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Mr. Pawan Jain , Chairman and Managing Director, Safexpress

India Infoline News Service | Mumbai |

over the last few years the Indian logistics and supply chain management industry has been growing exponentially and is today valued at around US$50bn

Safexpress - India?s leading third party logistics provider - offers the widest range of express services in India through Integrated Logistics Management, Express, Air, Multi-modal, Door-to-Door and Time Definite Delivery in addition to logistics consultancy and management services. The company was launched in Sept. 1995 as a door-to-door high value cargo distribution service. Today, it offers a one-stop solution for all logistics requirements such as customs clearance, consultancy on packaging, logistics centers with warehousing, inventory management, invoice generation and money management.

Mr. Pawan Jain is Chairman and Managing Director, Safexpress. Today, Safexpress boasts of the largest logistics network in the country, with 515 offices; and the widest range of express services. It boasts a turnover of over Rs. 225 crores. Mr. Jain played a critical role in organizing the first Global Exhibition and Conference on Logistics in 1997 promoted by Confederation of Indian Industry (CII). He also has the distinction of being Member, National Committee on Logistics and Convenor - ?Policy/Procedural issues in Domestic trade? - organized under the aegis of CII. Mr. Jain is a recipient of the Golden Peacock Award for Excellence in Logistics and Supply Chain Management, conferred by the Institute of Directors and the Quality Management Institute under the aegis of the World Conference on Quality Management. He participated in the Asia Pacific Round Table on Logistics and Supply Chain Management organized by The Economist at Singapore. He is also Member - Advisory Committee of leading management institutes across the country. Mr. Jain was amongst the finalists at the Ernst & Young Entrepreneur of the Year Award 2003.

Replying to Hemant Maradia of India Infoline Mr. Jain says that over the last few years the Indian logistics and supply chain management industry has been growing exponentially and is today valued at around US$50bn.

What is the size of the Indian Logistics and Supply Chain Management (LSCM) market? At what rate is it growing annually? What is your share in it?

The Indian logistics and supply chain management industry is a booming industry today. Transportation itself is worth more than Rs 150,000 crores industry with surface transportation alone accounting for over Rs 100,000 crores. Third Party Logistics (3PL) and warehousing management add on another Rs. 3,000 crores and are growing rapidly.

A pan India reach and a wide gamut of services make Safexpress one of the leading logistics services providers in the country.

The economy has been on an upswing over the past couple of years. How has this benefited the industry and the company? What is the outlook going forward?

As the Indian economy has liberalized and expanded, the increasing competition has forced India Inc. to look for various cost cutting alternatives in order to improve bottom lines. One of the most important factors, that forms as much as 6-10% of the total cost of the product, is supply chain management. A faulty supply chain can add another 30% to the total logistics cost of a company.

This has furthered the cause of logistics and supply chain management industry in India. Over the last few years the Indian logistics and supply chain management industry has been growing exponentially and is today valued at around US$50bn.

Safexpress has been a part of this industry since 1995. Started as a door-to-door delivery service with 9 offices, 12 vehicles and 20 employees, Safexpress initially plied only on 4 routes. Growing at 40% annually, Safexpress today is a Rs. 250 crores company with a pan India reach extending to over 515 metro cities & townships. Backed by state-of-art infrastructure, cutting-edge Information Technology systems and warehousing space exceeding 2mn sq. ft., Safexpress today is India?s leading logistics services provider.

Tell us about your network strength?

Safexpress operates more than 2,400 containerized vehicles on over 750 scheduled routes, 365 days of the year. Safexpress delivers to 519 destinations as its scheduled network and delivers to more than 2000 further destinations for its clients on special projects.

Tell us about your financials? How much revenue did you clock last fiscal year and are what is the outlook going forward?

Safexpress is a privately held organization. We ended the 2002-03 clocking a turnover of Rs. 175 crores. In 2003 04, we had set ourselves an aggressive target of Rs 225 crore. Fuelled by the growth trends and Govt initiatives, we surpassed this target - and clocked a turnover of over Rs. 250 crores.

What kind of capex plans do you have for the current fiscal year? Where exactly will you be investing on?

Safexpress is investing heavily in several areas of logistics to support and enhance its existing business including warehousing and 3PL. With increasing demand, over the next couple years Safexpress will double its warehousing capacity from the existing 2.5mn sq. feet to over 6mn sq. feet.

Any expansion plans as far as fleet is concerned?

Safexpress fleet growth is continuous and regular. Each year we add some 300 vehicles in our fleet, apart from a continuous replenishment. As for change in the mix in our fleet, Safexpress became the first cargo services company to start 40 feet container fleet earlier this month, flagged off on our Delhi-Bangalore route.

What impact rising fuel costs are having on your operations?

The impact of fuel costs to our business is twin fold. The direct cost to business is anywhere between 40-45%, in the form of fuel costs for trucks. Indirectly increased fuel costs amount to approximately 5-7% increase in terms of general price rise.

With the industry growing rapidly, has there been any positive impact on your billing rates/pricing? Are your rates better or in line with the industry?

Even though input costs have been rising, the rates have remained stable and have only moved in a downward direction. With a maturing industry, increasing efficiency and better business practices, efficiencies in cost were bound to happen.

Do you see any consolidation in the Indian market? Are you looking at acquisitions?

The Indian market is still in its nascent stage. It is too early to look at consolidations right now.

Which are the industries that you currently cater to? Do you plan to grow your portfolio to new segments?

Although present in practically every industry segment, Safexpress offers specialized services across 16 industry verticals. With specialized solutions like Beat the Heat and Wrinkle Free logistics, Safexpress offers tailor made solutions to the air conditioning industry and the apparel industry. Some of the largest verticals we serve include IT Hardware, Telecom, Pharmaceuticals, Apparel, Automotive components and spares etc.

Do you cater to the overseas market?

Currently Safexpress caters only to the domestic requirements of its clients. Safexpress has one of the widest networks with over 519 destinations to which we deliver.

Can you segregate your services into road, air and multi-modal transport (% wise)?

85% of the freight business that we do is surface, 15% is air and multimodal

You already have a tie up with Panalpina. Any new alliances in the pipeline?

None Immediately

Tell us about your IT initiatives? What are the plans on this front?

Safexpress has always tried to stay a step ahead of competition in terms of technological know how. Pioneering several initiatives, Safexpress has brought in the Live Web Tracking, ePOD, Virtual Cargo, SMS Track, Live Chat among others to enhance customer experience and maximize value for our customers.

How much investment went into the Center for Intelligence and Research Excellence? What benefits do you plan to derive from it?

The Center for Intelligence and Research Excellence (CIRE) has been a continuous source of investment for Safexpress. Just like an R&D facility in a manufacturing enterprise, CIRE continues to work on newer systems, technologies, best practices and research among other activities to enhance customer satisfaction. CIRE uses the knowledge plank to derive clients? needs, giving our Indian customers an international experience while giving the comfort of an experienced veteran to our MNC clients.

How do you differentiate yourself from the rest of the pack? What kind of value addition do you offer your customers?

Safexpress has designed the business and growth strategy around the customer. The ?Safexpress? brand has been known to lead through innovation in every aspect of their activity and their thought process.

As part of this process the Company has recently pioneered path breaking IT initiatives providing valued customers the ultimate in track and trace solutions.

The strong IT backbone of the Company offers user-friendly front-end solutions through the web site (www.safexpress.com).

The Special features of the site are complete web based tracking, scanned image of Proof of Delivery (ePOD) and a web based Logistics planning tool, ?Virtual Cargo?.

Customers are empowered to access the Safexpress Server to track consignments with high degree of mobility using the SMS facility.

Safexpress has also launched segment specific solutions, to providing a single window solution for all SCM needs, adding a value proposition for the customer. Safexpress offers customized solutions like the Wrinkle Free Logistics (WFL) with models like Direct to Retail (DTR) and Replenishment that facilitate reduced inventory holding costs, elimination of shortage situations and no opportunity loss that has a direct impact on the bottom line of the customer.

Couple this an ability to judge client?s needs, ability to adapt to market dynamics, agility to run parallel to our clients giving them convenience, scalability to deliver, consistency in performance, urge to excel and excellent customer service provide that cutting edge which differentiates the company from competition.

How big is the threat from the unorganized segment?

The unorganized segment consists primarily of truckers/cargo carriers. They do not have the required warehousing and technical capabilities to provide SCM services, 3PL or 4PL services etc. and do not form any immediate competition.

Do you outsource any part of your logistics process?

We are usually an outsourced party. Companies outsource their logistics requirements to professionally managed companies like Safexpress. We in turn offer end-to-end solutions to our customers, smoothening the creases in their supply chain.

Who would you consider your competitors?

Safexpress delivers a range of logistics solutions ranging from Freight to 3PL to Consulting to Packaging. As a single organization offering complete logistics solutions for the domestic operations there aren?t many players. However, running right behind Safexpress is Gati that competes with us in the Freight business followed by XPS. In the 3PL business Safexpress is again the largest player with players like AFL, Lemuir and Sembcorp along with others forming a distant pack.

Do you see the introduction of VAT solving the tax woes of the industry?

Yes, the introduction of Value Added Tax (VAT) will to a certain extent make business simpler. The initial bottlenecks will also be eased out over a period of time.

Any plans to list on the stock exchanges?

Safexpress is a privately held company today. There are no plans to enter the stock markets in near future.



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