperature controlled are all shipped on direct IATA flights due to their nature, whilst non-restrictive products are moved on Exel’s airfreight consolidation service. Exel collects all restricted cargo on its day of readiness and depending on the destination and transit time involved, delivers between 24 and 48 hours later. Exel ships in excess of 1,500 shipments per annum for Bayer Diagnostics, with consignments varying from 1 kg up to 2,000 kg.

Major 3PL Logistics Company in the world

UPS: Founded in 1907 as a messenger company in the United States, UPS has grown into a $36bn corporation.

DHL: Founded in 1969, by three friends. Today, its revenues are $30bn with over 170,000 employees servicing more than 220 countries and territories and 4.2 mn customers.

TNT: Started in 1946 as Thomas Nationwide Transport in Australia, revenues of $12.6bn today.

FedEx: Started in 1913, FedEx has revenues of $24.7bn and operates in 215 countries handling 3.1 mn packages daily with 240,000 employees.

Major third-party logistics service provider in India

o AFL Logistics o DHL o Dynamic Logistics o GATI Ltdo Agility Logistics o Om Logistics o Patel Logistics o Reliance Logistics o Safexpress o SembCorp Logistics o Take Solutions o TCI Supply Chain Solutions o Total Logistics

o Transystem Logistics International o TVS Logistics o VRL logistics

Logistics evolving from 3 PL to 4PL (Lead Logistics Provide) A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions. The term “4PL” was actually coined by the consulting group Accenture. In fact, they also hold the trademark to the name 4PL.

4PL organization would build a set of activities focused around a specific set of

Supply chain initiatives and goals, generally with the following characteristics.

4PL Common Services (invoice management, call centers, warehouse/distribution.

Implementation Center (the business process analysis/scoping, and development of all activities into an systems framework).

Product/Skill Centers (supply chain engineering). IT System Center (the pure IT selection for design and

implementation/connectivity).

4PL Back Office (administration, quality, finance, legal, etc.)

Indian logistics industry still alien to 4PL concept

Indian logistics industry so far has been much unorganized with different players handling different aspects of cargo handling. It is only recently in India that companies have realized of outsourcing their logistics requirements to a single player and focus on their respective core competencies. 3PL still is a new concept in India. A 3PL company is an external provider who manages, controls, and delivers logistics services on behalf of the shipper. Third party logistics (3PL) provider is an outsourced provider that manages all or a significant part of the logistics requirements of manufacturers and traders and performs transportation, locating and some product consolidation activities. Revenues for the 3PL market in India were estimated at $250 million in 2003. Market for 3PL services is forecasted to grow at a CAGR of 20.4% over the period 2004-09. This market is expected to generate revenues of $970.3 million by 2009. India’s transport system handles 870 btkm (billion tonne kilometers) of freight and 2450 billion passengers-kilometers a year Revenues of logistics industry from manufacturing sector was estimated at $13460 million in 2003. Revenues are

forecasted to reach $19540 million by 2009 on the strength of a growing economy and higher international trade. Chemicals, metal & metal products, FMCG, cement and textiles are the top five revenue contributors for logistics. The 3PL market is witnessing higher growth due to entry of MNC’s, and exports focus of Indian companies. This market is expected to generate revenues of $970.3 million by 2009. Currently, automotive, IT hardware and FMCG companies are large users of 3PL services. Emerging users include textiles, auto components, retail and pharmaceuticals industries. Plan outlay for transport sector (Roads, Railways, Air transport) has not been sufficient enough to remove the bottlenecks for sustained economic development.

Indian Logistics Industry…… A Snap Shot

The logistics market in India is estimated to be Rs. 260,000 crores and constitutes 13 per cent of the GDP. It is much higher than for the U.S. but lower when compared to countries like China and Korea. The major advantage for Indian logistic industries is that the GDP of Indian economy is going to cross 8%. India is going to one of favorite destination for logistic industries following reasons:

One quarter of world’s youth live in India54% of Indian population is less than 25 yrs age

2nd largest English speaking workforce

Second largest pool of technically qualified knowledge workers

10th largest economy and 4th in PPP terms.

The logistics market in India can be considered as fragmented and far from being saturated. With Indian economy booming, the freight

volumes have been increasing. Logistics costs in India are estimated to be 13% of GDP as against 8.7% of GDP for US. Hence, for total GDP of US$576 billion in 2005-06, the size of the logistic industry in India is pegged at US$75 billion as of 2005-06. Since

liberalization of Indian economy in 1991-92, inventories as a percent of net sales for the manufacturing sector has consistently

declined.

Globally, logistics service provider organisations have shifted from courier and cargo to logistics, from freight forwarders to integrated shippers and from customs clearances to consultants. A similar trend is visible in recent times in Indian market. Service providers have shifted from just movers of materials to logistic and supply chain service providers. truckers have moved into integrated haulers, large Indian organisations with multi-million spends on logistics are hiving off entire divisions into service providers who handle not just the parent’s logistics but also of others, others are forming joint venture into leverage skills.

In the current set-up the, logistics service providers in India can be broadly classified into courier services, express service providers and end-to-end logistics service providers.

Indian courier industry has undergone a large change in recent past. Courier industry which was once dominated by Indian postal department is now dominated not only by a few large national players but also by several multinational, regional and local players. Due to presence of of large number of players, margins are thin in this business, prompting many to diversify into express services. At the national level, there are several express service providers like Gati, Safexpress, Blue Dart and XPS. The logistics market across the world is increasing at rapid rate. According to the sources the logistic revenue was US$300 billion in 2006 and it will touch US$350 billion in 2007.

Indian Logistics Industry Structure

Logistics Services

Cargo Services End-to-End LogisticsServices

Courier Services

Cross-Country logistics Cost Comparison

Country Logistics Cost/GDP

Logistics activities

China, India 16-20 % < 10 %

US 9.9 % 57 %

Europe 10 % 30-40 %

Japan 11.37 % 80 %

Elements of logistics cost facing by Indian Logistic industries

Road/Express

Rail Water Air

Transportation 35 % Inventories 25 %

Losses 14 %

Packaging 11 %

Handling & warehousing 9 %

Customer’s shopping 6 %

According to World Bank report the Indian logistics cost is one of the highest in the world. By comparison, the cost of logistics in India is 17.25% of total value of goods where as in Japan it is 11.37% of total value of goods. The following three factors are primarily responsible for the high cost of logistics in India.

1. Congestion Cost2. Transaction Cost

3. Demand and supply factors

Congestion Cost

Congestion at ports, inland and roads have rapidly increased thus directly augmenting logistics cost and also resulting in over all high inventory cost as delivery time increases.

Transaction Cost

Administration cost including insurance and government taxes continue to be very high. The logistics cost could rise further due to supply and demand factors.

Demand and supply factors

The continued rise in container traffic is leading to increased traffic congestion in rail and road network, as exports and imports growing 22% to 25% annually.

The high cost of terminal development along with relatively latest innovation in finalizing the strategies result in only moderate pace in supply chain addition. There is also lack of proper road infrastructure in the class-b and

Elements of logistics cost facing by Indian Logistic industries

Transportation 35 % Inventories 25 %

Losses 14 %

Packaging 11 %

Handling & warehousing 9 %

Customer’s shopping 6 %

According to World Bank report the Indian logistics cost is one of the highest in the world. By comparison, the cost of logistics in India is 17.25% of total value of goods where as in Japan it is 11.37% of total value of goods. The following three factors are primarily responsible for the high cost of logistics in India.

4. Congestion Cost5. Transaction Cost

6. Demand and supply factors

Congestion Cost

Congestion at ports, inland and roads have rapidly increased thus directly augmenting logistics cost and also resulting in over all high inventory cost as delivery time increases.

Transaction Cost

Administration cost including insurance and government taxes continue to be very high. The logistics cost could rise further due to supply and demand factors.

Demand and supply factors

The continued rise in container traffic is leading to increased traffic congestion in rail and road network, as exports and imports growing 22% to 25% annually.

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Port Air Rail Road

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The high cost of terminal development along with relatively latest innovation in finalizing the strategies result in only moderate pace in supply chain addition. There is also lack of proper road infrastructure in the class-b and class-c towns. The lack of specific logistics professionals is also hampering the growth.

Name of the country Logistics Cost (in Rupee)

France 5.5/km

Japan 3.7/km

Canada 2.0/km

India 7.5/km

(Comparison of cost of logistics between different countries)

Transport Mode Capacity (Mn Tons) Amount (Rs Bn)Port 573 172Air 1.3 123Rail 667 365

Road 1560 1495

Indian Logistics Industry is dominated by roads.

Logistic Market Scenario in Asia Pacific Region

Indian logistics sector at the lower end of the evolution stage compared to Asian market

Retail boom fuels growth in logistics sector

India's vast middle class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. Driven by changing lifestyles, strong income growth and favourable demographic patterns, Indian retail is expected to grow 25 per cent annually. Modern retail in India could be worth US$ 175-200 billion by 2016. With the economy booming, competition in the marketplace is fierce. According to 'Retail in India Getting Organised to Drive Growth', a report by AT Kearney and the Confederation of Indian Industry, retail is one of India's fastest growing industries with a 5 per cent compounded annual growth rate and expected revenues of US$ 320 billion in 2007. Rising incomes, increasing consumerism in urban areas and an upswing in rural consumption will fuel this growth to around 7-8 per cent. KSA-Technopak, a retail consulting and research agency, predicts that by 2010, organised retailing in India will cross the US$ 21.5-billion mark from the current size of US$ 7.5 billion

Logistics companies, which now provide services from transportation to warehousing and inventory management, will soon have to expand their products basket to include value-added services such as packaging, labelling and reverse logistics. As India's retail sector opens up on a huge scale, domestic logistics companies are planning significant investments to expand their portfolio of services. It is expected that in the next two years, the logistics sector will have undergone major changes, offering a wide spectrum of services.

Consider this: Global retail giant Wal Mart announces its entry into India through a joint venture with Bharti. Reliance puts on its drawing board a mega plan of Rs 25,000-crore to create 100 million sq ft of retail space. The Aditya Birla group makes a retail foray with plans to invest Rs 15,000 crore. The Tatas plan to participate in the retail race with renewed vigour. Pantaloon plans to create a retail space of 30 million sq ft by 2009-10. Shoppers Stop may have 6 million sq ft of retail space by the same time. Global retailers from the US, European Union and Australia are all eyeing the retail revolution in India. Indian players in the logistics space are keenly tracking these developments, as they suddenly find their services in big demand. Although some

retailers, like Reliance, may have their own logistics subsidiaries, most of the others are working with third-party providers. The Indian logistics sector is at the beginning of a strong growth path. Not only retail, there are other growth drivers like the manufacturing, FMCG and auto components sectors and IT hardware sectors. Players in the segment are, indeed, ramping up their capital expenditure programme. the six major players in this sector — Concor, Gateway Distriparks Ltd (GDL), Allcargo, SICAL, Transport Corporation of India and Gati — will spend Rs 3,400 crore over the next three years to cash in on the growth opportunities. These companies together invested about Rs 500 crore in the last fiscal. The companies plan to expand their service portfolios. For example, Concor and SICAL's future growth area is cold chain logistics, GDL and SICAL's is container train operations, while TCI and Gati's is warehousing. Other trucking and courier companies are leveraging on their networks to offer express and supply chain distribution solutions, apart from developing expertise in 3PL (third-party logistics) services. The different sectors within the logistics segment are also poised to absorb significant investments. Edelweiss estimates that the container train sector (thrown open to private sector recently) will see a capex of Rs 1,600 crore in the next three years, while warehousing will get Rs 200 crore, trucking/XPS Rs 380 crore and offshore logistics Rs 250 crore. However, the infrastructure will certainly see brisk development in the coming years, with the Government attaching high priority to this sector. The road sector alone will see investments of about Rs 1,52,000 crore between 2006 and 2012. Airports, which together handled a cargo of 1.4 million tonnes last fiscal, as against 0.65 million in 1995-96, will also see significant expansion and development.

Challenges facing by the logistic industry in India:

Fragmentation and overlapping of responsibilities among the various government agencies.

Lack of IT infrastructure Lack of professionally competent logisticians Poor system management skills among different companies Poor road condition, slow speeds, traffic congestion in Indian

road The six major air ports carry only 88% of total air cargo Poor infrastructure in air ports for the successful operation air

cargo Poor ware housing and transportation infrastructure Handling less amount of bulk cargo in different sea ports of India.

Snapshot of Logistics Operations via Major Channels

Roads

Road transport accounts for 85% of passenger traffic and 70% of freight traffic

Currently Indian roads handles over 1,176 bn tonnes Km of freight per annum

Total number of goods vehicle has increased from 82,000 in 1951 to 4.04m in 2006

Railways

15% of passenger traffic and 30% of freight transport Freight contributes over 65% of its revenue In 2004-05 it handled 602 mn tonnes of freight 95% of revenue comes from the bulk commodities such as Coal,

iron ore, cement, fertilizers and food grain. Coal alone constitutes nearly 50% of all bulk freight

Air

Cargo handled at airports has gone up at a CAGR of 7.8% from 0.65 mn tonnes in 1995-96 to 1.3 mn tonnes in 2004-05

International cargo handled has increased at 6.8%per annum, while domestic has increased at 9.9 % per annum

5 major airports have accounted for 90% of total cargo handled in the country

Water

Major ports handle 90% of seaborne trade In 2005-06 major ports together have handled 423.41 mn tonnes

of cargo traffic out of the total 604.58 mn tonnes of cargo from all ports in the country

Container traffic has gone up by 14.2% during 2000-2006

Characteristics of surface logistics in India

The elements of logistics market and its components are mostly like a traditional small sector.

More than 1 million transport operators owning and running above 4 million trucks.

500 large transport operators having more than 100 trucks of various sizes.

The road transport system has two categories – primary & secondary.

Technological innovations have direct impact on transport operation and reduce the operation cost and it is estimated around Rs 33,660 crore in a year.

Most of operators are providing stand-alone logistics solution in a traditional technology.

Opportunities for Indian logistics sector

Automotive industry is one of fastest and largest growing industry.

Automotive industry in India is growing at 18% per annum creating a huge opportunity for Indian logistics industry.

India’s auto export is growing 25% per annum Textile industry is growing 18-25% per annum in India India’s auto components & heavy engg. goods sector is

growing 15-18%. India’s foot wear business will generate US $ 858.8 million by

2015.

Gross Turnover of Indian automotive industry

(Gross turnover as % of GDP of Indian Logistics Industry)

Courier Industry: Business Of Trust

A courier is a person or company employed to deliver messages, packages and mail. Couriers are distinguished from ordinary mail services by features such as speed, security, tracking, signature, specialization and individualization of services, and committed delivery times, which are optional for most everyday mail services. As a premium service, couriers are usually more expensive than usual mail services, and their use is typically restricted to packages where one or more of these features are considered important enough to warrant the cost.

Different courier services operate on all scales, from within specific towns or cities, to regional, national and global services. The world's largest courier companies are UPS, followed by FedEx and DHL . The first two being based in the United States and the latter now owned by Deutsche Post, a German company, and offer services worldwide, typically via a hub and spoke model. The fourth major player Gati is basically an Indian company with its operation in five countries across the world.

Types of courier:

In cities, there are often bicycle couriers or motorcycle couriers but most couriers today use trucks and aircraft. Owner Drivers operate alone or in small groups, covering both regular routes and often undertakes 'overflow' work from larger courier companies and major integrators.

Many companies who operate under a Just-In-Time or "JIT" inventory method often utilize on-board couriers. On-Board Couriers are individuals who can travel at a moments notice anywhere in the world, usually via commercial airlines. While this type of service is the second costliest - general aviation charters are far more expensive - companies analyze the cost of service to engage an on-board courier versus the "cost" the company will realize should the product does not arrive by a specified time (i.e. an assembly line stopping, untimely court filing, lost sales from product or components missing a delivery deadline, organ transplants). There are companies that special in utilizing professional on-board couriers such as Legal Air Worldwide link title.

The courier services was once a part of the emergency program during world war –I. During that time the non-medical persons were taken into courier programme who assisted nurses by delivering supplies to remote outpost clinics, grooming and caring for the clinics’ horses assisting the nurse midwife in home visits and occasionally lending a helping hand with home deliveries. Thus, the courier program was all started in 1928. by the end of the world war-I the use of courier service was further increased. To-day one comes across the plethora of courier services that have mushroomed in the neighborhood and are available with any time, for any sort of delivery to any place in this world. With the advancement of the technologies, speed is not only consideration. These days various courier companies are vying with one another to provide specialized packaging, multi-centre coordination, temperature control and on line monitoring of their parcels and documents etc.

There are various factors like the growth of the industrial segment, growth in export and import and overall economic scenario of the country which have contributed to growth of the courier industry. The courier industry has world over been recognized as an essential and indispensable part of any economy. Various international companies are marked their presence the world over with their specialized

features and customerized value added services. The couriers abroad are not limit to delivery of documents or parcels but they are also transport temperature sensitive biomedical products and infectious diagnostic samples with a promise of same day delivery to any parts of the world. World courier company of Australia is one such company, which has successfully transported human organs for transplant, handled cryogenic shipments and also live animal transportation.

Other companies engaged in this service are TNT, which has spread its network in Europe, Asia North and South America. Similarly UK’s premier courier company courier Net is specialized in online booking services that saves customers’ time and provides facility to its customers to track their packages from collection to its final delivery and provides real time proof of delivery. The Indian cargo giant Gati is the 1st company who has introduced such type facilities to its customers in India.

As compared to the advanced countries indian courier industry with a combined turnover in excess of Rs 20 billion is still in its blooming stage. Even the courier industry of China is 5 times greater than ours. India has more than 2300 courier companies. The courier industry in india is disintegrated with nearly 20 in the organized sector, 2000 in the semi organized sector and the rest are in the unorganized sector. There are few major players in organized sector who have a combined market share closer to 90%. Though many companies are emerging in the organized sector, four major players dominating the Indian courier market are Gati, AFL, Blue dart express and first flight.

The Indian courier industry is not regulated and entry barriers are not high.However, it is a manpower intensive service requiring a pool of

trained manpower to provide seamless service and sustain in the market. Most of the large Indian courier companies of today have had international alliances in the past that have helped in enhancing its

manpower skills and deploy contemporary

Blue dart have a tied-up with DHL and Elbee had collaboration with UPS. The collaboration helped these pioneers to ramp up in reaching a critical mass and also deploy process engineering methodology to progressively reduce the operational cost without compromising the quality in service. Focus was also maintained on developing the nascent industry and brand building.

Historically indian courier industry started with the growing resentment for the postal service during the seventies. The angadiyas especially in Mumbai offer point-to-point overnight courier services to destination Gujarat at attractive rates. In 1979, DHL entered in indian market

primarily for handling international courier shipment out of India. In course of time they started providing the domestic services in partnership with domestic players. During the late eighties many courier companies burgeoned like First flight, overnite & blaze flash etc. These courier companies focused on domestic business opportunities. This period also saw the growth and consolidation by the domestic major like Bluedart and Elbee both of whom acquired a freighter aircrafts for quicker services and made in-roads in the well entrenched traditional postal services. The later years saw the entry of another Indian courier giant Gati which enjoys market leadership yet in the Indian courier market.

The advent of customers and the rapid growth of information technology boosted the performance and service standards of the courier industry as the leaders in this industry were among the first to embrace the emerging technologies solution to revolutionize their services. Further internet and e-commerce activities specially the business-to-business (B2B) and business-to-consumer (B2C) models have generated immense business potential helping the courier companies in saving cost and managing inventory more efficiently.

The courier companies has changed the environment and the way people corresponded, communicated and distributed packages. They are now also able to accurately identify and anticipate changing customer needs and to respond and service them. Today, the courier companies become an important part of the supply chain for many industries. They have almost single-handedly expanded the market. Today, the Indian market – both domestic and international – is estimated at Rs. 25,000 million. The courier companies’ market share is 35% of the domestic, organised has an in-house development and investment in technology, to date, has been in excess of Rs. 570.

Courier Industry in the world

The express industry globally is estimated to have generated total sales revenue (i.e. turnover) of US$130 billion in 2003. While the Courier industry itself is a small part of the global economy, it has been growing very rapidly. Stripping out the effects of inflation, the courier industry’s turnover is estimated to have risen by almost 35% in real terms since 1998 – i.e. at an average annualized rate of almost 6% a year, nearly 2½ times the rate of growth of the world economy as a whole. USA forms the largest courier market in the world, with estimated revenues of US$59 billion in 2003; the courier sector now accounts for over 60% of the US domestic air cargo market. With revenues of US$33 billon and US$26 billion respectively, the European

and Asia-Pacific markets for courier services have significant scope for further expansion as companies increasingly adopt best international business practice with regard to time-definite, guaranteed delivery. The vast majority of courier deliveries are inter-regional i.e. between countries and states within either the Americas, Europe or Asia-Pacific. Courier deliveries between these three regions account for just under 10% of total courier industry revenues. Nevertheless, intra-regional Courier deliveries generated revenues of almost US$11 billion in 2003. The market for courier services in the rest of the world is estimated at less than US$4 billion.

India’s courier industry

The courier industry in India is mainly dominated by private companies. Same day work is offered by many small & big players. Before 1990 the courier service was mainly dominated by the Indian postal department. But people faced a lot of troubles while getting the service offered by Indian Postal Department. Indian Postal Department failed to offer some distinguished services such as speed, security, tracking, and committed delivery times to its customers which led to revolutionize the courier industries by the private courier companies. The Indian courier market is mainly dominated by the courier giant Blue dart, DTDC, XPS and Gati which are specialized in shipping packages, non-documents & documents across the country and also across the world with committed delivering time & security to its customers’ material. The consignments handled by courier companies in India can broadly be classified into two types viz. documents and non-documents. Any material comprising of paper such as correspondence, bill/invoices, brochures, catalogues, manuals, annual reports, account details, books, files etc are categorized as documents. The non documents consignment would include items that may/may not have commercial value such samples, CKD units, small machineries, electronic parts and goods, spare parts. Indian Courier industry comprises Large organized service providers, EMS speed post (Product of universal postal union), regional semi-organized service providers and local un-organised service providers. There are over 2300 Courier companies operating in this space.Quick facts about Indian courier industry:

2,500 operators Rs 40 bn crore in revenues from servicing distribution needs in

India Rs 22.5 bn in revenues from servicing import/export needs Over 1 bn shipments moved Over 1 mn full time equivalent jobs Rs 25 bn investment in brands and infrastructure

64%

30%

6%Organized Sector

Semi & UnorganizedSector

EMS

Organised Sector: These service providers operate in domestic and international markets. This sector also includes service providers in international niche markets.

Semi-organised Sector: Operate by and large in the domestic sectors, and has a reach within limited geographical area. This also includes operators catering to center-specific niche markets (intercity).

Unorganised Sector: Operate in local (intra-city) markets.

EMS Speed Post: This is an express arm of the Department of Post andTelegraph, Government of India. EMS is the product of the Universal Postal Union of which India is a founder member.

The organised sector dominates the courier industry in India, accounting for 64% of the market in terms of revenues. The semi-organised and un organized sector accounts for 30% of the courier industry market size. The share of EMS speed post is estimated at about 6% in FY’ 03.

Market Share of Indian Courier Industry

Organized SectorThese are the courier service providers having national and international reach armed with fully equipped infrastructure and other value added services. They have their own collection and distribution infrastructure. This sector includes large Indian companies and MNCs. Organized sector constitutes to about 66% of the total business mainly catering to the document and non-document / commercial parcels. The major user sectors are Pharmaceuticals, IT, Readymade Garments and FMCG products.

Major Service ProvidersThe major domestic and international service providers are:AFL Pvt. Ltd.Blue Dart Express Ltd.First Flight Couriers Ltd.Overseas Courier ServiceDHL Worldwide Express (I) Pvt. Ltd.Blue Dart Express Ltd. Overnite Express Ltd.GatiFederal Express Corporation

Business Characteristics

The large service providers are technology driven companies with major emphasis on customer service and speed. The organized sector business thrives on: · Speed of delivery - major operation through air, own fleet for surface delivery· Reliability - time bound delivery, insurance facility· Technology - tracking facility, web enabled services

Semi-Organized Sector

The semi-organized sector comprises service providers operating within a limitedgeographical area. The operations could be between geographical regions (North-South; East-West), between states or between specific sectors (Ahmedabad -Mumbai, Delhi - Jaipur, etc.) i.e. domestic niche markets. Such companies generally have their own network in the regions in which they operate.There are few local companies who book consignments bound for any domesticlocations. However, such companies do not have their own distribution network, and rely on the network of other similar companies in various locations or act aswholesalers to organized sector companies. The semi-organized sectors match the reach of organized sector service providers. Semi organized sector player, by and large operate in the domestic market, however some of the semi organized sector player also accept the international consignment and use the service of other major international service providers. The business in document sector predominates the total shipment handled.

Business Characteristics:

The semi-organised sector companies have their own network of branches and franchisees in the regions where they operate. They operate in tie up with similarCompanies in the neighboring regions. Some of the semi-organised service providers also accept the international consignments. The consignments are also shipped through co-loaders. The semiorganised sector also generates its revenues through wholesale business (acceptance of a sizable lot of consignments) from small local service providers. There are some courier companies, which operate between niche market sectors like major wholesale markets in India for specific items. Such niche sectors are observed between Mumbai, Ahmedabad, Baroda and Surat (all textile markets), Delhi (automobile parts), Calcutta and Chennai (leather markets). In Mumbai such courier companies (40 of them) have formed an association called Bombay CourierAssociation. Some local express/courier companies were observed to operate independently, without any distribution network of their own. Such companies book the consignments for any destinations. The consignments are then handed over to organised sector or semi-organised service providers.

Un-organised SectorUn-organised sector of the courier industry comprises companies, which haverestricted operations within the boundaries of a particular city (intra-city couriers). Such companies are by and large found in metropolitan cities and semi-metropolitan cities.

Business Characteristics:Typically, such companies have one or more branches in a city, based on the spread of the city and volume of the business from different locations within a city. Intra-city couriers have dedicated personnel for collection and distribution of consignments. The delivery schedules are based on the urgency of the consignments. Almost entire market for intra-city business is accounted for by documents. Intracity courier’s carryout distribution of promotional materials, magazines and newspapers. Large number of small service providers marks this market. The major centers for intracity business are Mumbai, Delhi, Calcutta, Bangalore, Chennai, Indore and Jaipur.

EMS Speed Post

EMS is the express arm of post and Telegraph department in India operating inassociation with other member countries of Universal Postal Union. Both Speed Post Domestic Services and Speed Post International Services are offered under the brand Speed Post. Electronic Track and Trace System has been implemented for Speed Post and Express Parcel Post wherein a customer can find out the status of his consignment online through Internet. It has started operations in national Speed Post Centers. At Present State Speed Post Centers are not directly linked with the web-server. In the Tenth five Year Plan, it is proposed to link all the State Speed Post centers with the web-server for providing on-line track and trace service for all speed post articles.

Products and Services of the Courier Industry: ProductsIn addition to the distribution of the consignments, courier service providers offercustomer specific products. Various products and services offered by the courierindustry are:

Courier (Document and non document)This is the basic product of all express service providers. The time bound delivery of consignments is ensured under this product. The delivery time depends upon the distance between the pick-up and delivery locations and type (document, non document) and size of consignments. The general delivery time offered by the courier service providers are:· 12 noon delivery· 24 Hour delivery· 48 Hour delivery· 72 Hour deliveryDoor to door (by Air and surface)Under this product the courier companies offer an option selection of mode oftransport. If the customer does not specify the mode of transport, the consignments are generally transported by air. In case of heavy consignments and/or the pick- up and destinations are on the trunk route then the surface may be used.

ServicesThe basic service of courier service providers is time bound delivery. However in the view of the fierce competition, the service providers

1420

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offer value added services. Some of the value added services offered by the courier companies are· Pick-up· Proof of Delivery· Collection of cheque· Payment after delivery· Bill the consignee· Monthly payments· Tracking service· Web enabled services

As is mentioned earlier, the consignments handled by the organised sector service providers are largely non-documents. Usually these consignments are high valued. Hence service providers offer track and trace services. Under these services the customer is able to trace the movement of his consignment through Internet from his own office premises. The leading service providers are also offering 10 and 15 boxes. These boxes relieve the customer of packaging difficulties and ensure the safe delivery of his consignments.

Market Share of Courier Industry (In crore)

665

561

200

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OrganizedSector

Semi/UnOrganized

Sector

EMS

EMS

Semi/Un OrganizedSector

Organized Sector

60%

40%

Documents

Non-documents

Market share of Courier Industry in International Sector

Market share of Courier Industry in Domestic Sector

Market share of organised playerThe revenue of organized sector player in domestic and international courier business for the year 2004-05 was estimated to the tune of about Rs 1,628 Crore (Domestic Rs 665 Crore + International Rs 950 Crore). The international courier business is mainly the domain of large MNC players.

Express Industry: Break-up by consignment typePrimarily, two types of consignment handled by express industry in domestic andinternational market; documents and non-documents. On overall basis Documentaccounts for about 60% of the total organised sector revenue valued at Rs 977 crore. Non-documents constitute to another 40% of the total organized sector revenue valued at Rs 651 crore.

Indian Cargo Industry

In today's business big or small, domestic or global, the value of time is clearly immense.Companys today is focusing on how it can deliver goods and services to global markets in a timely and reliable manner. Besides efficiency in pick up, timely delivery, timely information and availability of other infra structural facilities for efficient handling of cargo transportation have become the need of the day. In other words prompt customer service is what gives competitive edge to the players of the cargo transportation industry in today's rapidly changing environment. It was this need which stimulated the growth of the express cargo industry worldwide.

           The express cargo industry is judged primarily on the following key parameters:

Speed of distribution

World wide service

Security and reliability

Value added Service

Customer care

           To meet the above needs , the express industry is developing effective use of information technology, which forms the backbone of the industry. Right from the pickup point, the precise status of the consignment needs to be monitored at every stage of its journey. Secondly the use of multi modal services assumes importance in order to provide turnkey solutions to the customer. Also, guaranteed timely delivery gives the required confidence to the customer to reduce his inventory positions at various levels of distribution.

The Key stage of a typical express delivery

Indian Scenario

           Today the Indian customer's standard and the level of expectation have gone up dramatically. They have become world class customers and thus expect world class services. Hence it is customer service which is going to give the competitive edge to any industry in the future. The Indian cargo sector growing at 12% contributing 4.9% GDP.

           The domestic express cargo industry is meeting the customer satisfaction needs by providing speedy and safe delivery of cargo like documents, packages, samples, exhibition material etc. Domestic market for door-to-door express cargo market is more than Rs.400 crore and the current rate of growth is in a region of a healthy 35% per annum. The industry has been making an increasingly important contribution to the economic growth of the country by providing logistics to the cargo movement.

Sector-wise Market Share- Express Cargo

Express cargo can be segmented in four categories as Organized Sector, which operates in domestic as well as international markets, semiorganised sector, unorganized sector and EMS speed post, which is express arms of the postal department.

Indian Cargo Sector has divided in to three broad areas.

1. Surface2. Air3. Water

According to economic survey 2005-2006, govt of India, cargo industry has experienced a significant revival with growth of 5.3%, which is also reflected in freight traffic movements in major ports, airports and railways. The drivers of change are a) technology b) global competitiveness c) Benchmarking to the best international practices and India is taking full advantage of all the three factors. The industrialized countries have appreciated the IT revolution in India.With the changing economic scenario, factors such as globalization of markets, international economic integration, removal of barriers to business and trade and increased competition have enhanced the need of transportation. It is one of the most important infrastructure requirement which is essential for the expansion of opportunities and

plays an important role in making or breaking the competitive positioning.Transport volumes in India remain much less than those in the developed countries. India has still to go a long way in strengthening its transportation network. The countries transportation network suffers from several inadequacies and, in particular it has little resilience to deal with unforeseen demands.

Transportation, like all industries is largely influenced by information and communication technologies with the focus being on knowledge of customer needs and value added services. Surface transport is provided by the Road and the Indian Railways (primarily for carrying low value bulk commodity, mostly for the government sector). Cargo Road Transport is entirely in the hands of the private sector. An estimated 1.2 million trucks (9 tons capacity) crisscross the country covering more than 80,000 kilometers of roads. In India road transportation is preferred for cargo movement, where flexibility of routing assumes importance. It facilitates door-to-door delivery, overcoming unnecessary delays which normally take place in the other modes of transportation.In today's business big or small, domestic or global, the value of time is clearly immense. Business today is focusing on how it can deliver goods and services to global markets in a timely and reliable manner. Besides efficiency in pick up, timely delivery , timely information and availability of other infrastructural facilities for efficient handling of cargo transportation have become the need of the day. In other words prompt customer service is what gives competitive edge to the players of the cargo transportation industry in today's rapidly changing environment. It was this need which stimulated the growth of the express cargo industry worldwide.

The link between transport infrastructure and economic development is like giving water to a tree. The key factor, which largely influences the economic growth process, is the transportation infrastructure. According to the World Development Report 1994, the infrastructure capacity grows in concert with economic output. An 1% increase in the stock of infrastructure is associated with a 1% increase in GDP across countries. India is a country where most of the people reside in rural area. And depend mostly on agricultural activity. In order to get remunerative price on their products, they have to transport the products to the marketing area. For these purpose there must be well road links to the market area and the nearest railway station.

The railway, on the other hand, provides the service between the area of production and the consumers at a distant place and between manufacture in the town and the agriculturist in the

village. With the globalization of economic process, the role of shipping transport has been crucial for national economic growth. The Indian economy is passing through an interesting phase. The growth in GDP is ranging between 7% - 8% and the rate is likely to be sustained over the next five years and the growth drivers are clearly shifting from agriculture to services.

Opportunities for Indian Cargo Industry:

Over 380 million Indians have an annual house hold income of over $10,000. This is expected to increase expected to increase to 550 million by 2010. The market for basic goods such as groceries and textiles is already large, driven by the demands of an enormous population.

Over 100 million telephone subscribers, growing at over 25 million p.a.

Over 8 million TV sets and 4 million refrigerators are sold annually with a growth rate over 20% p.a.

Over 8.6 million production of vehicles with a growth rate over 35% p.a.

Abundant mineral resources India is the 2nd largest in manganese and 1st in producing

chromites. India is largest producer of Tea and Milk in the world & second

largest producer of vegetables, fruits and Wheat etc. India’s retail boom has created a major opportunities for

cargo industry in India.

Express industry of IndiaThe express market in India can be characterized by the existence of organized, Semi organized and unorganized players. There are over 2000 express companies operating in India. About 20 companies in organized sector, 25 in semi organized sector and rest of the companies are in unorganized sector. The present express market is estimated at Rs.2493 crore. The domestic market constitutes to about

59%

41%Domestic

International

64%

30%

6%Organized Sector

Semi & UnorganizedSector

EMS

59%, value at Rs 1,468 crore. The international market constitutes of 41% of the total industry, valued at Rs 1,025 crore.

Total Express Industry: Rs 2,493 croresOrganized sector constitutes about 64% of total market, Valued at Rs 1,628 crores. Semi organized sector and un organized sector constitute to about 30% of total market, valued at 618 crores. The share of EMS speed post, express arm of Indian post is pegged at 6%, valued at RS 247 crores.

Total express industry: Rs 2493 crore

EMS speed post is express arm of Indian postal is out of come of international postal union. The Sales revenue of EMS speed Post for the year 2002-03 is estimated at Rs 247 crore.

51%

49% Documents

Non-Documents

Market share of documents & non documents in domestic business.

The express industry in India is sustained the growth with emerging business opportunities in various user sector. Liberalization of Indian economy and integration of international trade has attributed to the sustained growth in express industry. The growing customer requirement and scaling up of operation has led to the heavy investment by the express industry in infrastructure set up, hub and new technology. The express industry has witnessed fundamental changes in its composition over the past few years, owing to fierce competition in the business. The international sector now contributes to 41% of total revenue, as compare to over 50% market in 1990s. During past 4-5 yrs new association and strategic sales arrangement have been between companies.The unorganized sector is thriving on price and unable to keep pace with the market. They are not reliable and time bound service providers. The express service provider operates on economies of scale where large companies cater to the higher business volume. The future year may witness a scenario wherein unorganized sector will not exist any more at a national level due to its inability to keep pace with the technology and customer demand.

The growth in express industry is dependent on extent of business activity. Historically the growth of express industry has been dependent on the growth in domestic business and international trade. However recent year has witnessed the growth of emerging business area in the new economy such as service sector, banking sector and IT industry. Based on current estimates, the express industry is expected to touch the Rs 6,203 crores mark by FY 08.

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Projected future market for express industry in India (Source:-EICI)

Indian Cargo Industry structure

Roads

Roads are the dominant mode of transportation in India today. They carry almost 90 percent of the country’s passenger traffic

X- YearY- AMOUNT(IN CRORE)

Road Rail Water Air

Indian Cargo Industry

and 65 percent of its freight. The density of India’s highway network -- at 0.66 km of highway per square kilometer of land – is similar to that of the United States (0.65) and much greater than China's (0.16) or Brazil's (0.20). However, most highways in India are narrow and congested with poor surface quality, and 40 percent of India’s villages do not have access to all-weather roads

Indian Road Network length (NHAI 2005)

Road Development in India

          The economic development of the country and the consequent surge in the demand for transport services, and also the strategic needs of the country necessitated expansion as well as improvement of the road network. The country took up this uphill task in a planned manner.

           Recognizing the need to develop arterial routes to link the Union capital with the state capitals, major seaports and other highways, the National Highways Act, 1956 was enacted. In 1957, the chief -engineers (road and bridges development) of the Central and the state governments met in Bombay. Having taken into account the size of area, population, regional levels of development and feature potential, the engineers presented a 20-year Road Development Plan (1961-81) in 1958 which is popularly known as the Bombay Plan.

The Plan anticipated an increase in road length from 6. 10 lakh km in 1960 to 10.50 lakh km in 1981. The Plan target was to achieve a density of 32.5 km of roads per 100 sq km of area, 44 km for developed agricultural areas, 19 km for semi-developed and 12 km for underdeveloped areas at an estimated cost of Rs 5,200 crore, including

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Rs 630 crore for village roads.

The Bombay Plan set a target of 8.88 lakh km of major district roads, order district roads and classified village roads. This target was exceeded in 1978 with the construction of 9.7 lakh km of roads. The target of 98,000 km of state highways could only be achieved a decade later. Of the target of 52,000 km only 34,619 km was achieved till 1 April, 1997. Another Road Development Plan (1981-2001), known as the Lucknow Plan of the Indian Road Congress, has made a case for 66,000 km of National Highways by 2001 A.D.

           The National Transport Policy Committee, set up in 1978 under the chairmanship of B. D. Pandey, submitted its report in May 1980. It recommended 37 roads with a 12,955 km length for inclusion in the National highway network. Out of these, only 11 roads, aggregating 3,595 km length, were completed over a span of one-and-a-half decades.

           The Government of India instituted an Asian Development Bank-aided study in February 1990 on Development of Long-Term Plan for Expressways in India. The study, was completed in 1991 and it has recommended development of 10,020 km of expressways by 2015 at an estimated cost of Rs 58,000 crore.

Growth Trends

Growth of Road Freight Industry

During the period 1951 to 1994, the average yearly growth of traffic has been of the order of 8 to 10%. (Source: Transport India 2000 Conference Paper)

Fig. 2 indicates that freight traffic has increased from 6 billion tones kilometers (BTK) in 1951 to 800 BTK in 1999. Such a rapid growth has occurred mainly owing to the flexibility and accessibility offered by road transportation.

Growth of Vehicular Traffic

           Since Independence, the number of motor vehicles in the country has been increasing rapidly. The number of goods vehicles increased from 82,000 in 1950-51 to 17.96 lakh in 1994-95. During the same period, the number of buses increased from 34,000 to

4.25 lakh. The total vehicle population swelled from 3.06 lakh in 1950-51 to nearly 302.87 lakh in 1994-95.

           The private sector, mostly unorganized and comprising individual operators, has had a dominant presence in the field of road transportation. It runs almost the entire goods-carrier industry and also owns nearly 73.75 per cent of the buses at present. After the Road Transport Corporation Act 1950 became operational, almost all states and union territories have nationalized passenger transport in varying degrees by setting up corporations. In other cases, these services are operated by municipal corporations or registered companies. At present, the number of such bodies stands at 69 with a fleet strength- of 1, 11, 538 buses carrying 6.88 crore passengers every day. The Motor Vehicles Act 1988 replaced the Motor Vehicles Act 1939 and introduced far-reaching changes in the road transport sector.

The rapid growth in the number of goods vehicles is indicative of the increased volume of freight handled by road. 

The no. of goods vehicles has been steadily increasing; however it is still not sufficient to meet the high demand. The annual growth of trucks during the period 1995-96 has been negative (-6.3%) as indicated in Fig.2 indicating that during this period the growth of other goods vehicles such as LCVs was far more greater, whereas it has sharply increased to 13.5% between 1996-97.

Indian Road Freight Industry

Organized Vs. Unorganized Sector

The road freight industry stands out unique with the majority of the market share held by the unorganized sector. Out of the entire market size of approximately Rs. 38,000 crores, Rs 6000 crores is with the organized sector and the remaining with the unorganized sector

Organised vs Unorganised

India’s total highway mileage

(Details of cargo transported through road & rail mode)

Railways. Indian Railways is the largest railway in Asia and the fourth most

heavily used system in the world. It carries some 14 million passengers a day and is one of the world’s largest employers. Till recently, the

railways played a leading role in carrying passengers and cargo across India’s vast territory. However, with tariff policies that overcharges

freight to subsidize passenger travel, the movingfreight is increasingly shifting from railways to roads. But the railways

have been losing their share of freight to road consistently over the past 20-30 years, mainly due to the relative flexibility of train movement. Until the formation of inland container depots in 1990s it was extremely difficult to load goods to wagon. Most companies needed sidings, which would be expensive. Today, ICDs have made exports and import made easier and concor, the monopolistic multi modal provider, has done a good job of linking ICDs to the ports. Overall rail movement remains cumbersome for most except some materials like coal and steel. Wagons have been the bane of the railways for many years. They have simply not been enough to ferry cargo seamlessly. Contrast this to

nearly 3mn trucks and cargo carriers that exists on India’s roads. The rail traffic is growing and is expected to touch 624 mn tons in 2006-07 from 484 tons in 2001-02.Similarly freight tonne KMs are also expected to increase from 323 tons in 2001-2002 to 396 bn tons in 2006-07.

Ports.

Sea traffic is expected to carry 95% of India’s export and so ports are very critical for handling the goods, planning expansion and linking seamlessly to production centres across India. India may produce world class goods in many industries but these goods reach in the market where they have the demand. And these days geographical distances are no excuses for not supplying in time. This is where port plays an important role. With transport volumes expanding more rapidly than the GDP, and the road and rail network suffering from chronic congestion, water ways is a feasible option as it combines efficiency with sustainability. Port plays an important role in supply chain of most of exporter from India. Ports have to get ship in and clear them out and dispatch them loaded as soon as possible. India has 12 major and 140 minor ports along its vast coastline. These ports serve the country’s growing foreign trade in petroleum products, iron ore, and coal, as well as the increasing movement of containers.

Key Statistics:

India has

Twelve major ports One hundred and forty minor ports

25%

13%7%39%

12% 4%

Tankers

Bulk carriers

Container Ships

General Cargoships

Passenger Ships

Other

Seventy five percent of the traffic is by major ports

India ranks 21st in the container traffic in the world

The ports spend approx of Rs.8bn per annum on infrastructure, Rs 40 bn worth of private sector investment stand approved.

Inland water transportation remains largely undeveloped despite India's 14,000 Km of navigable rivers and canals.

An overview of cargo Ships in Indian seaports

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Cargo at Indian ports

Port Traffic projections 2006-07 (mn tons) (Source: Ministry of Shipping)

Opportunities

1. Construction or operation of container terminals

2. Construction or operation of break-bulk, multipurpose and specialized cargo berths

3. Warehousing, container freight stations, Storage facilities and tank farms

4. Cranage and handling equipment

5. Setting up captive power plants,

6. Dry docking and ship repair frailties

1.5

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Aviation.

Aviation holds a small but significant value share of India’s freight market. Emerging industries like telecom, ITES, BPO, Gems and fashion have developed faster and better than ever before and are using air logistics much more as they are highly time sensitive industries. A lot of liberalization has occurred since 2002. Private airlines have been taken off; newer airports have been linked by low cost regional airlines. India has 60 airports, including 11 international airports. The dramatic increase in air traffic for both passengers and cargo in recent years has placed a heavy strain on the country’s four major air ports. It is estimated that the cargo traffic grow at over 20% p.a. over next five years and it will cross 3.3 million tonnes by 2010. Government is now focusing major investment for construction of new air fort and upgrading of existing air port. Many Indian and MNC cargo companies are preferring cargo transport through air. Blue Dart, the leading air cargo operator within India, already has six air hubs across India and has tie-up with MNC major DHL for inbound traffic. Gati, the market leader in Indian cargo sector has already tie up with Indian Airline for its inbound and outbound traffic and is going to start its air cargo operation with its own flights in July, 2007. Aviation plays an important part in overall logistics and supply chain management due to speed and efficiency combined with low cost carriers and infrastructures facilities at various metro and non metro air ports.

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Cargo Movements (mn tones) (Source: Ministry Of Civil Aviation)

Projection of Indian Air cargo (In bn)

Challenges:

The major challenges facing the sector are: 

India’s roads are congested and of poor quality. Lane capacity is low - most national highways are two lanes or less. A quarter of all India's highways are congested, reducing truck and bus speeds to 30-40 kmph. Most roads are of poor quality. Road maintenance remains significantly under-funded - only around one-third of maintenance needs are met. This leads to the deterioration of roads and high transport costs for users. 

Rural areas have poor access. Roads are significant for the development of the rural areas - home to almost70 percent of India's population. Although the rural road network is extensive, some 40 percent of India’s villages do not have access to all- weather roads and remain cut off during the monsoon season. The problem is more acute in India's northern and northeastern states which are poorly linked to the country’s major economic centers.

The railways are facing severe capacity constraints.

All the country’s high-density rail corridors face severe capacity constraints. Also, freight transportation costs by rail are much higher than in most countries as freight tariffs in India have been kept high to subsidize passenger traffic

Ports are congested and inefficient. Port traffic has more than doubled during the 1990s, touching 385 million tons in 2001-02. This is expected to grow further to about 900 million tons by 2011-12. India's ports need to significantly ramp up their capacity and efficiency to meet this surging demand.

Airport infrastructure is strained.

Air traffic has been growing at over 15 percent a year leading to severe strain on infrastructure at major airports, especially in the Delhi and Mumbai airports which account for around 50 percent of nation’s air traffic.

Express cargo industry is undergoing phenomenal growth due to the rising popularity of e-commerce. There is bound to be conspicuous diversion of low volume, high value tiny packages from traditional cargo to express mode in the coming years. Keeping that in view, there is lot of scope to flourish the express cargo industry in Indian scenario. To yield the fruit of these positive changes it is important that the industry works in close tandem with the regulatory agencies and the role of the latter should be of a facilitator rather than that of a regulator.

Brand Recall

Brand Recall is the extent to which a brand name is recalled as a member of a brand, product or service class, as distinct from brand recognition. Common market research usage is that pure brand recall requires “unaided recall”. For example a respondent may be asked to recall the names of any cars he may know, or any whisky brand he may know.

Some researchers divide recall into both “unaided” and “aided” recall. “Aided recall” measures the extent to which a brand name is remembered when the actual brand name is prompted. An example of such a question is “Do you know of the “Gati” brand?” In terms of brand exposure, companies want to look for high levels of unaided recall in relation to their competitors. The first recalled brand name (often called “top of mind”) has a distinct competitive advantage in brand space, as it has the first chance of evaluation for purchase.

Gati’s Brand recall as a “courier and cargo” service provider

Traditionally Gati has been operating with a philosophy of one product suitable for all markets. Often the market reach and presence is moderated by the product scope and utility. Gati’s brand recall as a cargo service provider is excellent in the market as Gati cargo is providing a unique value added services to its customers. Gati cargo has achieved a good customer satisfaction level. But Gati Courier still now has not fetch a good brand recall. It is due to low positioning of Gati Zipp and Gati Savor, poor brand awareness among the customers. Still now Gati courier is struggling to fetch a good brand recall in courier market even the presence of courier giant DTDC and Blue Dart which are already enjoying a high level of Brand Recall.

PROJECT DESIGN

This presents the every objective of the entire study and also the methodology and tools adopted in collection and analysis of data by the researcher. This also presents the nature of information required the source data, sample, survey universe details and limitations of the study.

Objective of the study:

To find out the market potential for products/services of Gati in Hyderabad.

To know the position of Gati Ltd. with respect to its competitors.

To study the attitude of customers on services offered by the company.

To study the brand recall of Gati Cargo and Gati Courier among the people of Hyderabad.

Possible value addition to the company through this study:

Attracting the customers with more innovative strategiesSegmenting its market more accuratelyIdentifying new segmentsTrace out the customers’ perceptionValue added to the old customers

Survey Universe Details:

For market survey on “understand the brand recall of Gati brand in cargo and courier needs” I have selected the Hyderabad City as the survey universe.

About the Hyderabad: Hyderabad is the capital city of the Indian state of Andhra Pradesh. Situated in the Telangana region of Andhra Pradesh, the city has an estimated population of 6.1 million people (61 lakh), making it the 6th most populous metropolis in India. This city was named after the beloved queen of Muhammad Quli Qutb Shah “Hyder Mahal” who is popularly known in Indian history as “Bagmati”.

16%

26%

34%

24%

Upper Class

Higher MiddleClass

Lower Middleclass

Lower Class

Hyderabad City Map (Map not to scale)

Geography and climate:

Hyderabad city is located in the South Indian state of Andhra Pradesh, in the region of Telangana. It lies on the Deccan Plateau, 541 meters (1776 ft) above sea level, over an area of 625 km² (244 mile²).

Population:

The population of the city is 3,632,094 which mainly consists of lower class, lower middle class, higher middle class and upper class.

Industries:

The Hyderabad city is mainly dominated by IT, ITES and BPO industries. The city also has a good growth of pharmaceutical industries. Companies like Microsoft, Oracle, Infosys, and TCS, Dr. Reddy’s Lab, Matrix Lab, Aurobindo Pharmaceutical, Wipro Infotech and HCL infosystems have open their production and research units in Hyderabad.

Education and research:

Hyderabad is an important seat of learning in southern India. The city is home to three Central Universities, houses two Deemed Universities, and six State Universities. Among them is Osmania University, established in 1918, it is the seventh oldest in India and the third oldest in South India. Many institutes for technical education like Jawaharlal Nehru Technological University, International Institute of Information Technology, Acharya N.G. Ranga Agricultural University , and medical colleges such as the Gandhi Medical College are located here. Also based here is Indian School of Business, Hyderabad Central University and the National Academy of Legal Studies & Research. Hyderabad has various research institutes such as the Indian Institute of Chemical Technology, Centre for Cellular and Molecular Biology and Central Institute of English and Foreign Languages ( CIEFL was accorded Central University status recently). It is the home of Maulana Azad National Urdu University as well as BR Ambedkar Open University. Defence Research and Development Organization (DRDO) had set up Defence Electronics Research Laboratory (DLRL) in 1962, to work on the design and development of communication and radar systems. Currently DLRL is involved in the Integrated Guided Missile Development Programme (IGMDP) of DRDO. Nuclear energy sector has a strong presence with three organizations under Department of Atomic Energy (India) such as Atomic Minerals Directorate for Exploration and Research (AMD), Nuclear Fuel Complex (NFC) and Electronics Corporation of India Limited (ECIL), located here for conducting basic research and providing the much needed materials and technology required for carbon free energy generation.

Transport:

Hyderabad is connected to the rest of the country by National Highways—NH-7, NH-9 and NH-202. Hyderabad has a light rail transportation system known as the MultiModal Transport System (MMTS) which offers connectivity between rail and road transport for the facility of the commuters. The South Central Railway headquarters are located at Secunderabad. The three main railway stations are Secunderabad Railway Station, Hyderabad Railway Station (Nampally)

and Kachiguda Railway Station. The Begumpet Airport has domestic and international terminals.

Marker Profile:

Hyderabad is known as the city of pearls, lately, for its IT Companies. Products such as silverware, saris, Nirmal and Kalamkari paintings and artifacts, unique Bidri handcrafted items, lacquer bangles studded with stones, silk-ware, cotton-ware and handloom-based clothing materials are made and traded through the city. Hyderabad is a major center for pharmaceuticals.

Methodology:

The objective of the present study can be accomplished by

conducting a systematic Market Research (MR). This MR process

that will be adopted in the present study consists of the following

stages:

Defining the problem and research objective: The Research objective states that what information is needed to

solve problem-finding impact of service marketing.

Sample Size:

The Sample size for this study includes 40 residentials, 30 SMEs

and Industry Houses in Hyderabad.

Sampling Technique:

To study the projects, a simple random sampling technique is used.

Source Data:

The Data collected for this project work were from two sources:

1. Primary Sources2. Secondary Sources

Primary Data:

The primary data have been collected from primary sources. The data from consumers were collected mainly from observational study and unstructured interview.The retailer and industry survey was done after the consumer survey and the data was collected through a structured questionnaire.Secondary Data:

Secondary data were collected by interacting with my company guide Mr. Mathew Joseph, Manager – All India Retail and also with other managers and employees of Gati, Secunderabad. Some data are also collected from website of Gati and other website.

Tools Applied:

Analysis of primary data was done mainly using statistical tools like mean, mode, tally method and graphical analysis. The analysis has been three phases i.e. mass market, retailer/SME and corporate/industry houses

Limitations:

The data collected from retailers/SMEs, Consumers and corporate /industry houses were bound to have some factors of biasness in them. Hence necessary adjustment made to correct it.

Time was limiting factor to conduct extensive study. Very less amount of sample size was taken due to

limited period of time. Casual attitude of respondent at time stand as

hindrance to the present study.

MARKET SURVEY RESULTS

Survey results for Cargo Survey results for courier

66.66%

13.33%

16.66%

13.33%

10%

3.33%

6.66%

20%

6.66%

6.66% Gati

Speedage

AFL

XPS

TNT

Blue Dart

Professional Courier

Local Transporters

Safexpress

FedEx

Survey Results (CARGO)

1. Which cargo company do you use?

Gati 20 66.66%

Speedage 4 13.33%AFL 5 16.66%XPS 4 13.33%TNT 3 10%

Blue Dart 1 3.33%Professional Courier 2 6.66%Local Transporters 6 20%

Safexpress 2 6.66%FedEx 2 6.66%

2. Type of companies using cargo services

Chemical Industries 13.33%Engg.equipment Manufacturer 20%

Garments 11.11%Electrical & Electronics Industries 17.77%

Pharmaceutical Industries 26.66%

13.33%

20%

11.11%17.77%

26.66%

6.66%4.44%

Chemical Industries

Engg.equipmentManufacturer

Garments

Electrical & ElectronicsIndustries

PharmaceuticalIndustries

FMCG Industries

IT Hardware industries

FMCG Industries 6.66%IT Hardware industries 4.44%

3. Why do you use this cargo company?

Company Brand Name Good Service Economic RateGati 0 70% 0AFL 0 13.33% 63.33%Safexpress 0 6.6% 56.66%Local Tranporters

0 0 73.33%

0 0 0 0

70%

13.33%6.60%

00

63.33%56.66%

73.33%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Gati AFL Safexpress LocalTranporters

Brand Name

Good Service

Economic Rate

13.33%

0

26.66%

63.33%

Near to myoffice/company

Banners & Hoardings

Cargo Company vehicle

Visiting of CompanyExecutives

4. How do you know about this company?

Near to my office/company 13.33%Banners & Hoardings 0Cargo Company vehicle 26.66%Visiting of Company Executives 63.33%

5. How do you rate your experience with the following?

A. Service

Name Of the Company

Excellent Good Average Poor

Gati 16.66% 26.67% 50% 6.66%AFL 0 13.33% 30% 0XPS 20%

Speedage 0 0 24.37% 0Safexpress 0 6.6% 33.33% 3.3%Professional

Couriers0 0 10% 0

Local Transporters

0 0 13.33% 0

16.66%

0 0 0 0 0

26.67%

13.33%20%

0 0 0

50%

30%24.37%

33.33%

10%13.33%

6.66%0 0 0 0

6.60%3.30%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Excellent

Good

Average

Poor

B. Price Name Of the

CompanyExcellent Good Average Poor

Gati 0 3.3% 6.6% 40%AFL 0 0 13.33% 0XPS 0 13.33% 16.66% 0

Speedage 0 0 30% 0Safexpress 0 0 20% 0Professional

Couriers0 3.3% 0 0

Local Transporters

0 0 23.3% 0

0 0 0 0 0 0 03.30%

0

13.33%

0 03.30%

0

6.60%

13.33%16.66%

30%

20%

0

23.30%

40%

0 0 0 0 0 00

0.050.1

0.150.2

0.250.3

0.350.4

0.45

Excellent

Good

Average

Poor

0 0 0 0 0 0

26.66%

0

16.66%

0

16.66%

6.60%

33.30%

13.33%

0

23.30%

0 00 0 0 0 0 00

0.05

0.1

0.15

0.2

0.25

0.3

0.35

Excellent

Good

Average

Poor

C. Response & Over All Performance

Name Of the

CompanyExcellent Good Average Poor

Gati 0 26.66% 33.3% 0AFL 0 0 13.33% 0XPS 0 16.66% 0 0

Speedage 0 0 23.3% 0Safexpress 0 16.66% 0 0Professional

Couriers0 6.6% 0 0

Survey Results (Courier)

17.50%

65%

45%32.50%

27.50%

27.50%Gati

DTDC

Blue Dart

First Flight

Over Nite

Professional courier

25%

57.50%

30%

20%

0% 10% 20% 30% 40% 50% 60%

Official purpose

BusinessPurpose

HouseholdPurpose

Academic Purpose

Series1

1. Which courier company do you use?

Gati 7 17.5%

DTDC 26 65%Blue Dart 18 45%First Flight 13 32.5%Over Nite 11 27.5%

Professional courier 11 27.5%

2. Purpose of using courier services

Official purpose 25%Business Purpose 57.5%

Household Purpose 30%Academic Purpose 20%

0

27.50%

22.50%

47.50%

10%

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

Daily Weekly Monthly Half Yearly Yearly

Series1

3. How often do you visit a courier Office

Daily 0Weekly 10%Monthly 47.5%

Half Yearly 22.5%Yearly 27.5%

4. How do you know about this company?

37.50%

17.50%

12.25%

10%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

NewsPaper

Banners &Hoardings

CourierCompany

vehicle

Friends &Relatives

Near to mylocation

Series1

0

15%

25%

0

7.50%7.50%

30%

20%

10%

0

10%

20%

0

22.50%20%

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

Brand Name

Good Service

Economic Rate

News Paper 10%Banners & Hoardings 25%Courier Company vehicle 12.25%Friends & Relatives 17.5%Near to my location 37.5%

5. Why do you use this courier company?

Company Brand Name Good Service Economic Rate

Gati 0 7.5% 10%DTDC 15% 30% 20%

Blue Dart 25% 20% 0First Flight 0 10% 22.5%

Professional courier

7.5% 0 20%

6. How do you rate your experience with the following?

0

10.80% 9.60%

00

37.80%

20.70%

10%

25.60%

0

20.80%

00

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

Gati DTDC Blue Dart

Series1

Series2

Series3

A. Service

Name Of the

Company

Excellent Good Average Poor

Gati 0 10.8% 9.6% 0DTDC 0 37.8% 20.7% 10%

Blue Dart 25.6% 0 20.8% 0

B. Price

Name Of Excellent Good Average Poor

0 0

25%

47.50%

0

42.50%

35%

0

7.50%

20%

27.50%

15%12.50%

52.50%

32.50%

17.50%

0

0.1

0.2

0.3

0.4

0.5

0.6

Gati DTDC Blue Dart First Flight

Series1

Series2

Series3

Series4

the Company

Gati 0 0 25% 47.5%DTDC 0 42.5% 35% 0

Blue Dart 7.5% 20% 27.5% 15%First Flight 12.5% 52.5% 32.5% 17.5%

C. Response & Over All Performance

0

20%

33%

7.50%

27.50%

32.50%

17.50%

0

10%

0

37.50%

12.50%

0 0

42.50%

22.50%

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

Gati DTDC Blue Dart FirstFlight

Series1

Series2

Series3

Series4

Name Of the

Company

Excellent Good Average Poor

Gati 0 20% 33% 7.5%DTDC 27.5% 32.5% 17.5% 0

Blue Dart 10% 0 37.5% 12.5%First Flight 0 0 42.5% 22.5%

Findings & Conclusion

Findings

Gati brand recall as a cargo company:

Gati’s brand recall as a cargo service provider is excellent. As per survey maximum customers have rated excellent to

Gati for its service. Customers are opting for Gati not only for its services but also

for its value added services which is not provided by Gati’s competitors.

Gati’s brand recall is high among the customers for its good response and over all performance.

The brand recall is poor among some of customers for its high price than its competitors.

Suggestion for improvement of brand recall: Gati should upgrade its services to match up with the

service expectations that customer has. The service should be good in quality according to its

price. More proactive service response approach may create

good impression about the service and there by minimize the gap between the price and value expectation of customer.

Gati brand recall as a courier company:

Gati’s brand recall as a courier company is negligible. As per survey only 7% people are aware of Gati’s courier

arm Gati Zipp. There is low brand recall among the customer about Gati

Zipp. As per survey maximum people are opting for DTDC for

their courier purpose and DTDC is enjoying the market leadership position in Indian courier market in terms of recall.

The reason behind it is easy accessibility of their service points and visibility of their counters everywhere.

Maximum people knows Gati as a cargo service provider and the people have no idea about Gati Zipp.

Suggestion for improvement of brand recall:

There should be product awareness needed for Gati Zipp.

More number of courier outlet should be opened in city area to have more reach and penetration.

Gati should encourage the people to take the franchise and there by mushroom the easy access points which create awareness, recall and business improvements.

There should be special incentive schemes given to the franchise people doing business for Gati Zipp.

Posters, Stickers should be excessive for the promotion of Gati Zipp.

There should be attractive schemes given to the customers to make them continuously visit Gati counter .

Monthly customer feed back should be done for Gati Zipp.

Annually customer meeting should be done inoder to promote Gati Zipp.

Conclusion

According to the survey Hyderabad market offers a huge potential for Indian cargo industries. From the survey we found that:

Pharmaceutical Industries are the major customer of cargo companies. i.e 26.66% pharmaceutical companies are using cargo services.

Only 20% engineering equipment manufacturers are opting for cargo services for supply of their products.

73.33% companies are using a particular cargo company for economic rate.

70% companies are using a particular cargo company for getting good service.

No companies are looking for brand name in cargo service providers.

63.33% companies become aware of the cargo service providers after visiting of cargo company executives to their company.

In cargo survey we found that 16.66% customers are rated excellent to Gati for its outstanding service where as its competitor AFL rated as good by 13.33% companies.

40% customers have expressed that Gati’s price is very costly than all its competitor.

26.66% customers and 33.3% customers are rated Gati’s response and over all performance as good and average respectively.

In courier market survey we found that Gati Zipp has a poor market share. Only 17.5% customers are using Gati Zipp where as DTDC is used by 65% of customers and has dominated courier market.

Maximum courier service is used for business purpose. Only 47.5% people are visiting courier office on every month. Maximum people are aware of courier companies as it is near to

their location. Maximum people are using a particular courier company because

of only good service. Gati is having very poor position in courier market. i.e. only 7.5%

people are using Gati courier service only for getting good service.

37.8% people has rated good to DTDC for its service where as Gati is having only 10.8%.

42.5% people has rated good to DTDC for its economy price. 47.5% people have expressed their views that Gati’s price is very

costly among all other courier companies. Only 20% people are expressed that Gati’s response and overall

performance is good where as DTDC has rated as excellent by 27.5% people for its response and overall performance.

Recommendation

Recommendation

From the survey we found out that the following strategy should be followed:

Gati should upgrade its services to match up with the service expectations that customer has.

In cargo sector SME are playing an important role. So Gati should try to capture the SMEs in order to attain a market leadership position.

Gati should try to capture the automotive industries and textile industries as both the industries are growing 18-25% per annum.

To generate more revenue it should open more number of CCC-F & CCC-K in remote and untapped area.

It should focus more on small amount cargos. Packaging industries has huge amount of opportunity in

current market. So Gati should enter in to that sector. It should give some discounts to its customers those are doing

business with Gati on regular basis. The market position of Gati Zipp is very poor. So Gati should

go for product awareness for Gati Zipp among the customers. Price of Gati Zipp should be low so that it will be affordable to

all kind of customers.

Massive TV campaigning should be done to promote Gati Zipp.

It should go for customer meet from time to time. Posters, Stickers should be excessive for the promotion of Gati

Zipp Special incentive scheme should be given to franchise people Sales campaign and road shows should be done to promote

its products. More number of courier outlet should be opened in city area

to have more reach and penetration.

Café D’eliver is the showcase of company’s image to the people. Café D’eliver can generate good business for Gati. So more attention should be given to Café D’eliver.

Gati should target more to the educational institutes as it can generate more revenue.

Gati should go for corporate social responsibility like literacy campaign, polio eradication programme through which it can promote its products.

It should participate in exhibitions in order to promote its products.

There should be special incentive schemes given to the franchise people doing business for Gati Zipp.

Books:

Marketing Management – Philip Kotler Marketing Management – Rajan Saxena

Website:

www.gati.com www.gati.net www.tcil.com www.cargotalk.com www.indianlogistics.com

News Paper & Magazines:

The Economic Times The Business Line Cargo Talk Cargo Times

Journals & Market Research Reports:

The Indian Logistics Industries Report : Indian School Of Business(ISB),Hyderabad

Kotak Logistics Sector : March 2006 Indian Logistics Sector Report : Religare Market Study on Express industry in India: Acnlelsen

Orgmarg Supply Chain Management Review: Icfai University

Case Study:

Gati Limited: Evolution of a third party logistics organization: A case study on Gati Ltd. from IIM, Ahmedabad