SynopsisDelhivery CEO Sahil Barua anticipates no "irrational pricing" or heavy capital expenditure in the third-party logistics sector, despite projected ecommerce growth. He believes third-party players will gain market share from first-party operators like Amazon and Flipkart due to cost efficiencies.ETtechSahil Barua,CEO, DelhiveryEven as broader growth in the ecommerce space recovers, the third-party logistics industry is unlikely to see “irrational pricing” or heavy capital expenditure, Delhivery CEO Sahil Barua said during the company’s earnings call on Saturday.He noted that the ecommerce industry is expected to grow in the 15-20% range in the long term, adding that third-party logistics players are likely to see an increase in market share over first-party operators like the in-house services run by Amazon, Flipkart, and Meesho.“Are we going to see irrational pricing the way we saw three or four years ago? I think the short answer to that is `no’ because everybody has seen that movie and knows how it ends,” Barua said, referring to consolidation in the industry that saw Delhivery acquiring Ecom Express in a fire sale.Delhivery reported 30% on-year growth in its January-March operating revenue, at Rs 2,849 crore, though net profit remained flat at Rs 72 crore.The growth in revenue was mainly aided by the express parcel business — the company’s largest unit — which posted a 72% surge in volume during the March quarter, at 306 million shipments. The robust performance came despite logistics industry volumes typically moderating after the festive-season peak in the December quarter.Barua also said that services of first-party players such as Amazon Transportation Services or Flipkart-owned Ekart Logistics tend to be more expensive than third-party logistics players such as Delhivery, BlueDart, or Shadowfax.“It doesn’t matter if it’s Meesho, Flipkart, or Amazon… I think they have their own reasons for continuing to persist with first-party logistics and their strategies change in response to the circumstances they face. The reality is that first-party logistics does tend to be more expensive than third-party logistics and over a period of time, if rational financial decision making is to be believed, people will move a certain volume towards third-party players,” he explained.Meesho, which has its in-house logistics platform Valmo that aggregates delivery players, saw the volumes of this platform as a percentage of its marketplace sales come down in the March quarter to around 50% from over 60% earlier.However, despite saying that the share of third-party logistics players is expected to go up, Barua underscored that there was no space for more players in the industry.“I don’t think there’s space for other players in this market. I don’t think XpressBees has any structural advantage compared to the three listed players and I don’t see a reason for them to exist,” he said. ...moreElevate your knowledge and leadership skills at a cost cheaper than your daily tea.Subscribe Now