Prevailing Context – The ground for early Couriers

Indian logistics – An introduction

Modern India has the history of goods and consumables movement since late 1800s. During the rule of East India company initially and later during British government, number of industrial hubs developed at various places in India. In the eastern India mining led to coal as a primary energy source, and Calcutta became the hub of Indian operations till 1900. Steam engine driven boats started traversing since 19th century in the river Ganga, and Mirzapur became the transit point with the route covered the entire Gangetic belt.

Hinterlands got connected with the port town. Kanpur, Aligarh and other town in current Uttar Pradesh developed as hubs. In the western India the importance shifted to Mumbai with textiles occupying important space. Nagpur, Solapur, Surat, and Ahmedabad too developed as specialized hubs. In the southern India, Madras, and Coimbatore developed. Later Mysore region gained some importance due to the Maharaja’s investments. Once we have the hubs as production points, the consumptions centres widely spread, the importance of logistics came to the fore.

Goods produced at concentrated places can’t be consumed at the same place, and the customers located at different points have to be ‘serviced’. Thus, the goods must be transported somehow. Given the limited navigability of Indian rivers due to low draft, the penetration of Railways wasn’t much and due to the hassles suffered by the traders, the road routes became default choice. Road based transport is costly is a known fact but close to ninety percent of the goods that are being moved across the country are using the road route. Given the cost dynamics, air-based transport is not a viable option for price sensitive Indian customers.

Beyond ‘post’

Indian posts came into existence in a major way by the turn of the twentieth century. Post independence in 1947, the network got strengthened and acquired a unique All India presence. Of the six lakh villages many got covered and the postal foot print of 95% within a week to ten days delivery became the practice. Railway Mail Service (RMS) transported mail from places to places. Postal Index Code got introduced in India and ‘zones’ were identified. All sorting and distribution became more systematic with PIN operationalization. Postal service was the least cost solution for the long and short distance communications with one way communication happening at less than a cent. Post card was the universally used means with hardly fifteen paise as the standard rate for decades. Inland letters for longer written communication, and envelops to ‘carry’ papers or documents were the other forms. The pricing was double and triple of the post card, though further steeper pricing happened in recent decades. For carrying the goods, postal department had ‘parcel’ service. To ensure the delivery and acknowledgements, special pricing was there in terms of ‘registered’ and ‘acknowledgement due’ (AD) services.

Beginning ‘Courier’

1980s saw the early liberalization trends. Many businesses started incubated, and growing in size, numbers, and at different locations. This trend got strengthened with liberalization, privatization, and globalization starting in 1991. Many companies from abroad started appearing on Indian scene. Many new age Indian companies that started their operations too. The quality of service expected started increasing. People wanted quicker and responsible service. ‘May reach’ got replaced by ‘Should reach’. Important cities of the country that were eight accounted for over eighty percent of the business communication. Faster and definite reachability became the service expectation. Regarding the pricing too, the companies were expecting matching with the postal service. Thus, a new genre started in Indian business scenario wherein ‘courier service’ became a popular term.

Progressing to third party

Courier in the Indian context earlier was purely ‘private’ affair meaning two parties dealing with some transaction that required a good to be transferred from one to the other, had to operate in such a manner that one of them takes the responsibility of transit. In other words, ‘A’ has to send to ‘B’, then ‘A’ takes ownership and sends own person. Similarly, if ‘B’ has to send something. No third-party transactions were seen much. Even in high value diamond transport from place to place say Mumbai to Surat and back, the couriers that were operating were ‘Angads’ who were purely private parties owned by either of the two sides. However, the high value players or high-volume players can afford to have dedicated couriers. Smaller parties can’t have such with an economy scale. Hence, the need for aggregating, common, third-party courier service. Companies needed service quality, low pricing, reliability of service, but could not afford dedicated private courier service internalized. Hence, the third party that can ‘pool’ requirements of many, and offer the desirable quality of service at affordable (or atleast competitive) rates. The tipping point got reached by late 1980s.

Value proposition

The third-party courier needs to have offices or last mile connectivity points at the desired locations. One can be a purely a state player (with half the business transactions happening within the state, for small and medium players dominating). The bus network within the state can be effectively leveraged. The inter-state service again can be regional or national. For example, someone can be focused on western India and specifically say Gujarat, Maharashtra, and western Madhya Pradesh. Another example is, a player choosing to be a southern player. There can also be a niche of intra-city service, say within Mumbai Metropolitan Region. These are pure ‘local’ players.

Another advantage with couriers was unlike postal service where customer had to go to the ‘office’, the service provider sends their person to customer location to collect. A great service where small and medium enterprises hardly have sparable manpower to send them to post office to stand in the queue for hours together. Once the Internet has stated penetrating in India, the barcode-based tracking mechanism became possible and the status of the packet/package and its exact location could be tracked easily and information was transparent.

Another service was express courier that promised delivery within say twenty-four hours between big cities. If any urgent document was required, people could send by paying little extra was the notion. High and low value items could be sent at comparable rates to the desired locations and this helped people to develop trust in the courier services. As one must abide by the law, controversial and banned goods could not be sent, so also money.

Leveraging advantage

The requirements existed; the ‘services gap’ existed. Indian logistics was about to undergo transformation. Any early mover could have sensed the opportunity and tried it out for better. Companies started attempted entering this space in limited way and once found their feet firmly on ground, started expanding. The company that entered the space then has seen the full growth circle.