Sidhartha ShuklaMoneycontrolEmerging economies trade as intensively as advanced economies, but advanced economies are four to nine times more deeply integrated into international capital, information, and people flows, says German logistics major Deutsche Post-DHL in its 2016 Global Connectedness report.
The report had ranked India at 78, dropping the country 3 spots from the previous year's ranking of 75 in terms of its global connectivity.Read more: India ranked 78, down 3 places, in Global Connectedness Index
Overcoming the lack of infrastructure and connectivity to remote areas in the country has been a major bane for logistic companies in India. The entry of e-commerce companies in the market has brought various growth opportunity for logistics players and along with it new challenges as well.
The government's push for infrastructure development and subsequent simplification and easing of commerce policies shows promise of bringing relief to these logistic companies.
Speaking to Moneycontrol, Malcolm Monteiro, CEO of DHL e-commerce Asia Pacific, said, "With infrastructure growth the cost of logistics will come down, which is where we come in to ensure that we even reach the remotest areas where tier II and tier III cities are developing."
He said that demand from Indian consumers is constantly increasing, which makes it a lucrative investment destination.
Jürgen Gerdes, Member of the Board of Management of Deutsche Post AG, said with a more mature logistics infrastructure, the e-commerce industry will grow which has been the case in Europe, US and Asia.
DHL e-commerce, a division of the world’s leading logistics company, Deutsche Post DHL Group, is investing EUR 70 million (Rs 51,184 lakh) to strengthen its operations to meet the fast-growing demand for quality e-commerce logistics services in India.Read More: DHL eCommerce to invest Euro 70 mn to augment e-commerce
The company aims to expand its reach through its subsidiary Blue Dart Express.
On the implementation of the Goods and Services Tax (GST) Bill, Anil Khanna MD of Blue Dart said that the new tax regime is going to ease a lot of problems and is going to facilitate trade and e-commerce in India.
"Currently, between Delhi and Mumbai one goes through 17 toll checks [toll booths] and at every check point around 30 minutes to 2 hours of time is spent, which means you are spending between 10-12 hours at the toll nakas," Khanna said.
To go from Delhi to Mumbai, around 1700 Kms, it takes around 42 hours via road, out of which 10 hours are spent at check nakas, he said.
"Once the road infrastructure is in place and the GST is rolled out this 42 hours will probably come down to 24-25 hours which will lead to a lot of cost-saving," he added.
Khanna further said that India currently spends around 13 percent of its GDP on logistics while developed countries spend around 8 percent, which means that there is huge opportunity of 5 percent worth of savings.
The company has expanded its reach in the market by around 25 percent in the last 9 months and is aggressively trying to reach tier III and tier IV cities.Blue Dart is also exploring opportunities to work along with the Department of Post (DoP) and leverage their infrastructure rather than duplicating it.
"There is a pilot [process] going on with the department of post and hopefully it works well; we will be rolling it out in over a period of time," Khanna said.
Where Infrastructure fails to deliver, innovation comes in to play; DHL and Blue Dart have looked into various ways to reach out to their customers living in the remotest geographies.
One such initiative is DHL's drone service, called the Parcelcopters. The company launched its first drone test back in 2013 and recently conducted a test run of its third-generation Parcelcopter drones in Germany.
DHL's subsidiary Blue Dart is in talks with the India government to start this service in India as well.
"We were the first company in India to have applied to the Directorate General of Civil Aviation (DGCA) for allowing us to flying drones. Let's hope that we get the permission from them," Anil Khanna said.
Blue Dart is also looking to bring in e-scooters In Delhi and Mumbai to curb pollution.
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