Allcargo Logistics emerging big in LCL cargo business in India

Mr. Shashi Kiran Shetty of Allcargo Logistics who made it big in LCL (less than container load) cargo business in India, marked his presence in Europe by taking full control of the Belgium-based Engine Control Unit (ECU) Line five years ago.

He has not only turned around the company, but also expanded its global reach through more buyouts. Despite the economic slowdown, the company's bottom line grew by 25% last year.

“LCL business is recession proof. Volume drop does not happen. During recession, people buy goods in smaller quantities. Full container load (FCL) gets converted into LCL. Even a lot of airfreight gets converted to ocean freight. All these benefit us,” added Mr. Shetty, when asked how his European subsidiary could manage robust growth when the economy itself was facing a tough time.

Lower freight rates work in the company's favour, as it does not own ships or containers but buys container space. Mr. Shetty noted, “Lower freight means we pay less. Of course, we have to pass it on to our customers.”

While growth in LCL business comes from volume, it also allows flexibility to rationalise or downsize operations and cut cost. The margins are, therefore, stable, says Mr. Shetty, Chairman and Managing Director of Allcargo, the Mumbai-based listed company with a consolidated turnover of INR 3,500 crore.

The recognition from Antwerp Port comes at a time when Allcargo is increasing its Container Freight Station (CFS) capacity, strengthening third-party logistics, engineering and project transportation services. His ambition is to make Allcargo a billion dollar company by 2014.

Mr. Shetty remains bullish on the logistics business he entered with freight forwarding 30 years ago, despite ripples of a global economic slowdown rocking the shipping trade.