India Post to Increase the Parcel Transportation Channels

After collecting Rs.1,500 crore at the end of March 2016 in cash for delivering parcels for various e-commerce portals, including Amazon and Flipkart, the postal department now plans to have dedicated road routes for short distances and dedicated trains for longer routes to deliver parcels.

A senior department of posts (DoP) official, requesting anonymity, said B.V. Sudhakar, secretary of DoP, met officials from the ministry of railways earlier this month to explore areas to increase parcel delivery capacity, especially from e-commerce firms, through the railways.

“We are exploring various modes to deliver e-commerce parcels. We plan to buy our own vehicles for delivery through roads. Currently, we outsource and have few vehicles. Besides, we are looking towards increasing association with the railways and are in discussion with them for dedicated trains for parcels,” the official said.

The boom in the e-commerce sector has come as a lifeline for the postal department. The cash collected from e-commerce deliveries by DoP was Rs.500 crore in 2014-15, and a meagre Rs100 crore in 2013-14.

The e-commerce sector in India is expected to grow to $119 billion by 2020 with a total of 320 million shoppers, according to a report released in February by Morgan Stanley.

To be sure, India Post already has tie-up with the railways for transporting parcels and the plan is to increase the capacity in the trains to manage the load which is increasing day by day.

The postal department plans to buy 250-300 new vehicles this year and have a fleet of around 1,300 vehicles for inter-city transport and short distances outside cities.

A senior official at the ministry of railways, who also did not want to be named, said, “We have made extra parcel vans and we plan to have full parcel trains. It is under consideration but it is at an exploratory stage. We have an old association with the DoP and have a railway mail service as well. The DoP and the railways are together exploring the possibility.”

The cash-crunched Indian Railways is exploring all possible ways to increase its fare and non-fare revenues, and is also exploring external financing options to execute various projects.

In the budget of 2016, railway minister Suresh Prabhu had said that the ministry will look at liberalising parcel policies to increase non-fare revenue and it will expand its service offerings especially to cater to sectors such as e-commerce. Prabhu also had said that soon time-tabled parcel trains will be introduced.

As per the Indian Railways Statistical Publications 2014-15, the revenue from parcels and other coaching in financial year 2014-15 was Rs.3,997.89 crore.

Queries emailed to the spokespersons of the ministry of railways and the DoP on 11 August remained unanswered.

According to experts, the coming together of Indian Railways and India Post has the potential of creating a formidable logistics ecosystem.

“The big picture is that we are living in a digital age and once we have a digital platform, you can do a lot of things. It could be e-commerce, education, healthcare, etc. So in India, this is an amazing combination—the post office has last mile connectivity right to the villages and the Indian Railways has a wonderful network,” said Hemant Joshi, partner, Deloitte Haskins & Sells LLP.

Both are government departments and it is an absolutely fantastic combination as it can only create value for the people of India, added Joshi.

The postal department has set up 48 processing centres to handle parcels for handling the e-commerce load. Besides, it is also setting up automatic parcel centres at Mumbai, Chennai, Hyderabad and Bengaluru. The department already has such centres in New Delhi and Kolkata.

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