Deutsche Post expands business in India with subsidiary DHL
Deutsche Post expands business in India with subsidiary DHL
Edgar Bauer, Deutsche Presse-Agentur, Bombay
With bags of optimism and a lot of money, German postal
company Deutsche Post is getting into the world's fasting growing
logistics market with its subsidiary DHL.
A key region in their Asian expansion strategy is India,
which, like its neighbor China, has high levels of growth.
Deutsche Post chairman Klaus Zumwinkel, recently opening a
logistics HQ in Bombay, announced increased involvement in India
and the whole Asia-Pacific area. Around US$250 million is
invested there every year.
The Bonn-based company, which already has half of its turnover
abroad, is set to become the clear world market leader in
logistics (air and sea freight and contract logistics) with the
agreed takeover of the British firm Exel. Zumwinkel said the
takeover is due to be completed by December. He sees Asia as the
engine of growth to cement this leading position.
"Asia is the world's strongest growth market for us," he
notes.
Like China, India is an important building block for DHL.
After investment of around $250 million in the last three years,
DHL is now the market leader in India in both the express and
logistics business.
Zumwinkel did not give any exact figures for turnover and
profit. This market leader position is to be strengthened with
further investment and connected more closely to the Asian
network. "India offers us excellent opportunities which we are
pursuing strongly," the Deutsche Post chairman emphasized.
A few months ago DHL, which has been active in the Indian
market since 1979, secured a majority share of over 80 per cent
of the express market leader Blue Dart. With Blue Dart and around
5,800 employees in India, DHL has 14,000 locations and over 3,000
vehicles and five Boeing-737 freight aircraft.
The specialist logistics firm Danzas Lemuir was founded in
2003. The joint venture (DHL 49 percent/Lemuir Group 51 percent)
with over 300 employees organizes land, air and sea transport and
complete logistics services for over 5,000 companies in India.
Deutsche Post will profit from Indian economic growth and its
"enormous potential", says Zumwinkel.
The most interesting market for DHL is estimated to amount to
22 billion euros, of which 80 percent is domestic and 20 percent
international. Growth rates of 12 percent per year are expected.
Zumwinkel aims for quality for customers in India too. He can
build on a large reservoir of well-trained workers with good
English. The wages at DHL are attractive by Indian standards. An
average DHL worker in Bangalore might make the equivalent of 80
to 100 euros per month.
Pradeep Kunar, 34, who works at the customs department for
express parcels at the DHL sorting center in New Delhi, gets
about 250 euros per month. "The money's OK, but the most
important thing for me is that I work for a big and well-known
company."
Experts see India as a sleeping giant with huge potential and
as a new growing economic power alongside China. This year a
growth rate of around 7 percent is expected. The U.S. investment
bank Goldman Sachs predicts that the Indian economy will be one
of the three fastest-growing in the world in the next 20 years.
DHL wants to position itself in the Indian market early, as it
does in China. Economic growth has a direct effect on the
logistics sector. More and more goods have to be sent to and from
the Indian subcontinent. Rapidly growing foreign investment
(around $8 billion in 2005) will support and strengthen this
trend, Zumwinkel is confident.
The movement of production to India also helps the logistics
sector. IT firms such as SAP, Dell and Hewlett Packard have
offices in Bangalore, the Indian "Silicon Valley". Multinationals
like this are DHL customers. DHL managers expect further strong
growth in the textile, pharmaceutical, electronic and car
component sectors.
A lot of this is just prediction and success in logistics does
not happen by itself. Competition is also a factor, with many
rivals in the market, and DHL's competitors also have their eye
on the new markets. There are also incalculable business risks
such as natural disasters like earthquakes, floods and epidemics.
India still only has around one per cent of world exports
while China already has 6 per cent. India, a country with around
1.1 billion people (China 1.3 billion), still has much poverty
and weak infrastructure.
A quarter of the population lives below the poverty line.
Widespread misery is obvious on the street of Bombay and
Calcutta, where huts and tents lie in the gutter and countless
homeless people struggle for survival on a daily basis.