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Growth in international trade is providing huge impetus to the demand for freight forwarding in India. Furthermore, Intercontinental trade is expected to witness considerable growth in next five years. Freight forwarding sector in India has witnessed a significant growth due to robust economic growth. Key economic indicators including 100% FDI in logistics shows a healthy economic outlook for India. Post global slowdown freight forwarding companies have started to venture out into high end logistics solutions. Freight companies will benefit from the considerable planned investments in transportation infrastructure in India. Indian freight forwarding companies are now becoming competitive like their foreign counterparts.
The report begins with an introduction section, defining the market and classifying it into its types. The evolution of the freight forwarder is then projected. A Comparison between Custom Broker, Freight Forwarder & 3PL are given, followed by the value chain and the advantages of freight forwarders over carriers. Freight Forwarders’ Streams of Income are also identified.
Freight Forwarding – Segments & Features section discusses the segments served, services provided and the customer’s benefits from different types of freight forwarding. This section also provides the key characteristics of freight forwarding.
Market overview section provides a brief snapshot of the freight forwarding market both globally and in India. To begin with, it gives a brief overview of global freight forwarding market followed by its market size & growth. Region wise global market size is also given. Major Players in global freight forwarding market are identified from their market share in air freight and sea freight. Subsequently, a brief overview of Indian freight forwarding market followed by its market size & growth is projected. Top 5 Freight Markets in 2011 is identified with estimation in 2020. Attractiveness in freight forwarding market in India is also analyzed indicating the areas of improvement. Factors for selecting transportation mode are also identified in this section.
Sustainable Procurement Guidelines section deals with the sustainable procurement guidelines for freight forwarding. Their implementation in different areas of improvement is also provided. Further, steps to develop a sustainable procurement of freight transportation services are also discussed.
Standard Trading Conditions section deals with the standard trading conditions for freight forwarders.
Drivers & challenges section in the report provides a comprehensive set of factors which boosts and hinders the growth in the market. An analysis of the section brings forth the key drivers fueling growth in the market including growth in international trade, rapid economic growth & FDI in logistics, diversification into logistics business, improved trans
Market Research Report : freight forwarding market in India 2012
1. Insert Cover Image using Slide Master View
Do not distort
Freight Forwarding Market – India
September 2012
2. 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
3. •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 MARKET IN INDIA 2012.PPT 3
4. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 4
5. 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 IN INDIA 2012.PPT 5
6. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 6
7. 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
9. 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
10. 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
13. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 13
15. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 15
16. 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‐‐
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 16
17. 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 MARKET IN INDIA 2012.PPT 17
19. 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 FORWARDING MARKET IN INDIA 2012.PPT 19
20. 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 ‐‐ ‐‐
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 20
21. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 21
23. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 23
24. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 24
25. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 25
26. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 26
27. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 27
28. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 28
29. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 29
30. 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
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 30
32. 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 ‐‐ ‐‐
mm‐yy Company 2 Company 12 ‐‐ ‐‐
mm‐yy Company 3 Company 13 ‐‐ ‐‐
mm‐yy Company 4 Company 14 ‐‐ ‐‐
mm‐yy Company 5 Company 15 ‐‐ ‐‐
mm‐yy Company 6 Company 16 ‐‐ ‐‐
mm‐yy Company 7 Company 17 ‐‐ ‐‐
mm‐yy Company 8 Company 18 ‐‐ ‐‐
mm‐yy Company 9 Company 19 ‐‐ ‐‐
mm‐yy Company 10 Company 20 ‐‐ ‐‐
FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 32
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FREIGHT FORWARDING MARKET IN INDIA 2012.PPT 34