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For the complete report, get in touch with us at : [email protected] 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.
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Third Party Logistics Market – India
December 2012
2
SAMPLE
Executive Summary
Market
Competition
More than half of the gross revenue generated in global Third Party Logistics (3PL) market were accounted by 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
Major Players
Company A Company B Company C
Company D Company E Company F
Company G Company H Company I
Drivers & Challenges
Drivers– Economic growth
– High cost of Logistics in India
– Growth in Consumer Electronics and Durables Industry
– Growth in Auto & Auto Components Sector
– Growth in Retail Sector
– Phased implementation of VAT
– Infra related Govt initiatives
Challenges– Infrastructure Congestion
– High Inventory Levels
– Lack of Skilled Manpower
– Lack of Trust and Awareness
TechnologyAdoption
Identification Technology – Barcode, RFID
Material Handling Technology ‐ Automated Guided
Vehicle System (AGVS) , Information directed System
Communication Technology ‐ Global Positioning System (GPS) Tracking
Information Technology – ERP, eBizNET –SC suite, Vin eRetail
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
3
SAMPLE
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
•Introduction
•Market Overview
Global
India
•3PL – Shipper Relationship
•Drivers & Challenges
•Technology Adoption
•Competition
•Recent Transactions
•Strategic Recommendations
•Appendix
4
SAMPLE Evolution of 3PL
• Importance on improved productivity, cost reduction and long‐term contracts
• Value‐added services such as packaging, labeling, systems support and inventory management were offered
1950’s & 1960s
1970s
1980s
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
• Higher outsourcing and more value‐added services (VAS*) are being offered
• Logistics outsourcing was limited to transportation and warehousing
• Mainly short‐term transactions
1990s ‐ Present
*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.
5
SAMPLE
Demand for services of expert logistics outsourcing providers is rising worldwide
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Market Overview ‐Global Market Size & Growth
Global 3PL Revenues (2011)
•Global Third Party Logistics (3PL) market is currently
valued at around INR xx bn
•Major share of revenue generated is contributed by
Region A, Region B and Region C
• Factors contributing to the growth of global 3PL
market:
xx
Note: Gross Logistics Revenue of Top 50 Global 3PL players have been considered
a1%a5%
a3%
a4%
a2%
Region B
Region A
Region E
Region C
Region D
0
2,000
4,000
6,000
8,000
INR bn
x1
5.2%
20‐‐
x2
20‐‐
Note: Market size considers global 3PL gross revenues and the conversion is done using 2010 exchange rate
6
SAMPLE Major Players in Global 3PL Market
Share of Top 10 Global 3PL Players* (20‐‐)
Note: *among the top 50 global 3PL players
xx is the market leader in global 3PL
market
a5%
a4%
a3%
a2%
a1%
a11%
a10%a9%
a8%a7%
a6%
Player E
Player D
Player C
Player B
Player A
Player K
Player J
Player I
Player H
Player G
Player F
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
7
SAMPLE
Third party logistics is fast gaining popularity in the Indian logistics market
•Third party logistics (3PL) market in India is at a nascent stage, currently at around xx% of overall logistics market
• Findings
Market Overview ‐India (1/3) Market Size and Growth
INR bn
xx%
20‐‐
x6
20‐‐
x5
20‐‐
x4
20‐‐
x3
20‐‐
x2
20‐‐
x1
Share of 3PL in Total Logistics
Asset Based Non‐Asset Based
Own some of the assets used in supply chain management which often include trucks, distribution centres and warehouses
Does not own such assets
Possess flexibility that allows them to respond to clients’ needs on a case‐by‐case basis
3PL Market Comprises of Two Segments
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
a1%
a2%
xxxx
b1%
b2%
20‐‐ 20‐‐e
8
SAMPLE
Cost considerations are the major reasons for the outsourcing of various logistics services
•Findings
Increase in Share of Local Companies Outsourcing Services
Top 5 Reasons for Outsourcing Logistics Services
0
20
40
60
x1
%
20‐‐
x2
20‐‐
Share of local companies outsourcing has increased by almost xx times in xx years
Note: Approximate % share
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Market Overview ‐India (2/3)
Use of 3PL Services
~xx%
Logistics cost goes down by…
… thereby attracting more customers in this sector
IMPACT
Low Medium High
Logistics cost reduction
Focus on core competencies
Improved customer services
Improve return on assets
To increase inventory turn
9
SAMPLE
3PL Market Presence in India
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
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
South West
City O City Y
City P City Z
City Q City A’
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
10
SAMPLE
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) Demand from Different Regions (2011)
Sector H
Sector G
Sector F
Sector E
Sector D
Sector C
Sector B
Sector A
a8%
a7%a6%
a4%
a4%
a3%a2%
a1%
b3%
b4%
b2%
b1%
Region D
Region C
Region B
Region A
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
11
SAMPLE Changes in Use of 3PL Services Globally
Survey Result on Use of 3PL Services Worldwide
Positive Responses on Returning to In sourcing
Result
Positive Responses on Increased Usage of 3PL Services
0
50
100
% Respondents
Shipper
y
3PL
x
0
50
100
% Respondents
Region D
y4
Region C
y3
Region B
y2
Region A
y1
0
20
40
% Respondents
Shipper
q
3PL
p
0
50
100n
3PL
m
% Respondents
Shipper
Result
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Survey results
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”
Positive Responses on Reduction of 3PLs Used
12
SAMPLE Shipper – 3PL Relationship
0
50
100
Benefit B
a2
Benefit A
a1
Benefit E
a5
Benefit D
a4
Benefit C
a3
% Respondents
Shipper’s Benefits from Use of 3PL Services
Success Factors
Openness, transparency & good communication
Flexibility to hold current & future business needs
Interest in “gainsharing”between 3PLs & shippers
0
50
100
% Respondents
Shipper
y
3PL
x
Result
0
50
100
% Respondents
Shipper3PL
q
p
Result
0
20
40
60
% Respondents
Shipper
n
3PL
m
Result
Result
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
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”
13
SAMPLE
Drivers & Challenges
Drivers
Economic growth
High cost of Logistics in India
Growth in Consumer Electronics and Durables Industry
Growth in Auto & Auto Components Sector
Growth in Retail Sector
Phased implementation of VAT
Government Infrastructure Initiatives
Challenges
Infrastructure Congestion
High Inventory Levels
Lack of Skilled Manpower
Lack of Trust and Awareness
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
14
SAMPLE
Impact
Economic growth is creating demand for 3PL services and is a major driver in the market
Economic Growth(1/2)
• xx
Key Economic Indicators
GDP Growth Trend* Rapid Urbanization
0
2
4
6
8
10
%
20‐‐
a5
20‐‐
a4
20‐‐20‐‐
a3a2
20‐‐
a1
0
10
20
30
40
20‐‐
b2b1
20‐‐
b5
20‐‐
b4
20‐‐
b3
20‐‐
%
*Note: Figures for financial year – April to March
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
15
SAMPLE
Impact
Simultaneous cost reduction coupled with high productivity by electronics manufacturers will drive the 3PL market
Growth in Consumer Electronics and Durables Industry
• xx
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
India’s Consumer Electronics and Durables Market Sales Trends in Consumer Electronics
0
200
400
600
INR bn
xx%
20‐‐
x2
20‐‐
x1
0
5,000
10,000
15,000
20,000 xx%
20‐‐
b4b3
‘000
a4a3
a2
a1
b2
20‐‐
b1
Type B
Type DType C
Type A
16
SAMPLE
Impact
Growing dependence on 3PL services from automobiles and auto components sector to facilitate market growth
Growth in Auto & Auto Components Sector• xx
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Growth in Automobile Market Growth in Auto Components Market
0
5,000
a2a1
20‐‐
INR bna%
20‐‐
a5
20‐‐
a4
20‐‐
a3
20‐‐
0
5,000
10,000
b5
INR bn
c%b%
20‐‐
b6
20‐‐
b4
20‐‐20‐‐
b3
20‐‐
b2
20‐‐
b1
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
0
50,000
Units d%
20‐‐
c1c2
20‐‐
e%
20‐‐
d2
20‐‐
d1
‘000 Units
2,000
1,000
0
e6%e3% e5%e2%
e4%
e1%
Type F
Type C
Type E
Type B
Type D
Type A
17
SAMPLE
Impact
3PL providers need to customize their services and charge competitive rates so as to benefit from India’s retail boom
Growth in Retail Sector
• xx
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
0
20
40
60
20‐‐e
y
y1%
y2%
20‐‐
8.4%
x
x1%x2%
Type A Type B
Growth in Retail Market in India
18
SAMPLE
Poor and inadequate infrastructure acts as a major obstacle to growth of 3PL market in India
•xx
Infrastructure Congestion
Average speed of Commercial Vehicle (20‐‐)
0
50
100
Country B
kmphy
Country A
x
• xx
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Result
Impact
19
SAMPLE
Lack of trust and awareness is hampering the growth of 3PL sector
• xx
Lack of Trust and Awareness
3PL Activity as % of Total Logistics Operations (20‐‐)
0
20
40
60
80
%
Country D
z
Country C
yx
Country BCountry A
w
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
xxxx
xx
Vicious Cycle
Impact
20
SAMPLE
3PL is witnessing better productivity with rising investments in GPS, RFID, online analytics & new supply chain tools
• xx
• xx
• xx
• xx
Enterprise
App
lications
CommunicationTechnology
CompetitiveAdvantage
Material
Han
dling
IdentificationTechnology
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
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SAMPLE
Major Public Companies – Summary
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
Net Profit/Loss
Total Income
m4
m2m3
m1
Size of the Bubble represents Market Capitalization in INR bn
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Company BCompany A
Company C Company D
Note: All figures are in INR mn and are based on the latest financials available
22
SAMPLE
Key People
Products and Services
Company Information Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Category Products/Services
Name Designation
Head Office
Public: Domestic Company – Player A (1/3)
Mumbai
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
23
SAMPLE
Financial Snapshot Key Ratios
Financial Summary
• The company earned a net profit of INR 2,345.9 mn in FY 2012, ascompared to net profit of INR 2,228.7 mn in FY 2011
• The company reported total income of INR 35,858.4 mn in FY 2012, registering an increase of 4.3% over FY 2011
• The company earned an operating margin of 8.78% in FY 2012, a decrease of 0.19 percentage points over FY 2011
• The company reported debt to equity ratio of 0.86 in FY 2012, a decrease of 1.63% over FY 2011
Key Financial Performance Indicators
Indicators Value (27/11/2012)Market Capitalization (INR mn) xx
Total Enterprise Value (INR mn) xx
EPS (INR) xx
PE Ratio (Absolute) xx
Improved Decline
Net Profit/LossTotal Income
35,858.434,381.028,803.1
20,836.4
0
10,000
20,000
30,000
40,000
0
1000
2000
3000
INR mnINR mn
2012201120102009
Public: Domestic Company ‐ Player A (2/3)
Particulars y‐o‐y change (2012‐11)
2012 2011 2010 2009
Profitability RatiosOperating Margin ‐0.19 8.78% 8.97% 7.61% 8.01%
Net Margin 0.06 6.54% 6.48% 5.76% 6.24%
Profit Before Tax Margin ‐0.15 8.44% 8.58% 7.77% 8.13%
Return on Equity 0.48 15.42% 14.94% 13.74% 13.07%
Return on Capital Employed 1.52 14.71% 13.18% 13.53% 13.95%
Return on Working Capital ‐11023.91‐
10973.56%50.35% 46.22% 36.95%
Return on Assets 0.32 8.27% 7.95% 8.07% 8.62%
Return on Fixed Assets 4.55 16.76% 12.20% 19.68% 23.75%
Cost RatiosOperating costs (% of Sales) 0.19 91.11% 90.92% 92.34% 91.90%
Administration costs (% of Sales)
17.24 17.24% 0.00% 6.07% 8.64%
Interest costs (% of Sales) 0.03 1.65% 1.62% 0.68% 1.12%
Liquidity RatiosCurrent Ratio ‐48.94% 1.00 1.95 1.82 2.13
Cash Ratio ‐43.37% 0.26 0.47 0.63 0.83
Leverage RatiosDebt to Equity Ratio ‐1.63% 0.86 0.88 0.70 0.52
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
Efficiency RatiosFixed Asset Turnover 35.97% 2.53 1.86 3.39 3.77
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
Working Capital Turnover ‐21677.73% ‐1655.74 7.67 7.97 5.86
Capital Employed Turnover 2.23% 2.33 2.28 2.37 2.07
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
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SAMPLE
Key Business Segments Key Geographic Segments
Business Highlights
Description News
Overview
3PL & Warehousing
Acquisitions
7%7%
0%
50%
100%
%
2010
83%
10%
2009
83%
10%
2008
94%
6%
Multimodal Transport Operations
Project & Engineering Solutions
Container Freight Stations
Public: Domestic Company ‐ Player A (3/3)
28% 27% 29%16%
15%15%4%5%
6% 2%2%2%2%2%
0%
50%
100%
2009
29%
%
19%
31%
18%
20102008
30%
16%
India
Australia & New Zealand Europe
Africa
Far East
America
Mediterranean
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
25
SAMPLE Recent Transactions
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 xx
Transactions in 3PL Companies in India
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
Note: This list is not exhaustive
26
SAMPLE
Lack of 3PL operators in X
Issues Recommendations
Less X service logistics providers
Non‐compliance of best practices by Y
ZZ imposed on shipping lines which consumes up their profit
• xx
• xx
• xx
• xx
Strategic Recommendations (1/3)
THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT
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:
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THIRD PARTY LOGISTICS MARKET IN INDIA 2012.PPT