As one of the BRIC countries, India is one of the up-and-coming emerging markets and is particularly interesting for European companies as a production location. We spoke to Stephan Schiller, CEO of Hermes International, and Sam N Katgara, Mumbai Partner of the Indian freight forwarder Jeena, about the relevance of strategic partnerships and their joint plans.
India: Emerging market of the future
With a gross domestic product of approx. 2.7 billion US dollars in 2020, India is one of the largest economies in the world. The average age of 28.4 years together with a growing proportion of the population working in the industrial or service sector promise enormous development potential – from which also European companies can benefit.
Although the Corona year 2020 was accompanied by a decline in exports, goods approx. worth $276.23 billion were still exported. In 2019, the export volume was $324.34 billion. In addition to textiles, jewelry and software products, the most important export goods include industrial goods such as chemicals and petroleum. For European companies, India is therefore proving to be a versatile market with great opportunities.
Mr. Schiller, Hermes has already been active on the Indian market for years. What were the motives behind the collaboration with your long-standing partner Jeena – one of the country’s largest logistics service providers?
Schiller: Yes, that’s correct. Jeena and the Otto Group have already been working together for more than 30 years. It therefore made sense to deepen this cooperation when setting up the Sea&Air business segment (now Supply Chain Solutions) at Hermes, a subsidiary of the Otto Group.
Working with a local expert like Jeena gives us and our customers an advantage in the Indian market. Despite its considerable size, Jeena is a family-run company with fast decision-making processes, a sustainable strategy, and great personal relationships at all levels – everyone benefits from this corporate culture.
Katgara: Absolutely. Both Hermes and Jeena, as an owner-managed family business, share an open corporate culture, a mutual appreciation and motivation that characterizes a profitable collaboration. Further, the duration of the collaboration already speaks to the tremendous trust that has been built over the years – and, of course, to the organizations’ business growth.
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Sam Katgara, Mumbai Partner Jeena.
What advantages and synergies does the collaboration offer? What additional benefits does this bring to your customers?
Schiller: Jeena is a ‘True Local Hero’: The colleagues know the regional customs and local peculiarities, have contact persons in all areas and, of course, have an extensive network and know-how. This gives us and our customers the best possible access to the Indian market, which is not always easy.
In addition, I see explicit advantages over the large multinationals, which have their own offices in (almost) every country in the world. In the area of customs, for example, Jeena has its own customs department. While the large multinationals almost always must rely on external brokers, we can offer our customers the entire range of supply chain services together with Jeena.
Katgara: Working together gives both organizations the opportunity to understand each other’s culture, business and cultural nuances, which is a huge benefit for everyone involved.
In addition, both organizations strongly believe that the way business will be conducted in the future will be digital. Accordingly, we have invested heavily in new technologies to provide our customers with an exemplary service experience that will raise expectations for our industry as a whole.
Mr. Katgara, the situation in India is currently very tense. What impact does the pandemic have on your day-to-day business? How are you responding to the situation?
Katgara: We, as one of the largest freight forwarders in India, have been classified as an “Essential Service Bracket”, which means we have been exempted from many measures and can continue to operate unhindered.
This helps us to support trade, however our frontline colleagues at the port, airport and warehouse or customs are at risk. We have the utmost respect for our employees, who are all working hard to keep the business running. We are, of course, doing our part by currently vaccinating the entire workforce in our offices.
India is still suffering from the consequences of the pandemic – at the same time, the shortage of freight capacity has led to a huge increase in freight rates. Should companies enter the market now?
Katgara: Freight rates have fallen in recent years and have even been driven down to the point where shipping companies and airlines have gone bankrupt. This initial situation has strongly influenced the current capacity shortage.
Currently, a market entry is certainly associated with obstacles. Newcomers must be cost-sensitive at first, which is difficult at current freight rates. In addition, they lack the influence to get slots allocated at all. The current external circumstances are a challenge to which decision-makers must adapt. Nevertheless, we advise European companies to explore the many opportunities in India and to determine their own potential. Of course, we are happy to assist with our know-how and wholly support interested companies.
Schiller: An entry should always be well considered and strategically planned. Irrespective of this, however, India has enormous potential both as a procurement and sales market: the economy is growing continuously and the age structure in India promises both profitable sales opportunities and a dedicated workforce for production.
In addition, India can be an interesting alternative to China for companies to broaden their own business. In any case, it is advisable for companies to examine the Indian market for possible activities – we are happy to support here.
What opportunities does India offer European companies and how do you support them locally? What services do you offer together?
Schiller: Together with Jeena, we can in principle provide any logistics or supply chain service in India, across all modes of transport and concerning all areas: from distribution to customs clearance. It is always exciting when we can fully utilize our know-how and present a solution to our customers. This is where Hermes and Jeena are particularly strong together. For example, Jeena has its own packing station (CFS) in the Delhi region. Here, various goods from northern India are consolidated and transported quickly and securely to the seaports – a solution that offers our customers enormous cost and competitive advantages. Katgara: Absolutely. We are also the largest customs broker in the Indian market and offer our customers a full range of logistics services – economically, efficiently and quickly. Together with Hermes, Jeena can operate both eastward and westward so that we can successfully and seamlessly satisfy our customers even in these challenging times.
Let’s look to the future: What future potential do you see in the collaboration? And what projects do you want to drive forward together?
Katgara: Due to the synergies and the good reputation that both companies enjoy, we are looking to a successful future together – I am sure of that.
The search for individual and efficient solutions for both our existing and our pipeline customers continues to drive us. With innovative digital solutions that are flexibly tailored to our customers, we want to continue our dedicated and successful collaboration in the future.
Schiller: Together with Jeena, we want to continue to grow. Particular attention is being paid to digitization. By this I mean first and foremost the smart handling of performance data: How can we use data even more intelligently to make even better decisions? How can we sustainably improve processes and offer our customers even more efficient solutions? After all, if our customers are successful, so are we.