Volvo to drive into logistics

VOLVO is getting into the same business as its customers. But it won’t be fighting for the same piece of the pie. The high-end truck and bus maker is entering the logistics business. It has recently applied to the government to include “logistics, freight forwarding and transport” — as well as allied areas like cargo handling and clearing, packing, warehousing and store keeping — in its roster of activities in India.

The Swedish multinational, which has an assembly unit in Bangalore, already has a logistics business unit. When contacted, a company spokesman explained that the new business will not pit Volvo against its own customers. “This business unit intends to support only internal Volvo Group customers and some external customers connected to global sourcing of our components,” he said. Volvo decided to go for a government clearance to allow the logistics business greater operational freedom. “With the growth over the years and the inclusion of new activities like our bus joint venture, we envisage a large scope of activity for our logistics business unit,” said the company spokesman. “Hence, the reason to register with the Foreign Investment Promotion Board (FIPB) as a separate function, which allows the unit greater work flexibility in freight forwarding and local invoicing,” he said. “Additionally, the logistics department supports customers such as our vendors for global sourcing and we expect to see this activity growing in the days to come.”

However, Volvo does not have any plans to turn the business into a subsidiary. Volvo Logistics will continue as a business unit, supporting various internal customers in India and the FIPB registration will not mean any new investment. Worldwide, Volvo Group is involved in the logistics business in several markets. In India, its proposed activities include software development, consultancy, supply services, training and running call centres for development and design activities. That’s apart from its primary business in India—to make and sell trucks and buses, import and sell construction machines and high-tech engines and source components.