Federal Express Corporation (FedEx) -- the global courier major, has decided to enter India's growing international express market, independent of its global service participant -- Blue Dart. The company will set up its own full-fledged offices in all metros. It will also start an express flight to India beginning September.

In the recent past, there had been speculations about future of the 14-year-old FedEx-Blue Dart merger with FedEx Mauritius -- a subsidiary, setting up its independent office in Mumbai. But the $10.6 billion US multinational last month renewed its contract with the latter for five years, extendable by another five years. FedEx's direct presence in India is part of the renegotiated agreement between the two.

As a result, Blue Dart will find itself relegated to domestic operations only, while FedEx will gain exclusive access to the growing international market to and from India.

According to Hamdi A Osman, FedEx's managing director for middle east and the Indian sub-continent, FedEx does not intend to set up a full-fledged subsidiary. Nor will it set up its own supply chains and distribution network in the country and rely on Blue Dart for the same as it will not enter the domestic business as per the agreement. The latter will provide pick-up, transportation, custom clearance and delivery services for FedEx's international shipments, according to Tushar Jani, chairman, Blue Dart.

FedEx will also avail of Blue Dart's 464 offices nationwide in making its bookings and servicing its clients.

After gaining the permission from the directorate-general of civil aviation, FedEx will operate a 64-tonne capacity DC-10 jet aircraft to Mumbai five times a week. Mumbai will thus form a new link in the US-Europe-Dubai-far east chain, making FedEx the first to start a dedicated express flight out of India, linking India to FedEx global network. This around-the-world flight will improve the transit time and provide speedier service and focus more on heavy weight express service. ``We'll connect all major points around the globe within 48 hours. Also, we'll be able to provide custodial control over the consignment which no other competitor can provide in India at present,'' says Osman. A little later, FedEx intends to put another aircraft from its 580-strong fleet that will touch Mumbai going from Singapore towards Dubai.

``We will emerge stronger on the international sector as now we'll have our own aircraft. That will ensure faster delivery time and higher penetration into the market. It will revolutionise the industry,'' adds Jani.

Though the top brass of both the companies are optimistic of this recast in operations, points of conflict in interests may arise, putting the arrangement in jeopardy. FedEx's direct entry puts a question mark on the future plans of Blue Dart. While it will continue to service its existing client base, domestic as well as international, Blue Dart may lose out on new international business development from India. Whether the new agreement includes adequate sharing of revenue to compensate for Blue Dart's loss or not is not clear.

``Both companies will display each other's rate sheets and get a cut from each other for the business they gain for the other,'' points out Osman. But if that in itself will compensate for the capping of Blue Dart's global desires is anybody's guess. Jani refuses to see any conflict in interests as Blue Dart's international market share was always in association with FedEx.

``We have nursed this market in partnership in last 13 years and shared revenue between ourselves, so why should FedEx leave those markets for us?'' His logic is that with FedEx directly entering the market, a lot of US based MNCs who have not been using Blue Dart will start using their services.

``Between the strengths of two companies, we will be working side by side,'' he promises.

Blue dart enjoys a market share of 30 per cent in the domestic market, and about 22 per cent of the international business from India. It has grown from strength to strength in last couple of years. It operates over 48 all-cargo flights per week with two Boeing 737 aircraft connecting the four metros. It is this progress made by Blue Dart in the domestic market that FedEx plans to build upon.

FedEx India will be a branch of FedEx worldwide, not a separate company. He also points out that India is not the only country where FedEx has entered directly, ``We feel it is easier to bring in our expertise, systems and technology and highly trained manpower, rather than try to retrain the existing staff of Blue Dart,'' claims Osman. The 200-strong staff now being recruited by FedEx will be all-Indian and unknown to the FedEx practices.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.