Hit by a slowing economy and a bad year for the manufacturing and service sectors, logistics major TNT India Pvt Ltd., a 100% subsidiary of Dutch firm TNT NV, is shifting focus from the air freight to the land route in a bid to prune costs and increase margins.

TNT India Pvt. Ltd managing director Abhik Mitra said, “We are shifting focus from air freight to roads as more and more goods are moving through roads than air with customers looking at cheaper mode of transportation.”

The firm will leverage the huge road network and access to 514 odd depots, and 26 transit hubs across the country that came along with Speedage Express Cargo Service Cargo Services, which it acquired in September 2006, he added. “The industry will face a tough time going ahead resulting in a slower growth at around 8%-10% as against 15% last year,” Mitra said. TNT, which has huge exposure to US and Europe market, is also taking a fresh look at costs, trying to enhance process internally along with an enhanced product line.

Currently, TNT India’s surface transport is growing at around 20% and air freight at 50% year-on-year. The firm expects growth in the air freight business to slowdown to at least around 20% in the next two years, added Mitra.

The major growth drivers for the company’s business in India are telecom, life sciences, automobile, service provider and high-technology sectors.

While segments like textile, exports, banking documents and leather have taken a hit. The company will pump in additional investment in India over the next few years to expand network in all tier-2 and tier-3 centres. It will add another 400,000 sft storage space to the existing 200,000 sft in five major cities including Bangalore, New Delhi, Mumbai, Nagpur and Kolkata to expand its hub and spoke distribution network over the next three years.

However, Mitra refused to elaborate on the investments the company would make in this regard.

TNT enjoys 18% share in the international express market in India, 6% in domestic air market and 16% in the road freight market. Express cargo revenues were, however, down 1.4% and mail revenues increased by 3.1%.

Sobia Khan/ DNA-Daily News & Analysis Source: 3D Syndication