Powered by

Home Business

'Private Sector Has to Buckle Up': Blue Dart Founder Tushar Jani On India’s Logistics Industry

For The Core Report’s weekend edition, Jani spoke to financial journalist Govindraj Ethiraj about why he sold Blue Dart and how the logistics sector in India is evolving. 

By The Core Team
New Update
blue dart founder

Like many other sectors, Covid-19 had a significant impact on the logistics industry globally. As supply chains struggled globally, the pandemic brought logistics to the forefront. The sector has seen significant shifts in India since the pandemic as well. 

The Indian government announced the PM Gati Shakti scheme aimed at improving and fast-tracking infrastructure projects in the country in 2021. In aviation, Indian customs today work much faster than the private sector, pointed out Tushar Jani, founder of logistics and delivery company Blue Dart and chairman of SCA Group and Cargo Service Center (CSC). 

“When I [started] in 1976, there was an air cargo ‘dwell time' meaning the package remained on the ground for 21 days. Today we are down to a few hours. And that's the big leap we have taken…This has happened in the last about five years,” Jani said. However, the private sector needs to buckle up, he added. 

Since Covid-19, India’s stand in the manufacturing and assembly space has also shifted considerably, with countries focused on lowering reliance on China and its supply chains. “Since Covid now over a period, our Chinese imports have gone down by 18% by volume. Our export and import out of Europe and the US has increased almost by 27%,” Jani highlighted. As countries look to increase investments in India, Jani said that the logistics sector is ready to handle increased volumes. “I think we're ready for both maritime as well as aviation,” he said, pointing to GIFT city in Gujarat, where the Gujarat Maritime Cluster is set up, as well as Air India and IndiGo placing orders for 500 aircrafts each earlier this year. 

Meanwhile, the private logistics sector is also seeing an increasing number of new players, as well as more tech-based operations. But Jani emphasised on a people-first approach. “I always say our business is heart to heart, hand to hand; technology is an enabler. Unless you don't see the face of the person's face who comes and picks up your parcel you're not going to rest,” he said. “You have to spend money on people…during Covid, DHL had volunteered to give each of their staff around the world 300 euro as just one time money to handle the stress of life. I'm sure FedEx has got similar values. I'm sure UPS has got similar value. So we have to build that culture in India,” he added. 

For The Core Report’s weekend edition, Jani spoke to financial journalist Govindraj Ethiraj about why he sold Blue Dart and how the logistics sector in India is evolving. 

Here are edited excerpts from the interview:

So let me start off with the first question so that we'll put it aside and behind us. Why did you sell Blue Dart? 

It's very interesting why we sold Blue Dart and I remember when we sold it, every employee came and asked us why did you do that? We were very close to employees. The single reason was: Blue Dart was a baby conceived by three fathers and we didn't want a baby to suffer. We came in a mode and development mode where every year we had to add aircraft. An aircraft acquisition those days in 2004-2005 for an Indian entrepreneur was a very difficult proposition. So we thought DHL with all their might, they'll be able to bring aircrafts, which they've done every year. They've upgraded and we thought there were 7,500 people working in the company. We wanted to secure their future and make that baby sure grow up to be the nice woman which she is today. 

So aircraft and air logistics is or was a critical component of the operation?

It is because we started in 1996 with the aircraft and our growth came with every time we added an aircraft. So it was very evident that we had to add aircraft as a capacity to grow and that's what happened with Blue Dart's growth. And today Blue Dart is wherever it is… it's only because of their own dedicated fleet. 

What's changed since the time you sold it and today, in that we are also able to move a lot of cargo today on roads, roads have become better, we have expressways and so on. 

I think it will remain the same. In the United States there are very good roads but express thrives. UPS and FedEx are billions of dollars of companies. India also will go the same way because certain parcels or types of goods are critical to be delivered in time number one. Number two, in a good, safe and secure manner and that will always thrive. So on an air cargo, on a global volume, 35% of volume, value of air cargo goes by air. And that would continue for domestic in India also. Of course, we had a good run when earlier ecommerce came in, even mobile cover was to go into the air, which has now found its level where mobile covers lower items, value item goes by road and in the air, which is critical, high value goes.

I'm going to come to the present and then go back to the past a little later. Two things about the present, which is geopolitics — the Russia-Ukraine war, which we can see clearly has caused, for example, rerouting of air routes for passengers and obviously cargo as well. And the Middle East war. You know India wanted to announce the IMEC corridor, the India Middle East EU corridor in which Haifa in Israel is a critical component. Now, obviously, with the war going on, we cannot focus on that, at least for now. So geopolitics is affecting or likely to affect the way the logistics or the freight industry is going to be affected and perhaps was not in the thinking or consideration of a lot of people even a year and a half ago. How are you seeing it? 

See, first of all, you have to go back a little bit. It is Covid-19 which brought the logistics to the forefront. Otherwise the logistics supply chain guy was put into one corner in the corporate office. Suddenly he's now sitting in the corner office next to the CEO. 

The supply chain became important for the survival of humankind. And if there was no air supply chain available more and more millions of people would have died. So distribution of Covid drugs, vaccines and logistics played a very big role. So the journey started from there and then it turned into, as we got out of Covid, it took the shape of geopolitics. So if you see President Biden in various lectures, he's talking about supply chain. Look at our Prime Minister – he's talking about supply chains. Not only that, he's gone one step ahead and announced GATI Shakti of Rs 1,25,000 crores initiative just to improve logistic infrastructure. 

In geopolitics, you've seen China then China plus one. So people were looking for a good volunteer and India was a good volunteer as a good manufacturer. In terms of our supply chain we are agile, we are reliable and we are innovative and that will come in favour of India and way of China. China in terms of logistics is much behind in supply chain than India. 

How is that? 

Because our processes, our manpower, our understanding of the supply chain is far better than Chinese. And who better than an Indian can understand jugaad. Logistics is another name for jugaad. So we are quite responsive. As I say, I redefined the air during Covid. So A stands for agility, I stands for innovation, and R stands for resilience. And these three components of air, India is ahead of any of the countries. 

But since you mentioned it, can you illustrate a little more?

It is true that the Chinese manufacturing capacity and ability is huge. Will you buy a Chinese product vis a vis its quality? That's number one. Number two, China supply chain, even though people say is not very reliable compared to India at this stage, at this point of time. Few years back India had a problem. But the government's current initiative is all e-initiative. So everything is going online, on an e-platform that [hastens] the process of moving packages. Today, the Indian custom does much faster work than the private sector of cargo agents or people like us. So that's the change which has come in. And that's how you see on the logistic index where we were and where we are now. We almost jumped 40 points.  

If you were to take the journey of a package, let's say going into the manufacture of a car or the car itself going out, or a laptop from China versus India, how would you say we stack up in terms of, let's say, processing time at the seaport or at the airport, depending on the product.

When I came in 1976, there was an air cargo ‘dwell time' meaning the package remained on the ground for 21 days. Today we are down to a few hours. And that's the big leap we have taken. This has happened in the last about five years. In airports like Mumbai, Delhi, Chennai, Bangalore, Hyderabad. Packages which are coming from outside India to be distributed in India. 

The government has taken a lot of steps. The private sector has to come up with the government and supply chain will further improve in my mind.

Where is the private sector lacking?

The private sector is not buckled up the way the government has buckled up the resources, with technology. I think we need to come up to that level and things will change with Gati Shakti, I'm sure.

Could you give us an example?

Custom works 24/7. So you could go and take your parcel even on Sunday. But the private sector is not coming forward to take delivery on Sunday, which we have to ultimately, which will bring that change in all of us. 

Say, before the cargo arrival, give all the information to customs, so it can be pre-cleared before it arrives. So our approach is very simple as far as our company is concerned. If a passenger can get out from the aeroplane within an hour claiming his baggage and go home, why should cargo remain at the airport for hours or days? And let me tell you, on the passenger side, India is number one today in facilitation. If you go, JFK is 120 minutes waiting in immigration. If you go to Heathrow, it  is 140 minutes waiting. Today at Indian airport, you come in, walk out in almost 45 minutes. 

But that's also because you have less volume, right? 

No, not really. Idea is we are very good with the processes compared to them. And our men, our output has improved tremendously compared to the world. 

I asked about the IMEC (India-Middle East-Europe) corridor and I talked about the geopolitics of it. What's changing as you see today in terms of what are some of the bigger clients, what are their concerns? Because finally, they are the people who are moving or want to move production to India or move goods out of India if they're already producing here at scale. 

I will just give some data. Since Covid now over a period, our Chinese imports have gone down by 18% by volume. Our export and import out of Europe and the US has increased almost by 27%. I don't know the value, all on volume. So 68% of our export going by air on international export goes to Europe and the US. 78% of our volume comes from the US and Europe into India. And it's growing. 

Look at Apple phones. We get two charters every week bringing their components. They've got three charters coming out of Bangalore every day to finish…you know iPhones were going out of the country. And the value which Apple has generated out of their India business is unbelievable in terms of time. 

What we are doing is there's a lot of structural changes the government has brought along with the whole awareness in the logistics. First, we never used to get people to come and work. Now at least we are getting people to come and work. There are institutes which are now running good logistic courses, supply chain courses. So that canvas is changing, infrastructure canvas is changing. What needs to be changed is mindset.

I'll come to that in a moment. So the example you quoted, which is of iPhone components coming in charters from, let's say the US, and the finished product going to the United States two or three a day from Bangalore. 

This obviously is because we've created, let's say the whole Foxconn ecosystem where we are producing iPhones and other phones and other components. What are the other things that are happening? 

But Samsung was there much before iPhone, right? Number one. Number two, look at automobiles. We are the probably second or third largest purchaser of that chip which they put into the automobile. And look at how automobiles are being exported out of India and to developed countries. So we have bought that change in our manufacturing cycle. People are ready to buy. Look at Bajaj. You  know the kind of three wheelers or two wheelers which are being used of Bajaj. Look at in Africa, the Bajaj motorcycle which is so popular. So we are changing. 

When you talk about phones and chips, these are high value, but these are small. Our traditional problems have not been in this area. Our traditional problems have been, let's say you bring something big or you want to take out something big like cars and the time it takes to go from the factory to the port for the ships to come, the big ships don't come. And now we have a new trans-shipment port coming up for the first time, otherwise they were going to Colombo. The question I'm asking is really coming from where could we go rather than where we are? 

My point is that time has reduced considerably. I mean, is there room for improvement? Answer is yes. Do we want to improve? Answer is yes. Is the government committed to improving? Answer is yes. 

I think it's the private sector who has to buckle up now with the government in partnership that we also want to change. So I think they've combined everything. We would be better off in three to five years. I’ll give a small example of pharma. 20% generic drugs of the world come from Indian pharma companies. We're going to go through that 40%. But our APIs still come from China. Now that's what we need to change–- to build our own APIs over a period. 

And the way the government is working in the next three to five years…. We will be self-reliant. Today when we opened our pharma terminal during Covid time, we were shipping about 30-40 tons a day. Now we are reaching 180 tons a day of pharma going by air to other parts mainly to Europe and the US. And we are so much into the system that if India supplies get disrupted to the world of pharma, there'll be chaos in the world. Because there are temperature constraints, there are time constraints, so they go by air. 

I've been meeting a lot of companies who want to, let's say, set up in India, and they're all looking around. They've been looking around for some time, I think almost since 2017, when Trump started increasing tariffs against China, and everyone's been thinking of a China plus one strategy. But the question that I would have even today is to what extent are we logistically ready for this?

You said there are three aircraft that take out iPhones from Bangalore, but let's say tomorrow production of iPhones triples or quadruples. Are we ready at this point? 

I think we're ready for both maritime as well as aviation. Maritime Gift City has now set up where people can bring their ship and lease it out. They've set it up for aviation. Two big news happened. 500 aircraft each by Indigo and Tata. Tata ownership of Air India will change India because most of the traffic was then going via gulf countries, and then going to Europe and US. In three years, it will change. Air India will be a different airline in three years to come. 

How does that affect freight and cargo? 

Because every passenger airline, aircraft also has a belly capacity, and that will tremendously increase. And Air India at some point of time will have freighters when they find the right time, right match. 

Is there a number that you can say? 

So today… prior to Covid, 85% was belly, 15% was freighter. Today it is about 40% freighter, 60% belly. Once Air India comes into the picture with the belly space and the growth, what will happen… I would say 75% would go on a belly and 25% would be freighter. 

The change is faster movement, more cargo can come. Growth can be handled because the belly space has its own time schedule. If a factory needs a cargo, it's better to move by freighter and bring it in time, so you can achieve it just in time.

This will benefit, for the export, pharma specialty chemicals. India is the best specialty chemical manufacturer in the world. Medical equipment, imaging equipment. India is going to become one of the biggest hubs for medical equipment. Vaccines — in the amount of vaccines now we make, because everybody knows only Covid, there are 20 other vaccines India makes. So we are number one. We are the vaccine capital of the world. 

On ports we've seen a slew of new announcements in the last couple of months and that's good. But one of those announcements, for example, Vadhawan Port, which is quite close to where we are sitting right now, has been in the making for more than 20 years. And there was environmental opposition. So that's fine. I mean, these things happen. But my question is that if you look at the time that many of these projects take to come to fruition, are we losing out? And if so, how? 

If you ask me, are we losing out here? The answer is yes. Infrastructure in this country is always a problem. Either you have some lobby or some farmer lobby, or local people's lobby or fishermen's lobby. Look at our own city in Mumbai, to get that coastal way to go up to Versova, right. It took time. 

But the good part is the current government regime is very decisive and they're finding solutions to the problem. And that is important. And I believe when we all vote in time to come, we have seen one majority, clear majority government, what it can do then to have a coalition.

Let's talk about airports for a moment. So airports like Mumbai, for example, are pretty full. I mean, we are almost close to the peak of, let's say 900 movements. It's very difficult to do more. A lot of the industry, for traditional reasons, is in and around at least let's say in areas like pharmaceuticals, automotive and so on. Airports like Bangalore have more runways. Delhi has more runways, but they're also growing on the passenger side.

But Navi Mumbai will be there in a short time. By probably next year, Navi Mumbai will be operational and Navi Mumbai will give that answer… of 100 million, probably. I don't know what they are projecting, but if you're talking 100 million plus passengers out of Navi Mumbai, and about 50 million here in Mumbai, you have achieved what you need. I mean, nowhere in the world 150 million and the city of Mumbai will have enough upliftment capacity, passenger or cargo. 

Look at Delhi. Now we've got Noida which is coming up. Delhi currently, Indira Gandhi Airport has four runways. Noida will have four runways. Now eight runways in a distance of 100 kilometres is fantastic. 

As you project where the business will come from in the cargo and logistics business, a lot of it will be in the south. Are you seeing that kind of capacity addition in airports? 

I think it will change. It will change. You will see a lot of capacity coming in north vis-a-viz, UP, Rajasthan, and Haryana. You will see that change will come. Because please understand, all around the world, the industry has gone where ports are. If you look at all European ports, be it Liverpool, be it  Hamburg, be it  Rotterdam, be it Antwerp. So wherever the upliftment capacity will come, the industry will come around there. And I believe Noida as well as IG airport both have a great future. They will make it. We are seeing it already. 

Air India already started bringing transhipment cargo… picking up from New York, bringing to Mumbai and taking to Dubai. From Dubai, cargo comes to Mumbai, and goes to Sydney. Right. This has never happened. 

So how does that work? 

Optimization because Air India  doesn't go to New York to Dubai directly. So they bring it to Delhi and tranship it into their flight, going to Dubai. 

So now let me come to this point, and you've mentioned it about three times now. So why do you say that the private sector is not…

Because the private sector always thought we could blame the government and we ignored our own lethargy in our own system. I think that we'll have to cut that lethargy and inertia and move forward to a better supply chain. 

So can you give me an example from yourself about how you think you could have moved faster given that, let's say, the government had opened up? 

Saturday Sunday people don't work. They think the supply chain cannot work on Saturday and Sunday. But it's a continuous process. So private industry will have to work on Saturday, and Sunday to improve their supply chain.. to make products going out, which they are not doing. So today, what happened at our cargo terminal… Saturday, Sunday? Virtually, we don't have any cargo. So Monday, if you come to my terminal, nothing has come, all flights are almost empty. 

You're saying all of India's private cargo movement comes to a standstill on weekends. 

Yes, and that is a shame. When the government has put in infrastructure, technology, people resources, and we are not able to do it, not able to make use of it, but I believe we will be forced to do it. Once your growth comes, you will see people coming up. 

What they do is, they bring all cargo on Friday and then they create congestion. They said finish Saturday and Sunday work, you finish on Friday. So they still have their holiday. 

Let me come to another aspect of what's changed in the business at least from where I see it. A lot of newcomers have come in so there are at two ends one is let's say larger delivery companies themselves including well funded and tech kind of thing and then the other the tech companies who are providing all kinds of B2B, solutions, efficiency solutions and so on. How are you seeing them and what is in your mind as you look at it? Someone who's seen this industry for so many decades, what is their contribution? 

I always say our business is heart to heart, hand to hand; technology is an enabler. Unless you don't see the face of the person's face who comes and picks up your parcel you're not going to rest. 

Number two, we have to ensure that it goes on the aeroplane or truck. Number three we have to ensure that the aeroplane goes or truck gets driven and the other side when it comes we have to ensure we come to your home and give it in your hand. 

So in all that process technology is just an enabler. The biggest challenge the logistics industry will face is the human resource. We'll need people to understand when a guy says I'm a delivery boy…he doesn't get a girl. So his prospective groom doesn't get a bride. So we have to change that. 

But I'm happy that Swiggy and all are changing that perception, right? It will take time but the idea is do we need technology? Answer is yes. So many years before Mr. Fred Smith, the owner and chairman of Federal Express made this statement to me. He said: 50% of a business is pickup and delivery and 50% of business giving you information. But if your pickup and delivery has not done well, then information has no meaning. So I would say… urge investors, entrepreneurs to build your tech platform but do your groundwork first. 

I think we are not giving enough focus on the physical aspect in terms of motivating people to come and work…make their life a little easy. How many times people ask for a glass of water when a delivery boy comes to deliver a parcel at your home. Nobody bothers about him. Has he got water? I think every delivery company must put a health checker app within their company. Is that guy okay… right. I mean, you go in 50 degree temperature for him to go and make delivery. I think we have to be human first in our companies. That is I don't see and technology can't provide that. So all this valuation hurts me and makes me unhappy.

Why is that? 

You have to spend money on people. Technology will change…within no time, it will change. We started Blue Dart, started trace and track in 1986, when the internet was not born. There were no satellites. And look at where the technology has gone now. My small daughter can do trace and track with a little bit of coding and all. So it will change. It will evolve. But have we worked with the people? Have we done the final delivery? Look at what happened globally with FedEx, UPS and DHL. They're still working on people. And I'm proud to say, during Covid, DHL had volunteered to give each of their staff around the world 300 euro as just one time money to handle the stress of life. 

I'm sure FedEx has got similar values. I'm sure UPS has got similar value. So we have to build that culture in India. 

Let me come back to the first question I asked you. And I asked you why you sold Blue Dart at the time you did. So when you look back now, all the changes that have happened and clearly the last decade, for example, we've seen a lot of changes, including because of technology. Do you feel you should have held on for a little longer? 

Not really. I think DHL has done a splendid job. At the end, it was Blue Darters who were running the company. Whether it's DHL on the top or Tushar Jani, Khushroo Dubash or Clyde Cooper on the top, it didn't matter. Our staff is still highly committed. They still operate at 99% audit level. And they'll beat any company with infrastructure and power. I mean, I've seen people carrying their bags on the top when they serve the water even today…so Blue Dart will carry on. It's a brand which… multinational has kept the brand going. It's not DHL, it's Blue Dart. I think we have protected our people's future and I'm very proud with our Blue Darters. 


The Core brings you exclusive reporting, insights & views on business, manufacturing and technology.