Delhivery's low-cost model makes it impossible for in-house logistics arms to compete on price, chief executive Sahil Barua told NDTV Profit in an exclusive interview, even as e-commerce players increasingly build captive delivery networks.
"The great competitive advantage that Delhivery has and that we've always focused on is that we are the lowest cost service provider in the market," Barua said, adding that the company's reach across India further insulates it from in-house competition.
Barua said only three large captive logistics arms exist in India, and their design limits them to serving the specific needs of the companies they originate from. "It's very difficult to design processes and systems to actually be able to serve very unique and small needs," he said, pointing to sellers on platforms such as Shopify who require third-party logistics support.
The Delhivery chief estimated that e-commerce parcel logistics accounts for less than 10% of India's $140 billion logistics market, reinforcing the company's strategy of expanding beyond parcel delivery into freight, warehousing and technology services.
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On fuel costs, Barua told NDTV Profit that nearly all of Delhivery's freight contracts are protected against fuel price inflation, limiting the risk to margins from elevated crude oil prices. "I would be surprised if anything less than probably 100% of all of our contracts are covered for fuel price inflation," he said.
He acknowledged a near-term timing lag as pricing adjusts to index-linked freight contracts over the first two quarters, but ruled out any lasting hit. Delhivery has also cut its fuel exposure by deploying larger, more fuel-efficient line-haul trucks and expanding its electric vehicle fleet, which Barua said had grown five to six times over the past six months since the fuel price shock began.
"If anything, an inflationary environment strengthens our competitive position over the medium and long-term," Barua said, citing the company's relatively lower cost base and greater ability to absorb price pressures compared with smaller operators.
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