CJ Darcl gears up to be a full-stack logistics player

CJ Darcl Logistics, a joint venture between Indian-based Darcl Logistics and South Korean logistics major CJ Logistics, has an eye on the express delivery market, which caters to the e-commerce segment prominently as it strives to become a ‘total logistics player.’

“Prior to our partnership with CJ we were primarily operating in full-truckload, multimodal and project logistics segments and these were our key domain areas. But since 2017, after we entered into the agreement with the company, though we have not become a significant player in other businesses, it is still a start,” said Nikhil Agarwal, President, CJ Darcl Logistics.

 
The company currently draws the majority of its revenue, about 80 percent, from the Bulk and Full Truck Load (FTL) transportation segment. Multimodal transportation contributes about 17-18 percent and the rest 3-4 percent is contributed by project cargo and other segments. The company deals in road transportation, rail transportation, air cargo, coastal/barge, freight forwarding, warehousing and distribution, contract logistics and claims to manage around 2,000 FTL consignments across India every day.

The company is aiming at transforming itself into a full-stack logistics player by 2027 and is counting on the expertise of its Korean partner CJ Logistics to gain a foothold in the new segments.
 “CJ is one of the leaders in entire distribution bets in South Korea and we felt they are the right partner to capitalise on these segments,” added Agarwal.

 According to Baig Junghun, deputy CEO, CJ Darcl Logistics, CJ Logistics is the leader in the e-commerce express delivery services in South Korea and handled about 50-60 percent of the e-commerce shipment volumes in the country.

“We are quite sure we have the right technology and capabilities for the India market but until now we did not have the right opportunity to advance the service to India,” added Junghun.

The two partners, under their JV, have already started offering express solutions to a few e-commerce businesses and would be looking at scaling up going ahead. 

CJ Darcl would be competing with the likes of IPO-bound Delhivery, XpressBees, Shiprocket and Ecom Express. 

According to a report released by consulting firm RedSeer, e-commerce shipments in the country are slated to grow four times to 12 billion by 2024. And 3PL companies, which currently account for 0.85 billion e-commerce shipments in the country out of overall 3 billion shipments (in 2020), are expected to fulfil three billion shipments by 2024. 

The company, however, is late to the segment given the presence of multiple 3PL players who have already made considerable headway into the market and command a large share of it after the captive arms of logistics companies such as Amazon and Flipkart.

“If we had started the e-commerce business four years back, we would not have been able to sustain for a long period. Most of these companies are offering services at discounted rates to build scale and we would not have survived as we are not backed by VCs and do not have a war chest,” said Agarwal.

Agarwal feels that as most of these companies work to rejig their models and work on generating cash flows and profitability, there is going to be a more level-playing field in the segment and hence this makes it an opportune time for CJ Darcl to enter the business.​