The deal is seen to be important considering that the express logistics industry is expected to reach Rs. 48,000 crores (USD 7 billion) by 2023
Allcargo Logistics Ltd., India’s largest integrated logistics solutions provider, has forayed into the express logistics space by acquiring a controlling stake in GATI Ltd., a pioneer in the segment. Through this transaction, Allcargo Logistics has added another domestic service to its portfolio by entering a segment which has been growing exponentially. It has now become the only Indian company to provide a comprehensive range of services including multimodal transport operations (MTO), container freight station operations and inland container depot operations (CFS-ICD), projects and engineering solutions, warehousing, distribution, contract logistics and logistics parks.
Allcargo Logistics’ market leadership in the global LCL consolidation business and GATI’s domestic express transportation segment allows the company to henceforth offer end-to-end transportation capabilities to customers. With the formal completion of this deal in the next two to three months, Allcargo Logistics will emerge as India’s largest logistics company by revenue in the private sector with an operational presence across the length and breadth of India. Meanwhile, as a study led by Deloitte in 2018 indicates, the express logistics industry is expected to reach Rs. 48,000 crores (USD 7 billion) by 2023. This growth will primarily be driven by domestic consumption, shift from unorganised to organised trade, e-commerce (domestic and cross-border) and significant demand from the small and medium B2B segment.
“The exponential rise in cross-border and domestic e-commerce has opened up new markets for traditional express players such as GATI. With Allcargo Logistics’ existing strength in the ocean transportation business and GATI’s expertise in land and air transportation, we are now in a unique position to offer our customers a suite of truly multimodal solutions,” stated Shashi Kiran Shetty, Chairman, Allcargo Logistics Ltd. GATI has simplified door-to-door express logistics over the last 25 years. The company has a wide-ranging customer base that comprises the top Indian industry leaders, e-commerce players as well as SMEs. Post this deal, GATI will be in a position to leverage Allcargo Logistics’ global network to provide time and cost-efficient solutions to clients.
“With this strategic deal with Allcargo Logistics, we have entered a new era of consolidation in the domestic express logistics space. This collaboration also reiterates our commitment to ensure maximum outreach across untapped markets and provide benchmarked last-mile delivery solutions to our clients,” stated Bala Aghoramurthy, Deputy Managing Director, GATI Ltd. The company is a household name in India with presence in 727 districts and an extensive service network reaching out to 19,000 pin codes across the country. Allcargo Logistics is India’s largest integrated logistics services provider with a presence across crucial touch-points on the land side as well as ocean side of the value chain.
With this acquisition, Allcargo Logistics is also entering into a strategic relationship with Kintetsu World Express (KWE), the 10th largest air freight forwarder in the world which has been in the news for acquiring world-renowned APL Logistics. KWE has a market cap of over USD 5 billion and is also one of the key customers of ECU Worldwide – Allcargo Logistics’ wholly-owned subsidiary – in its LCL business. This partnership will allow Allcargo Logistics and KWE to jointly explore and pursue further collaborations within and outside India. GATI operates an asset-light model with a distribution network of trucking companies that provide vehicles on need basis. The business operates on a hub and spoke model across the country with highest standard of safety and compliance.