Market Research Report : freight forwarding market in India 2012

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Freight Forwarding Market – India
September 2012

Executive Summary

 xx Region is the 2nd largest freight forwarding market in the world after yy
 xx and yy are the global leaders in the air and ocean freight markets for the year 20‐‐
Market
 Freight forwarding market in India is estimated to reach INR xx bn by 20‐‐ at a CAGR of x%
 India is expected to witness considerable growth in freight business by 20‐‐ compared to European nations

Drivers Challenges

LE
– Growth in International Trade – Stiff Competition from International
Drivers & Counterparts

P
– Rapid Economic Growth & FDI in Logistics
Challenges – Diversification into Logistics Business – Rising Freight Costs

A M
– Improved Transportation Infrastructure

S
– Rising Competitiveness among Domestic
Companies

 EDI Platform
– Complex Operation
– Lack of Skilled Manpower
– Poor Infrastructure

 Technology Adoption by Leading Players
Technological  UPLIFT  Technology Adoption ‐ Case Study
Trends  4S eTrans

Major Players
Company A Company B Company C

Competition Company D Company E Company F

Company G Company H Company I

FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 2

•Introduction
•Freight Forwarding – Segments & Features
•Market Overview

Global
India

P LE
M
•Sustainable Procurement Guidelines

S A
•Standard Trading Conditions
•Drivers & Challenges
•Technological Trends
•Competition
•Investments
•Strategic Recommendation
•Appendix

Freight Forwarding – Definition & Types

Freight Forwarding (IFFA)

Services of any kind relating to the carriage, consolidation, storage, handling, packing or distribution of the goods with ancillary and
advisory services in connection therewith, including but not limited to customs and fiscal matters, declaring the goods for official
purposes, procuring insurance of the goods and collecting or procuring payment or documents relating to the goods

Types of

LE
MP Freight Forwarding

Air Freight S A
Sea / Ocean / Ship Land Freight Rail Freight
Forwarding Freight Forwarding Forwarding Forwarding

Mode of Transport Mode of Transport Mode of Transport Mode of Transport

Air Cargo Sea Freight Road Transport Rail Freight

Note: IFFA ‐ International Federation of Freight Forwarders Associations


SAMPLE
Freight Forwarding – Segments, Services & Benefits (1/2)
Types of Freight Forwarding
Segments Served Services Customer Benefits

Air Freight Forwarding • xx • xx • xx

Sea Freight Forwarding • xx • xx • xx


Freight Forwarding Market ‐ Global

Freight Forwarding Market ‐ Global ‐ Overview
• Findings

LE
MP
A
Market Size & Growth Market Size by Region (2010)
INR bn
10,000

8,000
x1
1.8%
x2
S 25%
5%
2%

39%
xx Region is the 2nd
largest freight
forwarding market in
6,000 the world after yy

4,000

2,000
29%
0
20‐‐ 20‐‐e
Region A Region C Region E
Region B Region D


Major Players in Global Freight Forwarding Market
SAMPLE
Market Share – Air Freight (20‐‐) Market Share – Sea Freight (20‐‐)

1.4% 0.5%
xx is the market 2.0% yy is the market
1.5% 6.8% leader in global air 0.4%
1.5% leader in global sea /
1.7% freight forwarding 0.5% 0.5% ocean freight
1.7% market 0.5% forwarding market

1.8% 3.5% 0.7% 1.5%

2.9% 0.9%
3.0% 1.0%

Company A Company F Company A Company F
Company B Company G Company B Company G
Company C Company H Company C Company H
Company D Company I Company D Company I
Company E Company J Company E Company J

• Findings

Note: Market Share ‐ % of total freight forwarding market

7

Freight Forwarding Market ‐ India

Freight Forwarding Market ‐ India ‐ Overview

• Findings

P LE
S A M
Market Size & Growth
INR bn
800
x6
16.5%
600 x5
x4
x3
400 x2
x1

200

0
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐


India is expected to witness considerable growth in freight
business by 2020 compared to the European countries SAMPLE
• Findings

Top 5 Freight Markets (20‐‐) Top 5 Freight Markets (20‐‐e)

bn tkm bn tkm
7,000 x1 12,000 y1
6,000 10,000
x2
5,000 8,000
4,000 y2
6,000
3,000 x3 x4
x5 4,000 y3 y4 y5
2,000
x6 y6
1,000 2,000
0 0
Country 1 Country 2 Country 3 Country 4 Country 5 Country 6 Country 1 Country 2 Country 3 Country 4 Country 5 Country 6

Findings

Note: Market size is for overland freight (road, rail and inland waterways) markets (billion tkm – unit of freight transport volume)

9

Freight forwarding is emerging as the businesses with high
market attractiveness SAMPLE
Attractiveness in Freight Forwarding Market in India
Competitive Overall
Current Market Size Growth Potential Innovation Potential Profitability
Intensity Attractiveness
‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Areas of Improvements
Level of improvement desired

Area 6

Area 3

Area 1

Area 2

Area 5

Area 4

Relative weight based on world average
Note: Attractiveness is rated in accordance with 1 < 2 < 3 < 4 < 5

10

Elements considered by shippers while selecting a mode of
transportation

Factors for Selecting Transportation Mode

LE x6%

P
Findings
x5%

SA M x4%
x1%

x3%

x2%

A B C D E F


SAMPLE
Freight Forwarding Market in India – SWOT Analysis

Strength Weakness

• xx • xx

SWOT Analysis

Opportunity Threat

• xx
• xx


Sustainable Procurement Guidelines for Freight Forwarding
(1/5) SAMPLE
Findings

Sustainable
Procurement of
• xx
Freight Forwarding
Services

• Greenhouse Gas Emissions
• xx

• Air Pollutants
• xx

Key Environmental
Impacts


SAMPLE
Standard Trading Conditions for Freight Forwarders (1/3)

Freight Forwarder’s Role

• xx

Performance of the Contract

• xx


Drivers & Challenges

Challenges

Stiff Competition from International
Counterparts

Drivers

LE
Rising Freight Costs
Growth in International Trade

MP Complex Operation

A
Rapid Economic Growth & FDI in

S
Logistics Lack of Skilled Manpower

Diversification into Logistics Business Poor Infrastructure
Improved Transportation
Infrastructure
Rising Competitiveness among
Domestic Companies


Growth in international trade is providing huge impetus to
the demand for freight forwarding
Growth in International Trade (1/2) Impact
• Findings

LE
MP
India’s Total Export
S A India’s Total Import
INR bn Government of India INR bn
plans to double India’s
15,000 20,000 18%
20% export of goods and y4
x4
services by 2014‐15 15,000 y2 y3
10,000 x2 x3 y1
x1 10,000
5,000 India’s import is also
expected to grow 5,000
further, particularly of
0 0
oil and capital goods
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐

Intercontinental trade is expected to witness considerable
growth in next five years
Growth in International Trade (2/2)
• Findings

Growth in India – US Bilateral Trade Growth in India – Russia Bilateral Trade

INR bn INR bn

LE
a% b% b2
6,000 a2 1,000

P
4,000 a1
b1
500
2,000
0
20‐‐ 20‐‐

S A M 0
20‐‐ 20‐‐

Growth in India – Lithuania Growth in India – Latin America Growth in India – China
Bilateral Trade Bilateral Trade Bilateral Trade

INR bn INR bn INR bn
d%
15,000 c% 6,000 d2 6,000 e% e2
c2 d1
10,000 c1 4,000 4,000
5,000 2,000 2,000 e1
0 0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐


Freight forwarding sector in India has witnessed a significant
growth due to robust economic growth
Rapid Economic Growth & FDI in Logistics (1/2) Impact

• Findings

P LE
S A M
Key Economic Indicators
GDP Growth Trend* Rapid Urbanization

% %
b4 b5
10 a3 40 b3
a5 b1 b2
8 a2 a4
a1 30
6
20
4
2 10
0 0
20-- 20-- 20-- 20-- 20-- 20-- 20-- 20-- 20 20--
*Note: Figures for financial year – April to March

Key economic indicators including 100% FDI in logistics
shows a healthy economic outlook for India
Rapid Economic Growth & FDI in Logistics (2/2)
Employment Growth Rise in Aggregate Annual Disposable Income
A B C D F
+2.3% INR tr
mn

y4 y5 100 z
600 y1 y2 y3 y4

LE
80 +6.9% 24%
400

P
60 23%
200 y
40 15%

M
x 9% 34%
0 34%
13% 9% 7%

A
20
20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 20‐‐ 49% 33% 15%

S
0 23% 9% 3%
~66% of the total population will be in the working age group by 2020
20‐‐ 20‐‐e 20‐‐e

Total FDI in India* FDI Inflow FDI in Logistics Sector

INR bn % Share
1500 x2
x2 x4 100
1000 x3
50 X%
500

0 0
20‐‐ 20‐‐ 20‐‐ 20‐‐** Logistics
India is the 3rd largest investor base in the world
Note: Working age group refers to 15‐64 years old *Note: Figures for financial year – April to March **Note: Figures for Apr to Jan

Freight rates in India are zooming up owing to diesel price
hike
Rise in Freight Costs (2/2) Cost to Import‐Export Per Container

•xx
INR ‘000 4%
60 a4 b4 a5 b5
a1 b1 a2 b2 a3 b3

40

LE
20

MP 0
2007 2008 2009 2010 2011

Hike in Diesel Price S A Destinations
Delhi to A
Rate Increased by (in INR)
‐‐
Import Export

Freight Rate Now (in INR)
‐‐
INR / litre
14% Delhi to B ‐‐ ‐‐
50 x2
x1 Delhi to C ‐‐ ‐‐
40 Delhi to D ‐‐ ‐‐
30 Delhi to E ‐‐ ‐‐
20 Delhi to F ‐‐ ‐‐

10 Delhi to G ‐‐ ‐‐
Delhi to H ‐‐ ‐‐
0
Earlier Now Delhi to I ‐‐ ‐‐


Process improvement and greater use of technology have
the potential to…
Information flow through the Logistics Value Chain

xx xx xx xx xx xx xx

LE
P
Electronic Data Interchange (EDI) Needed across the Entire Supply Chain

M
xx S A xx

xx

EDI Platform xx

xx
xx

xx xx


…significantly improve operating efficiencies for the Indian
logistics sector
Shippers & Consignees Custodian
Benefits

UPLIFT

• xx • xx

LE
Universal Platform for Logistics &

P
Integrated Freight Transport

CHAs / Forwarders

S A M xx

xx
Customs

xx

Carriers

• xx • xx

• xx


Technology Adoption by Leading Players (1/2)
Freight Forwarding Industry & Four Soft Alliance (FFIFA)

• xx

xx

LE
Greatly facilitates the freight forwarding
/ CHAs industry

MP
S A
IT • xx
Awareness


Major Public Companies ‐ Summary
Net Profit/Loss
2,800
2,600
Size of the Bubble represents Market Capitalization in INR mn
2,400 m1
2,200

2,000

LE
1,800

P
1,600

M
1,400

A
1,200 m2
1,000
800
600
400
S
200 m4
m3
0
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Total income

Company A Company B Company C Company D

Note: All figures are in INR mn and are based on the latest financials available


Public: Domestic Company – Company A (1/3)
Company Information Offices and Centres – India
Corporate
Headquarter

Tel No.
Fax No.
Website
Year of Incorporation

LE
Ticker Symbol

MP
A
Stock Exchange
Mumbai Head Office

Products and Services
Category
Logistics solutions
Products/Services
S Key People
Name Designation


Public: Domestic Company ‐ Company A (2/3)
Financial Snapshot
SAMPLE Key Ratios
y‐o‐y change
Total Income Net Profit/Loss INR mn Particulars 2012 2011 2010 2009
INR mn (2012‐11)
35,858 Profitability Ratios
40,000 34,381 3,000
28,803 Operating Margin ‐0.19 8.78% 8.97% 7.61% 8.01%
30,000 Net Margin 0.06 6.54% 6.48% 5.76% 6.24%
20,836 2,000
20,000 Profit Before Tax Margin ‐0.15 8.44% 8.58% 7.77% 8.13%
1,000 Return on Equity 0.48 15.42% 14.94% 13.74% 13.07%
10,000
Return on Capital Employed 1.52 14.71% 13.18% 13.53% 13.95%
0 0 Return on Working Capital ‐11023.91
‐
50.35% 46.22% 36.95%
10973.56%
2009 2010 2011 2012 Return on Assets 0.32 8.27% 7.95% 8.07% 8.62%
Financial Summary Return on Fixed Assets 4.55 16.76% 12.20% 19.68% 23.75%

Cost Ratios
• The company earned a net profit of INR xx mn in FY 20‐‐, as
Operating costs (% of Sales) 0.19 91.11% 90.92% 92.34% 91.90%
compared to net profit of INR xx mn in FY 20‐‐
Administration costs (% of
17.24 17.24% 0.00% 6.07% 8.64%
• The company reported total income of INR xx mn in FY 20‐‐, Sales)
registering an increase of xx% over FY 20‐‐ Interest costs (% of Sales) 0.03 1.65% 1.62% 0.68% 1.12%

• The company earned an operating margin of xx% in FY 20‐‐, a Liquidity Ratios
decrease of xx percentage points over FY ‐‐ Current Ratio ‐48.94% 1.00 1.95 1.82 2.13
Cash Ratio ‐43.37% 0.26 0.47 0.63 0.83
• The company reported debt to equity ratio of xx in FY 20‐‐, a
Leverage Ratios
decrease of xx% over FY ‐‐
Debt to Equity Ratio ‐1.63% 0.86 0.88 0.70 0.52

Key Financial Performance Indicators Debt to Capital Ratio ‐20.15% 0.27 0.34 0.24 0.17
Interest Coverage Ratio ‐3.90% 5.39 5.61 11.27 7.20
Indicators Value (25/09/2012) Efficiency Ratios
Market Capitalization (INR mn) xx Fixed Asset Turnover 35.97% 2.53 1.86 3.39 3.77

Total Enterprise Value (INR mn) xx Asset Turnover 3.01% 1.25 1.21 1.39 1.37
Current Asset Turnover 36.26% 5.10 3.74 3.59 3.11
EPS (INR) xx
Working Capital Turnover ‐21677.73% ‐1655.74 7.67 7.97 5.86
PE Ratio (Absolute)‐25th Jun, 2012 xx
Capital Employed Turnover 2.23% 2.33 2.28 2.37 2.07

Note: FYC 2012 Improved Decline


Public: Domestic Company ‐ Company A (3/3)
Key Business Segments Key Geographic Segments
Container Freight Stations Australia & New Zealand Mediterranean Far East Europe
Project & Engineering Solutions Africa America India
Multimodal Transport Operations
% %
2% 2% 2%
100% 6% 7% 7% 100% 2%
10% 10% 16% 6% 2%

16% 18% 5% 19% 4%

LE
50% 94% 83% 83% 50% 28% 27% 15% 29% 15%

P
30% 31% 29%
0% 0%

M
2008 2009 2010 2008 2009 2010

Business Highlights
Description
Overview
News
S A
ICD/CFS Facilities
Rank
Acquisitions


Major Private Companies ‐ Summary

Net Profit/Loss
800
Size of the Bubble represents Total Assets
700 in INR mn

600

LE
t1
500

400

MP
300

200

100
S A
t5 t3
t7 t2
0
t6 t4
‐100 Total income
‐5,000 0 5,000 10,000 15,000

Company A Company B Company C Company D Company E Company F Company G

Note: All figures are in INR mn and are based on the latest financials available


Private: Domestic Company ‐ Company B (1/3)
Company Information Offices and Centres – India

Corporate
Headquarter

Tel No. Delhi

LE
Fax No.
Website
Year of Incorporation

MP
A
Head Office

Products and Services
Category Products/Services S Key People
Name Designation
Diversified Support
Services


Private: Domestic Company ‐ Company B (2/3)
Financial Snapshot Key Ratios
y‐o‐y change
Total Income Net Profit/Loss Particulars 2010 2009 2008 2007
(2010‐09)
INR mn INR mn Profitability Ratios
1500 1376.6 0 Operating Margin N.A. N.A. N.A. N.A. 90.63%

1169.3 Net Margin N.A. N.A. N.A. N.A. 4.46%
Profit Before Tax Margin N.A. N.A. N.A. N.A. 5.61%
1000 ‐200 Return on Equity

0.00 0.00% 0.00% 0.00% 19.13%
559.6 Return on Capital Employed 0.00 0.00% 0.00% 0.00% 1438.72%

LE
500 ‐400 Return on Working Capital 0.00 0.00% 0.00% 0.00% 34.87%
222.9 Return on Assets

P
0.00 0.00% 0.00% 0.00% 16.44%
Return on Fixed Assets 0.00 0.00% 0.00% 0.00% 325.58%
0 ‐600

M
Cost Ratios
2008 2009 2010 2011

A
Operating costs (% of Sales) N.A. N.A. N.A. N.A. 6.54%

S
Administration costs (% of
N.A. N.A. N.A. N.A. 6.13%
Sales)
Financial Summary Interest costs (% of Sales) N.A. N.A. N.A. N.A. 0.09%

• The company incurred a net loss of INR xx mn in FY 20‐‐, as Liquidity Ratios
Current Ratio 32.99% 2.67 2.01 2.08 1.61
compared to net loss of INR xx mn in FY 20‐‐
Cash Ratio 16.04% 1.28 1.10 1.38 0.80
• The company reported total income of INR xxmn in FY 20‐‐, Leverage Ratios
registering an increase of xx% over FY 20‐‐ Debt to Equity Ratio 2.26% 0.18 0.17 0.05 0.16
Debt to Capital Ratio 1.92% 0.15 0.15 0.05 0.14
• The company earned an operating margin of xx% in FY 20‐‐, an Interest Coverage Ratio N.A. N.A. N.A. N.A. 1098.85
increase of xx percentage points over FY 20‐‐ Efficiency Ratios
• The company reported debt to equity ratio of xx in FY 20‐‐, an Fixed Asset Turnover N.A. 0.00 0.00 0.00 70.86
Asset Turnover N.A. 0.00 0.00 0.00 3.58
increase of xx% over FY 20‐‐
Current Asset Turnover N.A. 0.00 0.00 0.00 2.89
Working Capital Turnover N.A. 0.00 0.00 0.00 7.59
Capital Employed Turnover N.A. 0.00 0.00 0.00 4.16

Improved Decline


SAMPLE
Private: Domestic Company – Company B (3/3)
Business Highlights

Description News

Overview

Network

Awards


Significant M&A activity being witnessed in this sector over
the last few years SAMPLE
Investments in Freight Forwarding Market in India
Outbound M&A Deals, JVs & other Investments

Date Target Acquirer/Investor Amount (INR mn) Stake
mm‐yy Company 1 Company 11 ‐‐ ‐‐











SAMPLE
Strategic Recommendation for Freight Forwarders

• xx • xx

• xx • xx


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Market Research Report : freight forwarding market in India 2012

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