FedEx Express, a subsidiary of delivery services giant FedEx, is investing $100 million in Indian startup Delhivery as the global firm looks to expand its presence in the South Asian country.
Friday’s investment comes less than two months after the Gurgaon-headquartered startup, which is valued at $3 billion, is ahead of an initial public offering of $277 million in the coming quarters.
As part of the deal, the companies will enter into a long-term commercial agreement. FedEx Express will focus on international export and import services to and from India, and Delhivery, in addition to FedEx, will sell FedEx Express’s international products and services in the India market and provide pick-up and delivery services across India. Will do FedEx will move certain assets related to its domestic business in India to Delhi.
Sahil Barua, co-founder, Delhivery, said of Friday’s investment, “We aim to bring new products and opportunities to Indian and global businesses and consumers through our unparalleled access to our network, and our technology and engineering capabilities. “
Delhivery started its life as a food delivery firm but has since moved to a full suite of logistics services in over 2,300 Indian cities and over 17,500 ZIP codes. It is one of a handful of startups attempting to digitize the logistics market demand and supply system through a freight exchange platform.
Its platform connects freighters, agents and truck drivers offering road transport solutions. The startup says the platform reduces the role of brokers, makes some of its assets such as trucking – the most popular transport mode for Delhi – more efficient, and ensures round-the-clock operations.
This digitization is crucial to address the inefficiencies in the Indian logistics industry, which have plagued the national economy for a long time. In a report on India’s logistics market last month, Bernstein analysts wrote that poor planning and demand and supply forecasting lead to increased carrying costs, theft, losses and delays.
Delhivery, which says it has placed over 1 billion orders, works with “all of India’s largest e-commerce companies and major enterprises,” according to its website, where it also says the startup has placed more than 10,000 Have worked with more clients. For the final stage of delivery, its couriers are assigned an area that never exceeds 2 sq km, allowing them to run multiple deliveries in a day to save time.
Bernstein analysts said the TAM (total addressable market) of the Indian logistics market is over $200 billion. The startup said late last year that it was planning to invest more than $40 million within two years to scale up and increase the size of its fleet to meet growing demand for orders as the pandemic slows. Meanwhile more people shop online.