The Goods and Services Tax (GST) regime is slowly wiping out small logistics players who used to transport goods without documents as they did not prepare themselves for the transition.
The trend of large players eating up smaller ones will continue, said Ramesh Agarwal, Chairman, Agarwal Packers and Movers Ltd.
It will take three-four years for the smaller players to come into the mainstream. Their business will get diverted to those registered with GST. This transition is happening at a rapid pace, he told BusinessLine.
Multiple cargoes
The road transport industry is pegged at ₹8-9 lakh crore every year with the bulk of this being handled by the unorganised sector. In India, there are about 4 lakh small operators (having one or two trucks) and they are under threat post GST. Most of them have become sub-contractors, he said.
Some of the top players include Safe Express, TCI, Om Logistics and APML — with a collective business of ₹20,000 crore. Their combined market share is expected to grow sharply, he said. “For us, business will grow manifold. The traditional business growth will be 10-15 per cent. There will be incremental business from tier-II players,” he said.
The logistics industry is growing at 10-12 per cent annually. Post GST, it will be nearly 15 per cent as boundaries are gone. In a single bill, there could be multiple cargoes for different destinations. “In logistic cost, we will be soon on a par with other developed countries,” he said.
On APML, Agarwal said that by 2019, the company hopes to report revenues of ₹550 crore. Its core business is relocation (of household articles), reaching every nook and corner of the country.
Its other businesses include commercial movement (pharmaceutical, foods, electronics, white goods and tyres), third party logistics, and international cargo (only ex-Delhi), he said.