Market Research Report : Third Party Logistics Market in India 2012


Published on

For the complete report, get in touch with us at :

Indian economic growth is creating demand for third party logistics (3PL) services in the country. High cost of logistics, growing dependence on 3PL services from automobiles and auto components sector is expected to drive the demand for 3PL sector in India. Cost reduction coupled with high productivity by electronics manufacturers boosts the 3PL market. 3PL providers need to customize their services and charge competitive rates to benefit from the retail boom in India.
The report begins with an introduction section, classifying the logistics sector into its three broad segments and highlighting the focus of the study. The evolution of the 3PL services is then projected. The 3PL workflow is also briefly highlighted. The change of functions based on logistics services is illustrated in the 3PL pyramid. Different types of 3PL providers are classified based on their functions. Advantages of outsourcing logistics services to third parties are also pointed out in this section.
Market overview section provides a brief snapshot of both global and domestic 3PL market. To begin with, it gives a brief overview of global third party logistics market followed by its market size & growth. Considering the gross logistics revenue of top 50 global 3PL players the share of different continents is also found out. Major players in global 3PL market are identified and share of top 10 global 3PL players is also given. Subsequently, a brief overview of Indian 3PL market followed by its market size & growth is projected. The segmentation of 3PL market is given. The current and expected share of 3PL in total logistics is also shown. The increase in share of local companies outsourcing logistics services is depicted with top five reasons for outsourcing. The share of 3PL service providers in India is found out here. Further the respective sectors are analyzed wherein the customer’s propensity to outsource activities is more. Demand for 3PL services from various sectors and from different regions along with their share are also identified in this section. 3PL market presence in India is also mapped here.

Published in: Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Market Research Report : Third Party Logistics Market in India 2012

  1. 1. Insert Cover Image using Slide Master View Do not distortThird Party Logistics Market – IndiaDecember 2012
  2. 2. Executive Summary  More than half of the gross revenue generated in global Third Party Logistics (3PL) market were accounted by  Market top xx players in 2011  3PL Market in India is estimated to reach around INR xx bn by 20‐‐ at a CAGR of nearly xx% during 2011 ‐16  The market is rapidly evolving in India with more customers using outsourcing to reduce cost Drivers Challenges   – Economic growth – Infrastructure Congestion LE Drivers &  – High cost of Logistics in India – High Inventory Levels Challenges – Growth in Consumer Electronics and Durables  P – Lack of Skilled Manpower Industry – Lack of Trust and Awareness M – Growth in Auto & Auto Components Sector A – Growth in Retail Sector Technology S – Phased implementation of VAT – Infra related Govt initiatives  Identification Technology – Barcode, RFID  Material  Handling  Technology  ‐ Automated  Guided   Communication  Technology  ‐ Global  Positioning System (GPS) Tracking Adoption  Information Technology – ERP, eBizNET – Vehicle System (AGVS) , Information directed System SC suite, Vin eRetail  Major Players Company A Company B Company CCompetition Company D Company E Company F Company G Company H Company I THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 2
  3. 3. •Introduction•Market Overview  Global India LE   P•3PL – Shipper Relationship  M S A•Drivers & Challenges•Technology Adoption•Competition•Recent Transactions•Strategic Recommendations•Appendix  THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 3
  4. 4. Evolution of 3PL SAMPLE  1990s ‐ Present 1980s  1970s • Higher  • Value‐added  outsourcing and  services such  • Importance  more value‐ as packaging,  on improved  added services  labeling,  1950’s & 1960s productivity,  (VAS*) are being  systems  cost  offered  support and  reduction  inventory  • Logistics outsourcing  and long‐ was limited to  management  term  were offered transportation and  contracts  warehousing • Mainly short‐term  transactions*VAS includes import/export management, customs clearance, clearance, freight forwarding, customer service, rate negotiation, order processing, assembly/installation, distribution, order fulfillment, reverse logistics, consulting services that include distribution network planning, site selection for facility location, fleet management, freight consolidation, logistics audit etc. THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 4
  5. 5. Demand for services of expert logistics outsourcing providers is rising worldwideMarket Overview ‐Global Market Size & Growth• Global Third Party Logistics (3PL) market is currently  INR bn valued at around INR xx bn 8,000 5.2% x1 x2• Major share of revenue generated is contributed by  6,000   Region A, Region B and Region C 4,000• Factors contributing to the growth of global 3PL  market: P LE 2,000 0  xx S A M 20‐‐ 20‐‐ Note: Market size considers global 3PL gross revenues and the conversion is done  using 2010 exchange rate Global 3PL Revenues (2011) a4% a5% Region A a1% Region B a3% Region C Region D  Region E a2% Note: Gross Logistics Revenue of Top 50 Global 3PL players have been  considered THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 5
  6. 6. Major Players in Global 3PL Market SAMPLE  Share of Top 10 Global 3PL Players* (20‐‐) a1% xx is the market  leader in global 3PL  market a2% a11% a3% a4% a6% a5% a8% a10% a7% a9% Player A Player E Player I Player B Player F Player J Player C Player G Player K Player D Player HNote: *among the top 50 global 3PL players THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 6
  7. 7. Third party logistics is fast gaining popularity in the Indian logistics marketMarket Overview ‐India (1/3) Market Size and Growth INR bn x6 xx% x5• Third party logistics (3PL) market in India is at a    x4 LE nascent stage, currently at around xx% of overall  x3 x2 logistics market  x1• Findings  MP S A 3PL Market Comprises of Two Segments 20‐‐ 20‐‐ Share of 3PL in Total Logistics 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐e Asset Based Non‐Asset Based a1% b1%  Own some of the assets   Does not own such assets  used in supply chain   Possess flexibility that  management which often  allows them to respond to  a2% b2% include trucks, distribution  clients’ needs on a case‐by‐ centres and warehouses case basis xx xx THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 7
  8. 8. Cost considerations are the major reasons for the outsourcing of various logistics servicesMarket Overview ‐India (2/3) Increase in Share of Local Companies Outsourcing Services• Findings %  Share of local  60 x2 companies outsourcing  has increased by almost  xx times in xx years   40 LE 20 x1 MP 0 20‐‐ 20‐‐ Note: Approximate % shareTop 5 Reasons for Outsourcing Logistics Services IMPACT S A Use of 3PL Services Low Medium High Logistics cost reduction Logistics cost goes  down by… Focus on core competencies Improved customer services ~xx% Improve return on assets … thereby attracting more  customers in this sectorTo increase inventory turn THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 8
  9. 9. 3PL Market Presence in India North East City A City J City B City K City C City L City D City M City E City N City F City G City I E  South West City O City Y P L City P City Z  M City Q City A’ SA City R City B’ City S City C’ City T City D’ City U City E’ City V City F’ City W City G’ City X THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 9
  10. 10. 3PL Market Insights (2/2)• Highest demand for 3PL services comes from the Consumer electronics & durables and pharmaceuticals• Region wise West accounts higher demand for 3PL services in India Demand from Various Sectors (2011) LE   Demand from Different Regions (2011) a8% MP b4% A a6% a7% a1% a4% a4% S b3% b1% a2% a3% b2% Sector A Sector C Sector E Sector G Sector B Sector D Sector F Sector H Region A Region C Region B Region D THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 10
  11. 11. Changes in Use of 3PL Services GloballySurvey Result on Use of 3PL Services Worldwide SAMPLE Positive Responses on Increased Usage of 3PL Services% Respondents % Respondents 100 x 100 y3 y4 y y1 y2 Survey results 50 50 0 0 3PL Shipper Region  Region  Region  Region   A B C D Positive Responses on Returning to In sourcing Positive Responses on Reduction of 3PLs Used % Respondents % Respondents 40 p 100 m q n 20 50 Result Result 0 0 3PL Shipper 3PL Shipper Note: 1,561 industry executives and managers representing users and non‐users of 3PL services (shippers respondents) and 697 executives and managers  representing firms that provide 3PL services (3PL respondents) across the globe were surveyed in “XX” THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 11
  12. 12. Shipper – 3PL Relationship  SAMPLE  Shipper’s Benefits from Use of 3PL Services % Respondents 100 a4 a5 50 a3 Result a1 a2 0 Benefit A Benefit B Benefit C Benefit D Benefit E Success Factors Openness, transparency &  Flexibility to hold current &  Interest in “gainsharing” good communication future business needs between 3PLs & shippers Result Result Result% Respondents % Respondents % Respondents p m 100 100 60 x y q n 40 50 50 20 0 0 0 3PL Shipper 3PL Shipper 3PL ShipperNote: 1,561 industry executives and managers representing users and non‐users of 3PL services (shippers respondents) and 697 executives and managers representing firms that provide 3PL services (3PL respondents) across the globe were surveyed in “XX” THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 12
  13. 13. Drivers & Challenges Drivers Economic growth Challenges High cost of Logistics in India LE   Infrastructure Congestion Growth in Consumer Electronics and  Durables Industry MP High Inventory Levels Growth in Auto & Auto Components  Sector Growth in Retail Sector S A Lack of Skilled Manpower Lack of Trust and Awareness Phased implementation of VAT Government Infrastructure Initiatives THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 13
  14. 14. Economic growth is creating demand for 3PL services and is  a major driver in the market Economic Growth(1/2) Impact • xx P LE  SA M Key Economic Indicators GDP Growth Trend* Rapid Urbanization % % b4 b5 10 a3 40 b2 b3 a2 a5 b1 8 a1 a4 30 6 20 4 2 10 0 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐*Note: Figures for financial year – April to March THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 14
  15. 15. Simultaneous cost reduction coupled with high productivity by electronics manufacturers will drive the 3PL market Growth in Consumer Electronics and Durables Industry Impact• xx P LE  SA M India’s Consumer Electronics and Durables Market Sales Trends in Consumer Electronics ‘000 INR bn xx% 20,000600 xx% x2 15,000 b1 a1400 x1 10,000 a2 b2 5,000 b3 a3200 0 a4 b4 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ Type A Type B Type C Type D THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 15
  16. 16. Growing dependence on 3PL services from automobiles and auto components sector to facilitate market growthGrowth in Auto & Auto Components Sector LE   Impact• xx MP Growth in Automobile Market  SA Growth in Auto Components Market  INR bn INR bn a% a5 5,000 a4 10,000 c% a3 b% b6 a1 a2 5,000 b5 b1 b2 b3 b4 0 0 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ Note: Auto components includes Engine Parts, Drive Transmission & Steering Parts,  Body & Chassis, Suspension & Braking Parts Equipments, Electrical Parts, Others Growth in Passenger Car Exported from India  Growth in Vehicles Sold in India Type A Units d% ‘000 Units e% e2% Type B c2 2,000 d2 e3% e4% e5%50,000 c1 d1 Type C e6% 1,000 Type D e1% 0 0 Type E Type F 20‐‐ 20‐‐ 20‐‐ 20‐‐ THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 16
  17. 17. 3PL providers need to customize their services and charge competitive rates so as to benefit from India’s retail boomGrowth in Retail Sector Impact  • xx P LE S A M Growth in Retail Market in India  60 8.4% y 40 y2% x 20 x2% y1% x1% 0 20‐‐ 20‐‐e Type A Type B THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 17
  18. 18. Poor and inadequate infrastructure acts as a major obstacle to growth of 3PL market in India LE  Infrastructure Congestion•xx MP Impact S A Average speed of Commercial Vehicle (20‐‐) kmph Result 100 y 50 x 0 Country A Country B• xx THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 18
  19. 19. Lack of trust and awareness is hampering the growth of 3PL sectorLack of Trust and Awareness Impact• xx P LE  3PL Activity as % of Total Logistics Operations (20‐‐) 80 % y z SA M 60 x Vicious Cycle 40 w 20 0 xx Country A Country B Country C Country D xx xx  THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 19
  20. 20. 3PL is witnessing better productivity with rising investments in GPS, RFID, online analytics & new supply chain tools  • xx  LE   MP SA Applications Enterprise  Identification Competitive Communication • xx  Technology Technology • xx Advantage Handling Material • xx  THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 20
  21. 21. Major Public Companies – Summary Net Profit/Loss2,800 Size of the Bubble represents Market 2,600 Capitalization in INR bn2,400 m12,200 LE  2,000 MP A1,8001,6001,400 m2 m3 S m41,2001,000 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 Total Income Company A Company B Company C Company D Note: All figures are in INR mn and are based on the latest financials available THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 21
  22. 22. Public: Domestic Company – Player A (1/3)Company Information Offices and Centres – India Corporate AddressTel No.Fax No.WebsiteYear of Incorporation LE  Ticker Symbol MP AStock Exchange Mumbai Head OfficeProducts and ServicesCategory Products/Services S Key People Name Designation THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 22
  23. 23. Public: Domestic Company ‐ Player A (2/3) Financial Snapshot Key Ratios y‐o‐y change  Total Income Net Profit/Loss INR mn Particulars  2012 2011 2010 2009 INR mn (2012‐11) 35,858.4 Profitability Ratios40,000 34,381.0 3000 28,803.1 Operating Margin ‐0.19 8.78% 8.97% 7.61% 8.01%30,000 Net Margin 0.06 6.54% 6.48% 5.76% 6.24% 20,836.4 200020,000 Profit Before Tax Margin ‐0.15 8.44% 8.58% 7.77% 8.13% 1000 Return on Equity 0.48 15.42% 14.94% 13.74% 13.07%  10,000 Return on Capital Employed 1.52 14.71% 13.18% 13.53% 13.95% LE 0 0 Return on Working Capital ‐11023.91 ‐ 50.35% 46.22% 36.95% 10973.56% 2009 2010 2011 2012 P Return on Assets 0.32 8.27% 7.95% 8.07% 8.62% Financial Summary  Return on Fixed Assets 4.55 16.76% 12.20% 19.68% 23.75% M Cost Ratios• The company earned a net profit of INR 2,345.9 mn in FY 2012, as A Operating costs (% of Sales) 0.19 91.11% 90.92% 92.34% 91.90% compared to net profit of INR 2,228.7 mn in FY 2011 S Administration costs (% of  17.24 17.24% 0.00% 6.07% 8.64%• The company reported total income of INR  35,858.4 mn in FY 2012,  Sales) registering an increase of 4.3% over FY 2011 Interest costs (% of Sales) 0.03 1.65% 1.62% 0.68% 1.12%• The company earned an operating margin of 8.78% in FY 2012, a  Liquidity Ratios decrease of 0.19 percentage points over FY 2011 Current Ratio ‐48.94% 1.00 1.95 1.82 2.13 Cash Ratio ‐43.37% 0.26 0.47 0.63 0.83• The company reported debt to equity ratio of 0.86 in FY 2012, a  Leverage Ratios decrease of 1.63% over FY 2011 Debt to Equity Ratio ‐1.63% 0.86 0.88 0.70 0.52 Key Financial Performance Indicators Debt to Capital Ratio ‐20.15% 0.27 0.34 0.24 0.17 Interest Coverage Ratio ‐3.90% 5.39 5.61 11.27 7.20 Indicators Value (27/11/2012) Efficiency Ratios Market Capitalization (INR mn) xx Fixed Asset Turnover 35.97% 2.53 1.86 3.39 3.77 Total Enterprise Value (INR mn) xx Asset Turnover 3.01% 1.25 1.21 1.39 1.37 Current Asset Turnover 36.26% 5.10 3.74 3.59 3.11 EPS (INR) xx Working Capital Turnover ‐21677.73% ‐1655.74 7.67 7.97 5.86 PE Ratio (Absolute) xx Capital Employed Turnover 2.23% 2.33 2.28 2.37 2.07 Improved Decline THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 23
  24. 24. Public: Domestic Company ‐ Player A (3/3)Key Business Segments Key Geographic Segments Container Freight Stations Multimodal Transport Operations Australia & New Zealand Mediterranean Far East Europe Project & Engineering Solutions Africa America India % %100% 6% 7% 7% 2% 2% 2% 10% 10% 100% 2% 16% 6% 2%   16% 18% 5% 19% 4% LE50% 94% 83% 83% 50% 28% 27% 15% 29% 15% P 30% 31% 29% 0% 0% M 2008 2009 2010 2008 2009 2010Business HighlightsDescription Overview News S A3PL & WarehousingAcquisitions THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 24
  25. 25. Recent Transactions Transactions in 3PL Companies in India SAMPLE  Deals & Investments in 3PL firms Date Target Acquirer/Investor Amount (INR mn) Stake Jul‐12 Company 1 Company 13 xx xx Apr‐12 Company 2 Company 14 xx xx Feb‐12 Company 3 Company 15 xx xx Dec‐11 Company 4 Company 16 xx xx Jul‐11 Company 5 Company 17 xx xx Apr‐11 Company 6 Company 18 xx xx Feb‐11 Company 7 Company 19 xx xx Oct‐10 Company 8 Company 20 xx xx Oct‐10 Company 9 Company 21 xx xx Sep‐10 Company 10 Company 22 xx xx Jun‐10 Company 11 Company 23 xx xx Mar‐10 Company 12 Company 24 xx xxNote: This list is not exhaustive THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 25
  26. 26. Strategic Recommendations (1/3) Issues Recommendations Lack of 3PL operators in X • xx LE  Less X service logistics providers • xx MPNon‐compliance of best practices  S A • xx by Y ZZ imposed on shipping lines  • xx which consumes up their profit  THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 26
  27. 27. Thank you for the attentionThe Third Party Logistics Market – India 2012 report is a part of Netscribes’ Transportation & Logistics Series.For any queries or customized research requirements, contact us at:Phone: +91 33 4027 6214 / 6215E‐Mail: info@netscribes.comFollow us on:About NetscribesNetscribes is a knowledge‐consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content‐management services, and knowledge‐software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one‐stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used in the preparation of this report,Netscribes is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes. and prior permission is required for guidelines on reproduction. THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT 27