Ground express couriers growing much faster than flying competitors

When it comes to the business of delivering couriers, service providers seem to prefer hugging the ground rather than...

When it comes to the business of delivering couriers, service providers seem to prefer hugging the ground rather than taking to the skies. A number of operators in the space say they see a higher growth potential in the ground express market as compared to the air express sector, courtesy improving ground infrastructure and a heavy jump in cargo movement between non-metros.

“Currently, the ground express courier market in the organised sector is Rs 1,160 crore and is expected to grow at a CAGR of 23 per cent over the next five years. So by 2012, the market is likely to more than double to Rs 2,700,” says Ketan Kulkarni, general manager (marketing) at Blue Dart, a leading player in the courier services space. “Compared to this, the Rs 1,260 crore organised air express courier segment is growing slower at 19 per cent every year.” With 70 per cent of the ground express market currently in the unorganised sector, the actual size of the business would be significantly larger, say experts.

While according to Blue Dart, a major reason for the potential in this sector lies in improving ground infrastructure like roads and warehouses, others attribute it to rapid growth in courier cargo between non-metros. “While non-metro courier traffic was growing at 12 per cent earlier, growth has jumped to 20 per cent over the last two years. This type of non-metro traffic is best transported by road and hence the spurt in the segment,” says P C Sharma, CEO of XPS Air and Courier, a division of Transport Corporation of India. The non-metros contributing to this growth include Chandigarh, Ludhiana, Ambala, Kolhapur, Nasik, Pune, Goa, Belgaum, Hubli, Mysore and Trichur, among others.

Story continues below this ad

At the same time, the growth in courier traffic between metros is expected to be a more modest 16 per cent, translating into slower air express growth in the business. According to Sharma, non-metros now command the majority of total tonnage transported by the country, at over 60 per cent. Just two years ago, it was the other way around. A comparatively higher margin of 12 per cent in ground express as against an 8 per cent margin by air is also a major reason for the shift in focus.

To cater to this emerging demand, companies like Blue Dart have recently launched Surfaceline, a new ground express service which would enable the company to expand its network of 14,600 locations to 17,500 locations. With this acquisition, the company is eyeing a 20 per cent market leadership position in the ground segment in the short to mid term.

Not to be left behind, global logistics major TNT too recently acquired Speedage Express Cargo Services, an emerging road express company in India for over Rs 200 crore, emerging as one of the top three players in the segment.

“There is demand from the customer for speed and reliability, and this acquisition places us in a position to integrate our international expertise with the critical road expertise of Speedage,” said Jinendra Sancheti, senior V-P, India, Middle East and Africa region at the time of the acquisition. With growth strong and competition firming, it’s sunny days ahead for the Indian ground express sector.