Business Today Net Special

To the US, Overnite

By Vinod Mahanta

Indians post it, and pray for its deliverance. While Americans post it and forget it. The reason: the national mail carrier, run by the US Postal Service (USPS) has a security rating above phone calls, fax, and even e-mails. The USPS handles 46 per cent of the world's card and letter mail by volume (service performance for local delivery for the year ended 1999, at 93 per cent).

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USPS, courtesy Overnite Express (an Indian courier company) is offering a service from all SAARC countries to the US. Initially, the service will be available only in India, but shortly Overnite Express will expand to Nepal and Bhutan. "This deal will" says O.P. Rajgarhia, CEO, Overnite Express, "generate volume for both the companies. It's a partnering approach, and we will be leveraging both the networks for providing service."

USPS got its act together quickly when it realised that it did not have any share in the US bound mail. Fedex, Blue Dart, and TNT were eating into its share. There are more than 3.2 million Indians living in the US. Of all the non-Americans in US, Indians make-up the largest number of software professionals, the fourth largest group of students; hold fifth position among temporary workers, and are ranked sixth in the immigration list. Says Robert J. Edwards, Director, Asia Pacific Region, USPS: "As an emerging economy, which has over 21 per cent of its total exports to the US, India is indeed a very important market for us."

The Overnite Express service is competitively priced at a flat rate of Rs 500 for up to 250 gm packet, while companies like DHL are charging a flat rate of Rs 1,250 for up to 500 gm packet. But, by no means will USPS be able to run roughshod over the other courier companies. Apart from the rates, the quality of service plays an important role in this industry. Concurs Jinender Sancheti, MD, TNT: "Customers come back to us and agree to pay the high rates because of the quality of service that we provide."

This is an industry where discounts play a major role (ranging from 5-70 per cent) depending upon the volume of business of the client. Plus, the business is mostly in credit form. Cash clients form a negligible part of the total business. Therefore, old players have several strategies to attract cash paying clients. Recently, DHL offered a 50 per cent off for all students sending admission forms to US universities. While TNT launched a 'Scholar Pak', again for students. TNT also has a special "rakhee" offer.

Low rates alone won't make old clients transfer their loyalties to the new player overnight (no pun intended). USPS and Overnite Express will have to prove itself in the market, the hard way.

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