“India is a very important market for us for three reasons,” FedEx global CEO Raj Subramaniam said in an interview. “Firstly, India’s GDP continues to grow – India’s share of manufacturing in the world is going to continue to grow. Two, India is a significant source of talent. We launched our advanced capability community (ACC) just a few months ago. We announced partnerships with IIT Bombay and Chennai.”
The ACC in Hyderabad will serve as a hub for the company’s technological and digital innovation, it had said in December.
“And third, one of the exciting things that’s happening in India is the digitisation and the number of technology ideas that are sprouting from India,” he said. “It is quite exciting to see… we are watching that very carefully to see if there are opportunities for FedEx to participate in those as well.”
High demand and rising personal incomes in the bigger cities continue to make India a big offsetting factor against the global slump in demand that FedEx and other logistics companies across the world are facing.
While FedEx has seen a slowdown and even a decline in revenue in some quarters, it has managed to stay profitable with stringent cost cutting and restructuring initiatives across functions. A senior executive at the company said it continues to expand operations in India.”So right now, we have gateways in Delhi, Mumbai, Bangalore in India, and in Africa, in Johannesburg and in Nairobi. Our idea would be that as much connectivity as we can bring to this region, we would try to bring as we see the volumes develop,” said Kami Viswanathan, president, Middle East, Indian Subcontinent and Africa at FedEx. In February, FedEx opened a Dubai hub, on which it’s investing $350 million.
Subramaniam said the kind of supply chain disruptions that have been occurring aren’t new.
“If you look back in history about supply chain patterns, there have always been perturbations in supply chains,” he said. “But because of systems like ours and the technology, those perturbations have been relatively muted even through 2008. The pandemic changed that dynamic.”
From pre-pandemic levels to now, the company’s compounded annual growth rate has been about 6.2%, he said. “Which is quite similar to what we have seen in our (business) organically over the last 25 years,” he added.
In 2022, FedEx entered into a strategic alliance with India’s Delhivery, a leading homegrown logistics and supply chain services company.
“The thesis behind the Delhivery partnership is that a company like Delhivery has a network that is technology driven and can also access many more pin codes and (has) efficiencies as a pickup and delivery partner,” said Viswanathan. “And part of the arrangement is also that they will help us sell in some of the tier 2, 3 markets with their extended reach.”
FedEx hasn’t made any investments in that partnership after the initial $100 million in 2022, she said. The company, which has about 40 electric vehicles in its fleet, will continue to expand this as part of its sustainability initiatives in India, Viswanathan said.
