TCI: A journey From trucking to supply chain - Interview

Vineet Agarwal, Executive director, TCI The future of the logistics industry does not lie in providing simple point to point transportation but in getting the pulse of what different companies need, says Transport Corporation of India (TCI) executive director Vineet Agarwal. For, companies piggybacking on the retail boom would look for customised and integrated logistic solutions in their pursuit for higher profits. Excerpts from an interview with ET: Where do you see the logistics industry in the next two years? Till a few years back, logistics sector was predominantly considered synonymous with transportation. Regional and smaller players from the unorganised sector dominated the logistics business and each regional player had dominance over his region. In such a scenario, companies used to outsource their logistics requirements. This resulted in the involvement of a large number of players in the chain, with no focus on quality or delivery schedules. However, with manufacturing and retail growth kicking, Indian logistics is expected to be worth $220 billion by 2012. With more global conglomerates setting up base here, India is fast becoming a land of opportunities. The country is also witnessing large scale foreign direct investment with the entry of international players. Has inflation dampened the growth of the industry? No, inflation has not dampened the growth of the logistics industry. The industry growth ranges from moderate to good. This is due to the huge backing that comes from domestic demand as domestic consumption remains high. There may be some small hiccups in growth but the overall scenario looks promising. How does TCI plan to grab new opportunities opened by robust growth in retail and manufacturing? India is emerging as a global manufacturing hub. In such a scenario, it becomes essential to have an effective logistics/supply chain network. We at TCI are geared up to meet the demands of these emerging new segments and are prepared to offer efficient and customised logistics solutions to the organisations. TCI has been in the logistics space since 1958. How has been the journey? TCI, one of the largest players in the domestic logistics industry, has travelled a long way. It has transformed itself from a transportation company to an integrated logistics solutions provider. The company has a 15% market share in the organised logistics space. Over the last two decades, the company’s margins have increased at a rapid pace. This has been possible due to the gradual shift from low margin trucking business to high margin areas such as supply chain, shipping and express delivery. Lots of logistics players are considering their own air cargo line. What is the potential for starting company-owned air cargo business for the domestic market? At present, the share of air cargo in the overall logistics business is minuscule. However, the growth of the economy and the government’s decision to modernise airports across the country will definitely give fillip to the sector. As most passenger airlines are now diversifying in to air cargo, we believe that there would be a situation of excess capacity. We have tie-ups for air cargo services with most airlines and are not looking at launching a dedicated cargo airline in the near future.