News / Maersk ends contract with Indian 3PL after its role is 'over-hyped'

Photo: Maersk

Controversy over a 3PL hired by Maersk for inland transport in India has prompted the carrier to swiftly terminate the deal.

At the centre of the storm is Delhi-based Kaushalya Logistics (KLL), said to be a first-time transport vendor for Maersk, which claims a presence in 70 locations across India and reporting some $175m in group revenue last fiscal year (2023-24).

According to industry sources, KLL allegedly ‘capitalised’ on the transport service contract secured from Maersk to drive “undue” market advantages, helping its equity interests, while it was involved in an initial public offering (IPO) programme to raise funds.

KLL was said to have overplayed its role for the carrier, and the Danish carrier believes it was a tactical foul play.

The contract announcement by KLL, including a filing with the local market regulator the National Stock Exchange of India, grabbed headlines in the country last week.

KLL said of the deal:  “Under this agreement, KLL will manage Maersk Line’s surface transportation requirements throughout India, further solidifying its role as a leading logistics provider. This collaboration offers KLL the opportunity to leverage Maersk’s extensive network, enhancing its transportation solutions and operational efficiency for clients across various sectors.”

KLL MD Uddhav Poddar also claimed it was “a watershed moment” for his company in the full truckload (FTL) segment.

Thw statements, industry sources believe, painted a misleading picture, suggesting KLL would handle all Maersk’s inland movements and a Maersk India official said: “We are issuing a termination notice to KLl.”

Maersk sources explained that the logistics arrangement with KLL was a “routine contract” and KLL had not yet moved a single box.

“We have hundreds of transporters working for us, and KLL was to be purely one among them,” a Maersk India executive told The Loadstar. “Claiming that Kaushalya will do all our surface transportation was a false statement.”

As well as terminating the contract, Maersk is considering legal action against KLL for acting in violation of agreed contractual conditions, according to industry sources. KLL’s stock value was said to have appreciated markedly following the Maersk contract announcement.

Efforts to contact KLL for comment were unsuccessful.