Fedex To Link Up Mumbai In Major Push

The $10.3-billion US courier major, Federal Express (FedEx), is planning a big push in the country to expand its presence and brand awareness.

It will do so by focusing on international operations and will connect Mumbai to its global network from September this year. A new FedEx outfit has already been established and will soon be expanded.

Under the new agreement between FedEx and Blue Dart, the former will use the latter's transportation, customs clearance and delivery services.

The agreement, which will be effective from October 1, holds for five years.

The contract is extendable by another five years.

Stating this at a news conference on Tuesday, FedEx and Blue Dart officially claimed the new agreement as a new beginning, and strongly denied any talks of a break-up.

 

Under the new arrangement, the companies will target areas in the market which are untapped, company officials said. Blue Dart will continue to be a licencee of FedEx and will continue to service its existing customer base.

However, FedEx's entry into international operations on its own, has several implications for Blue Dart.

Though the Indian company will continue to be FedEx's partner, the global cargo business is likely to become the US company's domain.

A clash of interests and confusion among customers is also likely with FedEx and Blue Dart both courting the same business.

FedEx Mauritius, FedEx's subsidiary, has already opened a liaison office in Mumbai and has started recruiting people.

"The market will be segmented in such a way to ensure that a clash of interests does not arise. We are working on it," a FedEx official said.

"FedEx will get a cut for every business bagged by Blue Dart and vice-versa. We cannot announce the entire plans now as we are planning to take other courier companies by surprise," said Robert Elliot, vice-president (sales and customer technology, FedEx. "FedEx is making this long-term commitment in order to meet the strong growth of exports to the country's key trading partners, especially the US. Our clear objective is to grow our market share rapidly by making the FedEx brand highly visible, providing outstanding customer service and offering new services and greater market converge," he said.

When asked why FedEx decided to set up a separate office and appoint people at all levels when it can utilise the services of Blue Dart, a company official said,

"We had discussed all these issues at length throughout our meetings. This agreement was the best route we could think of."

He denied Blue Dart will be marginalised and just treated as delivery agents, while FedEx corners a major share of the business.

FedEx is one of the world's largest express transportation company, providing services for more than 2.8 million items in 211 countries.