Rhenus AG, Seaways in JV

Rhenus AG, a subsidiary of the Euro 2.4 billion Rethmann Group of Germany, is set to make a foray into the Indian logistics market this week. The company is tying up with the Hyderabad-based Seaways Shipping to form a joint venture, Seaways Rhenus Logistics.

The new outfit will offer total supply chain management solutions focussing on the Indo-European trade route, covering sectors such as automotive, healthcare, chemicals, industrial and consumer goods.

Explaining Rhenus' India foray, director of the Seaways group P Vivek Anand said, "The logistics market in India is hotting up as corporates are increasingly realising that outsourcing of their logistics requirements to specialised service providers can result in substantial savings."

This trend has seen the domestic logistics market attracting new services providers, particularly foreign players.

While foreign players such as APL Logistics, Panalpina and Maersk Logistics have been here for quite some time, new companies such as Rhenus and the Dubai-based Swift Freight and Logistics have bought themselves a ticket to India.

Furthermore, corporate houses are demanding more non-traditional services that go beyond the usual inbound/ outbound transportation and customs clearing and forwarding to more complex functions such as reverse logistics, inventory management, packaging, labeling and even order processing.

This is encouraging the existing domestic players such as Transport Corporation of India, Gati and DHL to broaden their service portfolio. With increasing competition, the companies are also consolidating their presence by increasingly concentrating on certain geographies.

A recent study by TCI and the Management Development Institute (MDI) has shown that less than 55 per cent of domestic companies subscribe to third party logistic services as compared to over 75 per cent globally, indicating a good growth opportunity.

The market for third party logistics which was at $250 million in 2003 is expected to grow at a CAGR of 20.4 per cent between 2004-09 to reach $970 million by 2009, according to a Frost and Sullivan report on the logistics market.