US COMPANIES IN INDIA
Background
Headquartered in Atlanta, Georgia, United Parcel Service (UPS) is a leading express carrier and package delivery company, serving more than 200 countries and territories worldwide. In 2003, the company reported annual revenues of US$ 33.5 billion, on an average volume of 13.6 million packages and documents per day.
UPS started operations in India in 1988. In 1999, it increased the number of weekly flights into India to 5. In 2000, it appointed Skypak Service Specialists Limited as its pick-up and delivery vendor in India.
UPS Jetair Express Private Limited is a 60:40 joint venture of UPS with Jetair. UPS Jetair Express started operations in January ’01 with an investment of US$
4.5 million. It has operations in 25 locations across India. It currently operates 13 flights a week from Mumbai and offers international express delivery
UPS INDIA
services across more than 200 countries and territories worldwide. Apart from its offices, the company has a comprehensive network in India comprising its own fleet of 101 vehicles, centralised call centres, 460 trained professional staff and technology applications.
With the worldwide takeover of Fritz Inc in 2001, UPS also has a supply chain solutions business in India.
Fritz Freight Forwarding has had a presence in India since 1995.
Range of services
• UPS Worldwide Express – Guaranteed time definite door-to-door air express delivery of urgent international documents and packages. The service is available to and from 200 countries and territories serviced by UPS
• UPS Worldwide Express Plus - guaranteed next day, early morning delivery service.
• UPS 10 Kg Box and 25 Kg Box - provides the
convenience of two easy-to-use packaging options for urgent shipments.
• UPS Worldwide Expedited - time definite door- to-door service for less urgent shipments that does not require express service.
• UPS World Ease - it is a fully automated solution that allows customers to group shipments destined for a single country into one consolidation that moves and clears customs as one transaction, and then is split and delivered to multiple consignee locations. It is a contractual service available to, from and among more than 60 countries.
• UPS Exchange Collect – offers an electronic payments option where UPS acts as a trusted third party to collect the funds from the importer prior to shipment delivery and pays the exporter only upon delivery. It provides customers with full visibility of goods, funds during each step of the transaction enabling sellers to quickly recover payment for their goods. UPS Exchange Collect is offered on a contractual basis and is available for UPS Worldwide Express and UPS Worldwide Expedited services.
Leveraging Information Technology
Leveraging IT to provide value added services UPS provides a range of IT solutions to enable its customers to better track their consignments and manage their supply chains. Some key IT solutions offered by the company in India include:
• DIAD (Delivery Information Acquisition Device) II - The device uploads package level details to the customers as well as enables signature tracking.
The information is available on the Internet instantaneously once the package has been delivered; there is also proof of delivery as well as the digital signature. This enables UPS to provide package tracking services to the customers.
• UPS SMS Tracking - Tracking information like package status, location, date and time, and confirmation of the receiver’s name are available over SMS to customers in Singapore, Malaysia, Hong Kong, Taiwan, Philippines, Thailand, China and India.
• UPS Online WorldShip – saves valuable time and money, this free software prints shipping labels and commercial invoices; it eliminates repetitive typing or handwriting by saving customer address and product information into the built-in database.
It also tracks information of packages, manages shipping information and provides notification to customers on shipment status.
• UPS CampusShip – It is a web-based, full-featured shipping solution, designed for companies whose employees handle their own shipments. Yet, with just a few steps, it allows custom set-up for optimising shipping throughout the organisation.
Using an Internet connection, employees can ship their own packages and letters from any desktop, while management maintains overall control of shipping activities.
Supply Chain Solutions
UPS has been transforming itself from a package delivery company to an end-to-end supply chain solutions provider, in line with demands from customers who began demanding one-stop services rather than stand-alone products. UPS Supply chain solutions (SCS) division had revenues of US$ 2.1billion last year, up from US$ 1.9 billion in 2002. The company sees supply chain solutions as a key offering for India as well.
India Challenges
The Indian market has two-way goods movement – both inbound and outbound, which is a positive
US COMPANIES IN INDIA aspect for the express industry. While UPS faced
some challenges in India, the key challenge was inadequate infrastructure – in terms of port space leading to long queues, insufficient rail connections to inland container depots etc.
Another challenge has been the policy environment (in terms of taxes, consistency, customs house licence only to local player etc.). Over a period of time this aspect has been improving. In aspects like licensing, India is better than even China.
Another challenge is that the customs procedures are elaborate in India.
Factors for Success
UPS has overcome these challenges and is building a successful business in India today. Key factors for success are detailed below.
Better Planning and Educating the Customer UPS India has developed ways of working within the limitations by better planning and deploying better
UPS, India: AT A GLANCE
• United Parcel Service, USA: A leading express carrier and package delivery company. 200 countries and territories worldwide.
Revenues of US$ 30 billion. 13.6 million packages and documents every day
• UPS Jetair Express Pvt Ltd: 25 offices. 13 flights a week. Offers international express delivery services through 200 countries and territories worldwide. 101 vehicles. 460 trained professional staff
• UPS provides a range of IT solutions to enable customers to better track consignments and manage their supply chains
• Factors for success: Planning better and educating the customer. Integrated supply chain solutions. Leveraging technology. Global backing with local management.
• For UPS, India is: A key growth opportunity.
A market that requires developing an appropriate business model...
skilled manpower. In addition to this the constant monitoring of the loads at ports and seeking other port opportunities has helped it manage delays due to port congestions.
On procedural requirements for import/ export, UPS ensures that all the documentation support is available with all the consignments. UPS also educates/counsels/consults the customer on various paper/documentation requirements and pre-checks documents and validates to prevent any issues later on.
Integrated Supply Chain Solutions
UPS has evolved beyond the package delivery business into being a partner in supply chain management.
Realising that competitive advantage in future will come from managing global supply chains, the company is shifting focus from providing package delivery to enabling supply chain management through synchronising the flow of goods, funds and information for its customers.
Leveraging Technology
UPS has focused on developing IT solutions and leverages IT to provide value added services to its customers. For many years, UPS has been at the forefront of technology. The company has invested over US$ 12 billion over the last 15 years on Information Technology.
Through its focus on IT solutions, the company has been able to offer several innovative services like DIAD, SMS Tracking and UPS Signature Tracking, Document Imaging System and various software related shipping solutions to best meet customer needs...
Global backing with local management With a presence in over 200 countries and with a large fleet of 268 jet aircraft, besides a range of ground vehicles, UPS has a global reach that enables it to provide guaranteed delivery across the world in the shortest possible time. The company has set up 4 major hubs in Asia – in Taipei, Hong Kong, Singapore and the most recent one in the Philippines. The Taipei hub handles shipments from UPS’s Asian markets to North and South America, while the Philippines hub is for intra-Asia shipments.
While there is strong support from the global operations in terms of processes and technology, the local management has the flexibility to take decisions, within policy guidelines, to suit the local environment.
In the express business, choice of a local partner provides local knowledge and understanding.
Future Plans
India is seen as a key growth opportunity for UPS.
In the third quarter of 2004 UPS Jetair Express has reported a strong performance with a nearly 45 per cent increase in exports volume both for the quarter and year to date.
UPS has recently launched UPS Internet Shipping (UIS) in India. UIS is an Internet-based shipping solution that allows customers to produce all necessary documents and labels on-line, among other things.
This solution is designed for customers who ship small volumes or companies with staff shipping from individual workstations.
The company is still working on the appropriate business model for India. In an interview the CEO Mr. Mike Eskew said, “We like the pace of our growth in India. We will keep moving our infrastructure in place until we get the right model for India. We don’t just think of the next quarter, but the next quarter of the century.”