Safexpress sews up big GM deal

India’s leading logistics player, Safexpress has taken over the entire spare parts logistic operations of General Motors India (GMI). The carmaker has recently moved out its spares division from Halol, where its factory is located, to the Safexpress Third Party Logistic (3PL) facility at Bhiwandi near Mumbai. The latter now handles the entire 45,000 square feet of warehousing of GM spare parts.

“We are involved in the entire in-bound movement into the warehouse. There is huge inventory management, a full process-driven environment and stock level control. Everything is on-line because GM worldwide should know what its stock level is at the Bhiwandi warehouse. It is also out-bound to all dealers of GM India,” says Capt Aman Bhalla, vice-president (operations), Safexpress.

The company has a tie-up with leading automotive players like Honda and Ford and is keen on providing similar services on the lines of its GM operations. It owns and operates over 3,000 trucks for transporting its express high-value cargo. Sources say that it is now exploring the option of inducting a fleet of aircraft to supplement its road network. “It was in the news that our company is buying an aircraft. At this moment, I would be comfortable remaining non-committal. It is an important subject for us and for the air cargo industry in general. Airfreight in India has huge potential and in the coming years we will see a lot of development in the air cargo segment,” he adds.

Pawan Jain, who is the chairman and managing director, controls the Safexpress Group. A first-generation entrepreneur, he has been in the transport business for the last three decades. Safexpress began operations in 1997 and now contributes to over 65 percent of group revenues. In terms of payload, it carries around 32,000 tonnes of express high-value cargo each month. “More than the value, it is the sensitivity of time-definite delivery that the customer expects and this is the biggest challenge. We have some definite commitments for the transport sector. When one is covering the whole country, the transport schedule is on paper the most important thing is compliance,” says Bhalla.

Safexpress is the only company that services all 603 districts in India. “There is a network beyond a network. We have two lines of business. There are some scheduled destinations that we cover for everybody. If they are not part of the 527 schedules in the country, the customer must call up a separate service for deeper penetration,” he explains.

##### The company has four divisions. The first is the core — the express network backbone — which connects all 28 states, seven union territories, 603 districts and over six lakh villages. The second is the 3PL line of business for which it has customers like GM and other companies. The third is freight mode which means full truck loads. Here, each company owns a truck. The fourth division, which is still young and has huge potential in the long run, is logistics consulting that involves providing consulting and advisory services to different customers both here and abroad.

The five industry segments that contribute to nearly 70 percent of Safexpress’ turnover are automotive, retail, pharmaceutical, office automation and IT hardware and, finally, apparel, readymade garments and lifestyle. Revenue from the automotive segment contributes to about 14 percent of turnover. There is huge demand from the viewpoint of logistics and transportation for good serious service providers. For instance, with the Fiesta’s entry into the market, the challenge is to hardsell but there is equally the job of getting spare parts and dealer network to service the aftermarket.

“We are not into full movement of cars. Our job is to give that level of comfort to a Ford or a GM so that their entire service supply chain, which goes into the dealer network, is enabled. Many of their suppliers use us. We are into the original equipment moving into the plant on the production line and also into the spares moving out. We have a separate line of business called Third Party Logistics in which the manufacturer outsources his warehousing and transportation operations to us. The ability of logistics and 3PL service providers like us is to create infrastructure which matches their global standards. There is a huge requirement of warehousing, transportation networks and IT which calls for huge integration by 3PL service providers like us,” says Bhalla.

Safexpress works on a hub- and-spoke model where there is a consolidation point and the hubs are interconnected through express routes. Hub-to-hub routes are essentially non-stop and Delhi to Mumbai can be done in 36 hours by road. The company has 39 hubs across India. “Any hub that handles over 5,000 tonnes of cargo, in-bound or out-bound, is classified as a super hub and if less than 5,000 tonnes, it is a mini-hub,” he adds. For inter-hub movement, Safexpress uses nine-tonners on a 24-foot chassis, largely Tata or Leyland trucks. “We use Volvo vehicles from the western to southern hubs and are quite pleased. We have three trucks and have placed more orders for FM 9 trucks for the south-east corridor. They are fully containerised,” says Bhalla.

Safexpress has a fleet of 3,200 vehicles and is adding about 350 vehicles this year. However, the biggest problem is of timely delivery since manufacturers have a plethora of orders in their hands. “I know 30 different transporters who are directly associated with us. They are keen to buy and the finance is ready but there are no trucks,” says Bhalla. The company has 150 Tata Ace mini-trucks and has a pending order of around 150 more.