Delhivery co-founder and CEO Sahil Barua has dismissed concerns of irrational pricing in the third-party logistics (3PL) sector, stating that the industry is unlikely to see price wars despite improving ecommerce growth. Barua’s comments come as logistics providers navigate rising demand and competitive pressures in India’s rapidly expanding ecommerce market. The sector has faced volatility in pricing due to fluctuating demand and operational costs, but Barua emphasized that disciplined competition will prevail 1.
Barua’s remarks follow a period of intense competition in India’s logistics sector, where players have often slashed prices to gain market share. However, he noted that the industry has matured, and irrational pricing is no longer sustainable. "The logistics sector has evolved, and players are now focused on efficiency and profitability rather than aggressive price cuts," Barua said in an interview with ET Tech. This shift aligns with the broader trend of ecommerce companies prioritizing reliable and cost-effective logistics partners over the lowest bidder 1.
Delhivery, one of India’s largest integrated logistics providers, has been a key beneficiary of the ecommerce boom. The company reported a 12% year-on-year growth in its express parcel business in the fiscal year 2024, driven by increased demand from ecommerce platforms. Barua attributed this growth to the sector’s ability to adapt to changing consumer behaviors and the rise of direct-to-consumer (D2C) brands, which rely heavily on third-party logistics for last-mile delivery 1.
The logistics sector in India has seen significant consolidation in recent years, with major players like Delhivery, Ecom Express, and Shadowfax expanding their networks. Barua highlighted that this consolidation has led to better infrastructure and operational efficiencies, reducing the need for price wars. "With improved infrastructure and technology adoption, logistics providers can now offer competitive pricing without compromising on service quality," he added. This has also helped in stabilizing pricing across the industry 1.
Despite the positive outlook, Barua acknowledged that the sector still faces challenges, including rising fuel costs and regulatory hurdles. However, he expressed confidence that the industry’s focus on innovation and automation will help mitigate these issues. Delhivery, for instance, has invested heavily in automation and AI-driven solutions to optimize its delivery routes and reduce operational costs. These investments are expected to further improve margins and pricing stability 1.
Barua also emphasized the role of government policies in shaping the logistics sector’s future. He pointed to initiatives like the National Logistics Policy (NLP), which aims to reduce logistics costs in India from the current 13-14% of GDP to single digits. "The NLP is a game-changer for the industry, as it will streamline regulations and improve infrastructure, making logistics more efficient and cost-effective," he said. The policy is expected to benefit both logistics providers and ecommerce companies by reducing bottlenecks 1.
The ecommerce sector in India is projected to grow at a compound annual growth rate (CAGR) of 27% between 2023 and 2028, according to a report by RedSeer. This growth is expected to drive demand for logistics services, particularly in tier-2 and tier-3 cities, where ecommerce penetration is still low. Barua noted that Delhivery is well-positioned to capitalize on this trend, given its extensive network and focus on technology-driven solutions 1.
Barua’s comments reflect a broader industry sentiment that the logistics sector is moving toward a more sustainable and profitable model. While price wars were common in the past, the focus has now shifted to operational efficiency, technology adoption, and customer experience. This shift is expected to benefit both logistics providers and ecommerce companies, as it ensures reliable and cost-effective delivery solutions. Delhivery’s growth trajectory aligns with this trend, as the company continues to expand its services and improve its margins 1.
ops.llm_calls. Every fact traces to a citation. If a fact looks wrong, write to corrections.