After a recent takeover by the German company, Deutche Post Worldwide Net, courier giant DHL has received a boost in strengthening its presence in the global market. Although the Nepal market is small, DHL's country manager for Nepal, Mukunda Malla, has big expansion plans, as he told Nepali Times.

Nepali Times: How come when the economy is down, the courier business is up?
Mukunda Malla: That is because we are not just in the business of moving urgent envelopes from one place to another. That is not our core business anymore. When DHL came to Nepal in 1981 we only handled documents. It was only in 2000 that we registered ourselves as a 100 percent foreign investment company in Nepal.

We are often asked why we carry handicrafts, garment samples and not documents. The international business of air express is moving from document to parcels. Document delivery is at 50 percent volume of former years. By 2005, we estimate only 20 percent of our revenue will be generated from this sector. We plan to increase our parcel business ten-fold with an aim to generate 80 percent of our revenue.

Unfortunately, the authorities in Nepal seem to think we should restrict ourselves to moving documents. Yes, there are certain guidelines. The parcels cannot exceed 35kg because we handle express deliveries right to the doorstep. It's a different value added service?freight in express-mode.

And how is the competition?
It is hard to survive in this industry. Cut-throat competition and price wars have become the rule. Nobody is talking about service, infrastructure or service enhancement. While there are companies doing 100 percent business independently, there also are those we call co-loaders who get business in the name of major air express companies. The latter definitely involves some hanky-panky.

That must make for problems with freight forwarders.
Yes, misunderstandings do crop up every now and then because all of us fall under the cargo bracket. We might appear to be competing for the same market, but what separates us is the time factor. Consumers who need urgent service use us and those with enough time opt for freight forwarders. We carry sample shipments of garments and carpets, and when the clients abroad okay them then cargo handlers get the major chunk of business. As it turns out, we actually generate business for them.

The inefficiency of our postal service must work to your advantage.
That is true. If they improve their service, we will lose a part of our market. But it will take them a while to get there. DHL has a track-and-trace system that allows customers access to their shipment en-route. We even know what shipment is arriving before they reach us.

How seasonal is the business in Nepal?
Our busiest time is little before Christmas, starting in October, especially in the export of handicrafts. In our document business, when it is admission time in schools and colleges abroad, we see an influx of students' documents. This happens especially in March and April. But our business is not exactly seasonal, just some months with spikes.

Is your clientele changing?
We have three categories: 15 percent are from services that include banks, financial institutes, insurance companies and government and international offices. Some 70 percent of our revenue comes from manufacturing textiles, carpets, handicraft and leather goods. The third section is import-export and trading, which covers computer hardware and software, and automobiles that require spare parts and domestic airlines.

How does turnover in Nepal compare to a similarly-sized country in the region like, say, Sri Lanka?
We used to be foremost among smaller countries in the region till recently, when the pashmina business contributed to about 40 percent of our revenue. As far as performance is concerned, the turnover in Bangladesh and Sri Lanka stand at about ?12 million, while we are just ?1.5.

We hear many courier businesses do not collect or submit VAT.
We do both. Even if 95 percent of the cost involved in this business has to be paid elsewhere. Kathmandu ends up getting only five percent of the entire cost, and yet we collect and deposit VAT. It's something cargo companies are exempt from and I feel if it is compulsory, it should be applicable to all the companies. Right now there are companies who quote a lower price than DHL because they do not charge VAT.

Has there been any strategic change after the Deutche Post took over DHL?
Yes, it was a great leap forward for DHL. It went from a company valued at ?6 billion to part of a ?40 billion conglomerate. We are now part of a bigger picture with more strength. Changes are being put through. DPWN has integrated other companies under DHL. For customers this means they will have access to different services through a single window.

Back here, what is your experience at customs in Tribhuban International Airport?
Because of our reputation, we get the best cooperation from customs. There are limitations for the air express industry for clearance of high value shipment but the system can be improved. All the SAARC countries except Nepal and Bhutan have DHL bonded warehouses. Here, they have allocated space for DHL, but it is within the premises of the cargo complex under customs. We would like to have a separate space for quality service because things come to a standstill during national holidays like Dasain.

Airport security says freight are not screened and are conduits for contraband.
General air freight does not have an x-ray machine in the new cargo complex, but we in the air express business use the passenger terminal. All air express packages are scanned. If there is any suspicion, the shipment is opened, checked and repacked to assure the safety of the airline and the passengers. Despite these measures, there have been some instances of contraband being smuggled out through air express.