Amazon, Flipkart to drive growth in cargo segment; air cargo to benefit by Rs 1,000 cr: Report

The e-retail industry led by the likes of Amazon and Flipkart has brought about a major disruption in the domestic cargo sector with an expected contribution of about Rs 5,000 crore this fiscal, of which the air cargo segment would garner around Rs 1,000 crore, a report said.

The Express Industry Report 2018 released last week said the e-commerce players have challenged the traditional express operations and unlocked many opportunities by providing newer avenues for value addition.

The Rs 17,000 crore domestic express industry, comprising shipments transported and delivered within the country by road and air, is currently growing at 15 per cent, with the e-retailers being a key driver of growth, the report said.

Air cargo express, which contributes Rs 5,000 crore to the domestic industry, will continue to reap dividends from the healthy growth of e-commerce players even as the e-retailer players are increasingly looking at surface transport for delivery of goods and products, the report said.

The e-retail industry is estimated to contribute close to Rs 4,000 crore to domestic surface express and close to Rs 1,000 crore to domestic air express during this fiscal, the report said.

Talking to PTI, COO of Express Industry Council of India, Vijay Kumar favoured re-evaluation of the government policy to allow the domestic cargo airlines to offer international operations, thus wooing more players into the air cargo business. At present, the notable player in the domestic air cargo airlines is Blue Dart Express.

More players and avenues in the cargo business could mean more scope for expansion for the e-commerce players.

Today, the top two e-commerce players Amazon and Flipkart contribute as much as 80-85 per cent to the industry revenues. But with the entry of newer players such as Paytm, ShopClues and aggressive investments from incumbents to capture a higher share of the lucrative Indian e-retail market, the competitive intensity in the express industry has increased significantly, the report said.

"E-retail, as a part of the B2C express segment, is estimated to contribute Rs 5,000 crore to the express industry during this fiscal. In terms of volume, close to 1.3 million shipments is being shipped daily - including the forward fulfilments and returns, the report said.

The dynamic and competitive nature of the e-retail segment has brought in many new trends for the industry such as adoption of alternate delivery methods, customer centric delivery, shift from air express to surface express, increase in regional movement, adoption of technology and expansion to remote locations, the express report underlined.