Courier and Delivery Services

Index : 738 | 1Yr : -10.86% | 1Mo : -6.55%

Category : Sectoral Trackers

Min Investment : 12,789

Sharpe Volatility Trend

Logistics is big business and there is an increased demand for deliveries in both B2B and B2C segments. The unique selling proposition (USP) is primarily volume and on-time deliveries. Business growth is largely dependant on business contracts with companies. In the recent years, the e-commerce logistics services has been the fastest growing business vertical for the sector with a CAGR of 35% in 2016.

Economies of scale plays a very important factor and the industry is exposed to competition from new players as entry barriers are very low. Local market conditions play a big role in their performance. The SME sector is the main disruption factor to their expansion plans as courier & delivery services are homogeneous. The industry is also prone to fluctuations due to changes in the business cycle and drastic changes in fuel prices can increase their logistics cost thereby intensifying the situation.

The progress of road infrastructure and development is a leading indicator of the scope and efficiency of these companies. Improvement in railway logistics can also give it a boost. The Goods & Services Tax (GST) has benefited this sector by centralizing inventory into larger regional warehouses and improved travel speeds due to reduction in regulatory delays. The simplification of the tax structure will encourage efficient supply chain management rather than tax-based network decisions. Invest in companies which have a vast network and can continue to maintain growth in the future.

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