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Strategic Analysis of the Third Party Logistics Markets in India

Frost & Sullivan
June 28, 2006
SKU: MC1394099

Abstract Table of Contents Related Reports

Countries covered: India

Research Overview

This Frost & Sullivan research service entitled Strategic Analysis of the Third Party Logistics Markets in Indiaexamines major drivers, restraints, and challenges impacting the market and also provides revenue forecasts and end-user analyses. A detailed overview of the competitive scenario highlights the key opportunities that 3PL service providers can exploit. In this research service, Frost & Sullivan's expert analysts thoroughly examine the following logistics functions: transportation, warehousing, freight forwarding, and MIS and other value-added services.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

Supply chain
Transportation
Warehousing
Freight forwarding
MIS/other value-added logistics operations

Technologies

The following technologies are covered in this research:

Enterprise resource planning (ERP)
Global positioning system (GPS)
Supply chain management

Market Overview

Trend of Outsourcing Logistics Gains Ground in Select Sectors in India

Valued at $890.3 million in 2005, the third party logistics (3PL) market in India is projected to grow at a compound annual growth rate (CAGR) of 21.9 percent from 2005 to 2012, reaching $3,556.7 million by the end of this period. Rapid growth in the Indian manufacturing sector is creating an increasing need for seamless logistics solutions. While the Indian 3PL market is still very much in its infancy compared to those in other countries, it is experiencing healthy growth and attracting new companies eager to capitalize on the plentiful opportunities it offers.

Currently, the trend of outsourcing the entire logistics function to a 3PL service provider is visible only in a few sectors in India. In the automotive sector, for instance, end-to-end outsourcing is becoming increasingly popular as companies realize the benefits of focusing on core competencies and delegating the logistics to 3PL service providers. Just-in-time delivery (JIT) to the assembly line is another emerging concept that is gaining acceptance in this sector. "The penetration of 3PL services is particularly high in the automotive sector," remarks the analyst of this research service. "Even companies that have traditionally adopted a conservative business outlook have started outsourcing logistics to 3PL service providers." The IT hardware and electronics sectors are also witnessing a rise in this trend, while those for fast moving consumer goods (FMCG) and pharmaceuticals have relatively low penetration rates.

Healthy Growth Forecast for Indian 3PL Market

The challenges facing the emerging 3PL market in India are many, the most significant of which is the domination of the unorganized sector. Service providers in the unorganized segment benefit from lower overhead costs and consequently, are able to offer customers extremely competitive rates. This is a major challenge for the organized segment, for both multinational and domestic 3PLs. Moreover, low entry barriers to the market could lead to intense competition, while complex tax laws and infrastructure bottlenecks could further add to participants’ difficulties.

"Despite these challenges, the growth prospects in the 3PL market are strong and the market is set for robust growth," says the analyst. "The increasing tendency to outsource is likely to drive growth in the immediate future, while the expected improvement in tax systems and infrastructure will boost the market in the long term." The most significant growth is expected to come from the warehousing function largely due to the implementation of value-added tax, a uniform tax regime across the country. In the transportation function, service providers can look forward to opportunities in the growth of express transport due to improvements in infrastructure and client requirements for time-bound services. Other promising logistics functions include freight forwarding and MIS and other value-added services.

1. Executive Summary
        1. Introduction and Overview
                  1. Introduction to Logistics Market in India
                  2. Introduction and Overview of the 3PL Market in the India
        2. Market Overview and Research Findings
                  1. Total 3PL Market in India Size and Forecasts
                  2. Opportunities for the 3PL Service Providers in India
                  3. Competitive Analysis
                  4. Industry Challenges for the 3PL Market in India
                  5. Drivers for the 3PL Market in the India
                  6. Restraints for the 3PL Market in India
                  7. Implications of VAT on 3PL in India
                  8. Strategic Conclusions

2. Strategic Analysis of Total 3PL Market in India
        1. Introduction
                  1. Introduction and Overview of the Indian Logistics Market
                  2. Introduction to 3PL in India
                  3. Evolution of 3PL Market in India
                  4. Awareness and Perception of 3PL in India
        2. Scenario of the Indian 3PL Market
                  1. Overall 3PL Usage in the Logistics Functions
                  2. 3PL Usage in Transportation
                  3. 3PL Usage in Warehousing
                  4. 3PL Usage in Freight Forwarding
                  5. 3PL Usage in MIS and Other Value-added Services
        3. Market Size and Revenue Forecasts
                  1. The Total Logistics Market in India
                  2. Size of the 3PL Market in the India
                  3. Growth History of 3PL Market in India
                  4. Estimated Share of the 3PL Market
                  5. Revenue Forecasts
                  6. Revenue Forecasts Breakdown by Different Logistics Functions
        4. Industry Challenges and Market Drivers and Restraints
                  1. Industry Challenges
                  2. Market Drivers
                  a. Growth of Multinational Operations Demand Professional Logistics Management
                  b. Growing Inclination to Outsource Logistics to Specialists
                  c. Economic Growth Across Different Sectors Necessitates Smooth Flow of Supply Chain
                  d. Infrastructure Development Facilitates Logistics
                  e. Implementation of an All India VAT
                  f. Declining 3PL Rates is Likely to Cause More Outsourcing
                  3. Market Restraints
                  a. High Cost of Logistics in India
                  b. Existence of Infrastructure Bottlenecks
                  c. Non-Uniform Implementation of VAT,Complex Laws and Sales Tax Regulations are not Favored by Compines
                  d. Outsourcing to a 3PL Service Provider Attracts a Service Tax
                  e. Competition from the Unorganized Segment
        5. Major End-Users of 3PL in India
                  1. Major End-Users of 3PL in India
        6. Implications of VAT on 3PL
                  1. Introduction to VAT
                  2. Challenges for 3PL Service Providers due to VAT’s impact
                  3. Opportunities for 3PL Service Providers due to VAT’s impact

3. End-User Analysis - Overview of 3PL Needs and Practices in India
        1. Overview of 3PL Needs and Practices in India
                  1. 3PL Usage in the Indian Automotive and Auto Components Sector
                  2. 3PL Usage in the Indian IT Hardware and Electronics Sector
                  3. 3PL Usage in the Indian FMCG Sector
                  4. 3PL Usage in the Indian Pharmaceuticals Sector
                  5. 3PL Usage in the Indian Retail Sector

4. Competitive Analysis of the 3PL Providers in Indian Market
        1. Industry Size
                  1. Industry Size in Terms of Number of Companies
        2. Industry Life Cycle
                  1. Current Status of the Industry Life Cycle
                  2. Current Status of Market Life Cycle
        3. Market Share Comparison and Breakup
                  1. Competitive Scenario
        4. Services Comparison
                  1. National 3PL Service Providers
                  2. Regional 3PL Service Providers
                  3. Local 3PL Service Providers
        5. Profiles of the Major 3PL Service Providers in India
                  1. AFL Logistics
                  2. DHL
                  3. Dynamic Logistics
                  4. GATI
                  5. Geo Logistics
                  6. Om Logistics
                  7. Patel Logistics
                  8. Reliance Logistics
                  9. Safexpress
                  10. SembCorp Logistics
                  11. Take Solutions
                  12. TCI Supply Chain Solutions
                  13. Total Logistics
                  14. Transystem Logistics International
                  15. TVS Logistics

5. Recommendations and Growth Strategies for 3PL Providers in India
        1. Opportunities for 3PL Service Providers in India
                  1. Types of Services with Potential
                  2. Potential of Services during the Forecast Period
        2. Business Model
                  1. Suggested Business Model
        3. Pricing and Positioning
                  1. Suggested Pricing Strategy
                  2. Suggested Positioning Strategy
        4. Strategic Alliances Joint Ventures and Partnerships
                  1. Suggested Strategy for Forming Alliances Joint Ventures and Partnerships

6. Database of Key Industry Participants
        1. Database of Key Industry Participants
                  1. Market Participants- 3PL Service Providers

7. Decision Support Database
        1. Comparitive Tabulation of Infrastructure and Industry Figures
                  1. Tabulation of Infrastructural Figures
                  2. Tabulation of Major Industry Sectors Size

List of Figures

Chapter 2

Total Third Party Logistics Market: Breakup by Mode of Freight (India), 2005
Total Third Party Logistics Market: Penetration by Logistics Function (India), 2005
Total Third Party Logistics Market: Revenue Breakup by Type of Logistics Function (India), 2005
Total Third Party Logistics Market: Estimated Shares (India), 2005
Total Third Party Logistics Market: Revenue Forecasts (India), 2002-2012
Total Third Party Logistics Market: Revenue Forecasts for Transportation Logistics Function (India), 2002-2012
Total Third Party Logistics Market: Revenue Forecasts for Warehousing Logistics Function (India), 2002-2012
Total Third Party Logistics Market: Revenue Forecasts for Freight Forwarding Logistics Function (India), 2002-2012
Total Third Party Logistics Market: Revenue Forecasts for Value-added Services and Other Services Logistics Functions (India), 2002-2012
Total Third Party Logistics Market: Impact of Top Industry Challenges (India), 2006-2012
Total Third Party Logistics Market: Market Drivers Ranked in Order of Impact (India), 2006-2012
Total Third Party Logistics Market: Market Restraints Ranked in Order of Impact (India), 2006-2012
Total Third Party Logistics Market: Top End-user Sectors (India), 2005

Chapter 4

Third Party Logistics Market: 3PL Industry Structure by Type of Service Provider (India), 2005
Third Party Logistics Market: Revenue Breakup by Type of 3PL Service Provider (India), 2005
Third Party Logistics Market: Revenue Share Breakup Between National 3PL Service Providers (India), 2005
Third Party Logistics Market: Services Comparison between National 3PL Service Providers (India), 2005

Chapter 5

Third Party Logistics Market: Top Ten 3PL Services with High Growth Potential (India), 2005
Third Party Logistics Market: Top Ten 3PL Services Ranked in Order of Potential (India), 2006-2012

Chapter 7

Decision Support Database: Tabulation of Economic and Infrastructural Figures
Decision Support Database: Value of Major Industrial Sectors in India, as of 2005

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Strategic Analysis of the Third Party Logistics Markets in India

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