The Postal Department is All Set To Snuff Out the Courier Industry [Logistics]

india postThe Indian postal department, is about to propose a protectionist amendment to the 100 year old Indian postal act, which threatens to snuff out the private courier industry overnight.

According to a report, the the new proposal plans to make it mandatory for courier companies to charge Rs 70 for all non local courier. It has also proposed to set up a postal regulatory authority, the Business Standard reported.

The proposed Rs 70 minimum charge is nearly twice the amount charged for a similar small packet sent through Speed Post, the service offered by India Post.

Some key proposed points from the bill

  • Couriers companies can carry letters even between 50 gm and 150 gm and charge Rs 70 for it.

  • All logistics operators required to register before providing any type of courier service.

  • There will be no registration fee or license fee.

  • An Appellate body to be formed for redressal of grievances for customers.

A move like this will really affect the Indian courier industry which is estimated to be around $2 bn in size.

In June this year the postal department made another big push into the courier industry by entering into a partnership with national carrier Air India, to transport goods between 15 domestic airports with  airport to airport, city to city and door to door services.

Logistics Startups & Their troubles Have Just Begun

For e-commerce players in the country, logistics has been a major pain point. Major e-commerce companies like Flipkart and Jabong have their own logistics arranged, but  many of the smaller companies used to rely on third party logistics providers for their delivery.

This move could push up costs for e-commerce companies that are already operating under thin margins. It can also deter new logistics players from entering the market and stifle competition.

The logistics market was dominated by major players like BlueDart and FedEx.

On the back of the e-commerce growth, few startups had also come up in the space. In April this year Delhi based startup VDeliver, Delhivery and Chottu are a few startups that came up to address the e-commerce market. Signs of trouble are already brewing at a few of them. Chottu is on the verge of closure, as the founding team is finding it difficult to raise money. Few months back, Hyderabad based Gharpay was acquired by Delhivery.

Earlier this year domestic logistics leader DTDC launched a specialised logistics service called DotZot, which provides delivery services for e-commerce companies across the country. Former TNT India leader Sanjiv Kathuria was roped in to head Dotzot.

Forum Discussion : Logistics providers for e commerce startups

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