When Delhivery, India’s largest third-party logistics company, acquired its biggest rival Ecom Express in a $165 million distress sale last week, it seemed a relief for both parties.

Ecom wasn’t doing so well, especially since its largest customer turned a competitor. E-commerce platform Meesho launched its in-house logistics unit Valmo in early 2024, effectively bringing Ecom’s revenue to a standstill, as The Ken previously reportedThe KenMeesho goes from Ecom Express’ dream client to feared rival.

The company even called offLivemintEcom Express pauses IPO plans, offloads 500 employees to cut costs its IPO plans in February—just six months after filing the papers—and laid off hundreds of employees. This was Ecom’s second attempt at a public listing. The first, in 2022, was cancelled due to poor market conditions.

So, when Delhivery came knocking at its door, slashing nearly 80% off its previous valuation of $878 million, Ecom gave in. “It squeezed the most out of Ecom Express’ difficult situation,” the founder of a third-party logistics startup said, referring to Delhivery’s potential benefits.

But it’s not like Delhivery was in a great place, either.

The company, with a market cap of over Rs 18,000 crore ($2 billion), barely shipped more e-commerce packages in the December quarter (typically, the peak season for online shopping) than it did in the same quarter the year before. That’s because the entire third-party logistics segment is facing headwinds from e-commerce players—their bread and butter. The latter is no longer growing at the rate it used to.

Sure, Delhivery has tried its hand at diversifying into services like part and full truckloadPart and full truckload shipmentsIt refers to transporting multiple, heavier shipments by road. In part truckload, the company consolidates shipments from multiple customers whereas in full truckload, the entire truck is dedicated to one customer in an attempt to become a conventional logistics company. But shipping e-commerce parcels still accounts for around 60% of its revenue. In other words, the business that got Delhivery here won’t take it much further.

Seen in that light, the Ecom acquisition looks like an attempt to claw back some business through scale.