Financial Daily from THE HINDU group of publications
Friday, Sep 27, 2002
Supply Chain Management
Corporate - Outlook
FedEx realigns biz model; targets high-value exports
CHENNAI, Sept. 26
FEDERAL Express Corporation (FedEx) has realigned its business model in the Indian sub-continent, following increase in capacity and acquisition of new local associates.
Mr Jacques Creeten, Managing Director, sub-continent, FedEx, said that with a daily MD 11 flight operating out of India, the capacity now available was three times what was earlier available with the weekly 10 A310 flights. The need was to India the company's core business of high value express products for exporters.
One area where FedEx had expertise was the garment export business. More Indian garment exporters supplying to the high fashion houses were opting for this service. The high value garments were packaged individually and sent to the store.
In this business where the product had a low shelf life, time became a crucial issue. This was a big advantage over the traditional airfreight model. The biggest problem faced by Indian garment exporters was in the packaging area, Mr Creeten said and added that FedEx was able to provide the solution.
The company, which has a presence in Mumbai, Delhi, Chennai and Bangalore, plans to expand its direct presence to exporting communities in Kolkata, Hyderabad, Ahmedabad and Coimbatore. Mr Creeten said that research had shown that 85 per cent of the country's total exports came from the hinterland of these cities.
FedEx is also expanding in the markets where its erstwhile partner, Blue Dart, did not fly. Blue Dart Aviation had just two aircraft feeding the Fedex hub in Mumbai. The size of the network was no longer sufficient, with more capacity at the Mumbai hub, he said.
Another critical issue was the customs clearance close to home. Jeena and Co, one of the new associates with expertise in customs clearance, has offices all over the country.
Mr Creeten said customs clearance in India had become quite a complicated procedure both for exports and imports with different regulatory authorities. To offer a time definite door-to-door product, customs clearance had to be done.
He said that there was no point in transporting a consignment in less than 48 hours to have it stuck in customs for two to three days due to procedural delays. So from October 1, customs clearance will be integrated with the door-to-door product. Another issue has been pick-up and delivery, which was earlier done using the domestic network of Blue Dart. The use of technology and training to the staff would be another area which FedEx can now implement.
Mr Creeten said there would be now 36 FedEx branded locations and over 100 retail locations in the coming years. Some of them would be company-owned and some would be franchisee operations.
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