Empowering MSME Enterprises Through Express Logistics

The Indian express logistics industry plays a significant role in the growth of MSMEs in the country

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The Micro, Small and Medium Enterprise (MSME) sector forms the very backbone of the Indian economy. It contributes over a remarkable 24.63per cent to the country’s GDP from the service sector. Moreover, MSMEs are a key sector for employment generation and entrepreneurial development and also help in overall inclusive development of the society, thereby facilitating India’s socio-economic transformation.

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With the increase in demand and empowerment from e-commerce, the MSME sector has experienced a much-needed boost in its prospects. Aiding it further is the rapidly developing Indian express logistics industry.  An efficient, transparent and fast delivery mechanism has become one of the most vital factors of success for any business due to extensive demand across the country, time-limited and value-added nature, cost optimization, superlative customer experience and inventory management. Therefore, the Indian express logistics industry plays a significant role in the growth of MSMEs in the country. In fact, both these sectors are highly beneficial to and dependent on each other for their development. MSMEs are the key consumers of express services in the country.

A direct correlation has historically been noted between the growth of both the MSME and express sectors owing to their reliance on one-another. However, it has been observed that the express industry is growing steadily at a CAGR of 17per cent whereas the MSME sector has had a subpar CAGR of around 5.3per cent. Therefore, leading players of the express industry have begun taking active initiatives to strengthen MSMEs. This will be tri-laterally beneficial: it will not just help in the growth of MSMEs but will also result in a subsequent growth of the express industry and an enhanced customer experience. Further, the MSME sector has been instrumental in the country’s growth and empowering them further can yield fruitful results for the Indian economy in the long run. Leading express players are therefore empowering MSMEs in the country in the following manner:

Facilitating Trade and Productivity

Ease of business, a seamless functioning, improved consumer experience, faster stock availability, free cash flow and a lesser need to follow-up are among the most essential components for the growth of any business. Therefore, by providing complete end-to-end solutions for all services, leading express players have been acting as a key facilitator of trade and productivity for MSMEs. They provide customized services: from delivery to packaging, storage, sorting, clearance and even payment of duties, all within a specific time frame. This helps rid MSMEs of almost all the stress associated with the logistical and customer relationship functions, thereby letting them focus more on the operational aspect of their enterprise and increasing their productivity. Since a majority of established express players belong to the organized segment, there is also an assurance of superlative services. This has been considerably helping MSMEs expand their businesses and rise above their contemporaries in the provision of guaranteed timely logistical services.

Meet More Demand Generated Through E-Commerce

Ever since its inception, the logistics market has predominantly been B2B in nature. But B2C, which is essentially e-commerce, has emerged as one of the fastest growing segments especially within the domestic market. With ever-increasing digital penetration and an exponential rise in the ownership of smartphones, MSMEs have begun to gradually modify their operations to gain trade opportunities through e-commerce. For the express industry, e-commerce has been among its most important growth drivers. The increase in demand for e-commerce segment of express services is evident from the fact that customers are getting better-acquainted and comfortable with these deliveries and are even willing to pay premiums for their fulfilment. Therefore, leading express players have become indispensable support for MSMEs striving to boost their growth and increase their consumer-base and profits through e-commerce.

Maximized Efficiency and Minimized Costs

The implementation of government-led policies such as GST has resulted in a substantial shift from air express to road express, thereby resulting in improved transit time, higher efficiencies and reduced expenses. This has also helped increase the range of last-mile connectivity for established organized express players, who now cater to regional delivery consignments from and to Tier-II and Tier-III cities. In fact, few leading express players have already begun collaborating with India Post, the government-operated postal system of the country, as it has the highest reach and covers approximately all of India’s 19,100 pin codes. Therefore, within the domestic market, express delivery has helped maximize efficiency for enterprises of all sizes to a great extent. Moreover, MSMEs have also begun to seek opportunities in cross-border trade, backed by logistical support from leading express players.

Hassle-free Functioning Through the Adoption of Technology

The advancements in technology have brought with them a rising complexity, as most of the MSMEs have fundamentally thrived in a traditional trade environment and are not familiar with new practices. Since technology is a key enabler in express logistics, express industry players have been among the earliest adopters of new-age technological interventions—be it AI, machine learning, IoT sensors, AR, blockchain or even drones. From first-mile operations such as demand planning, automated package sorting and sourcing optimization to mid-mile real-time tracking and end-mile alternate methods of payment—the adoption of technology is crucial throughout the express value chain. Therefore, by providing optimized route predictions for faster transit, stress-free real-time visibility, freedom of payment options and an erasable electronic proof of delivery, leading express players can help rid MSMEs of logistical hassles. Moreover, in cases of any unfortunate occurrences, leading express players to make the process of claim settlement quicker and smoother, enabling MSMEs to have a risk-free experience.

Enhanced Consumer Experience and Retention

A substantial change in consumer expectations of logistical services has recently been observed. Customers these days do not just want prompt delivery of their packages, but also expect very careful handling. The express industry has emerged as an efficient solution to this trend by setting optimal standards of credible deliveries. With increasing consumer demand for value-added services especially in the last-mile connectivity, the role of express logistics is progressively changing from being purely operational to essentially strategic. This means that while logistics was previously not concerned with the consumer engagement aspect, its express segment now plays a key role in enhancing consumer experience and thereby impacting their preferences. Therefore, for any MSME striving to emerge as a key player in its respective industry, it has become imperative to avail express services from established players.

Chander Agarwal

Written By

Chander Agarwal is the Managing Director of TCI EXPRESS LIMITED, India’s leading time-definite express distributor. In this role, Chander is responsible for the planning and growth of the company, staying deeply involved in the company’s strategic and financial decisions. He has helped guide TCIEXPRESS into becoming India’s leading and fastest growing express company, and has been instrumental in establishing the TCI group’s global footprint in international markets like Brazil, Indonesia, and countries in Africa.

Chander, widely acknowledged by shareholders as a visionary and prudent business head, graduated from Bryant University, Rhode Island, USA in 2001, and is the holder of a Bachelor of Science degree in Business Administration. He specialized in Management, Economics, and Political Science as part of this course, and began his career working with Transfreight USA, a 3rd-party logistics provider. Working with this company, which specialized in lean logistics and primarily served Toyota Motor Vehicles, in 2001 and 2002, Chander gained an in-depth understanding and knowledge of the logistics business. He leveraged this knowhow as well as a flair for leadership to steer TCIEXPRESS into becoming a company with a valuation of nearly INR 3,000 crore by the end of FY2018.