Allcargo Logistics mulling to expand in Tech & Contract Logistics domain post GST

Posted by Daily Shipping Times on 10-08-2017        Tweet

MUMBAI: Allcargo Logistics is looking for acquisitions in the technology and contract logistics space, seeking to grow its business in India where opportunities will likely grow at a faster pace under GST.

We have started focusing a lot more on India according to Chairman Shashi Kiran Shetty. He said, “In the last five years, there was nothing much happening here. Although the economy was growing at 6%-7%, on (the) ground, there weren’t any big changes.

There was excess capacity in transportation, manufacturing, hotels,” he said. “It appears now that the cycle is changing. GST will also help companies reorganise their supply chain management.”

The company has kept aside Rs 200 crore for acquisitions. It has made 12 acquisitions till date. Currently, India business accounts for just 20% of Allcargo’s consolidated revenue; its global business — consolidated last year under ECU Worldwide — contributes the rest. The implementation of GST on July 1, among other things, would lead companies to shift to bigger, more efficient warehouses and imbibe higher levels of technology in all aspects of functioning for higher efficiencies.

“One way consolidation will happen in this industry is through technology. I think technology will force the middleman out,” Shetty said. “The tech companies will take that role. Once technology comes into play, it starts building the organisation to certain standardisations,” he said. According to him, the focus will be on technology-enablers in the transportation space.

Newer technology will be especially relevant in last-mile delivery, a segment where Allcargo recently forayed into.

The company is in the B2B (business-to-business) space but may look at venturing into the B2C (business-to-customer) space in the next few years, said Shetty.

“What attracted us to the lastmile space was express transport. It’s very similar to what we do internationally,” he said. Allcargo is investing Rs 800-1,000 crore in setting up logistics parks in Bengaluru, Hyderabad, Nagpur and Jhajjar. Shetty said work on at least two of them will start later this year. He said at some point, it would be feasible to list ECU Worldwide.