Trucking ahead: Startups drive changes in industry
The startups, backed by large private equity firms, are improving the working conditions of truckers, who put in long hours behind the wheel with little respite.
“Customers want faster turnaround time and reliability, and they want their goods to reach on time,” Deepak Garg, founder of technologyenabled logistics company Rivigo, told STOI.
Rivigo, which counts Warburg Pincus and Saif Partners among its investors, owns a fleet of 4,000 internet-connected trucks. It developed a rostering algorithm which powers a driver relay model. Under this model, multiple truck drivers work on the same route in shifts, which allow them to return home for the night.
For example, a driver on the Delhi-Mumbai route covers a certain distance and makes a pit stop in Jaipur, Rajasthan, where another driver takes over. The former boards a truck returning from Mumbai, driving it back to Delhi. The relay system keeps drivers well-rested and fresh, and significantly reduces the time required to transport goods. A trip from Mumbai to the national capital, which earlier took nearly 100 hours, is now completed within 32 hours.
The drivers, or pilots as Rivigo calls them, are equipped with smartphones, which contain information about their tasks and mandatory documents and clearances for the journey.
Garg, an IIT Kanpur alumnus, was working with consulting major McKinsey when he thought about testing technological solutions in the logistics industry. He quit the well-paying job and travelled across the country to understand the business and get first-hand accounts from truckers. He launched Rivigo in 2014, taking a bank loan to buy 15 trucks.
Garg’s first customer was courier services company Gati. The clientele now includes Amazon, Blue Dart, Flipkart, and Hero Moto-Corp, among other firms in various sectors.
Another startup, Black-Buck, viewed as Uber or Ola of the trucking scene, has also generated a lot of interest after rolling out its platform four years ago.
“We wanted to disrupt (the market) with technology, get truck owners in direct touch with shippers, and bring in much-needed transparency,” said Ramasubramanian B, one of the three partners who started the firm. “We created an asset-light online marketplace for long-haul trucking, bringing the owners and shippers together.”
BlackBuck, which is backed by Accel, IFC, Tiger Global, Sequoia and Flipkart, has over 10,000 clients and 4 lakh trucks on its platforms.
The company uses its inhouse technology to ensure that truckers don’t exceed the safe prescribed limit for daily driving. Their movement is monitored in real time. The trucks on the platform cover 20% more distance than regular commercial vehicles.
BlackBuck has a strict onboarding policy for trucks and every important detail related to the vehicle and owner is posted on the platform. There are no cash transactions; only bank transfers and digital payments are accepted.
“We introduced many things and the industry has started to see them as good practices,” Ramasubramanian told STOI.
But some in the industry think such startup don’t have a sustainable business model and they are burning through investors’ cash. “It’s easy to do business on somebody else’s money. What is the point when you sink in Rs 750 crore and have losses of Rs 250 crore?” said a senior executive of a leading logistics company.
Rivigo’s Garg said largescale innovation required money, but his firm had been frugal with resources while developing infrastructure such as pit stops for drivers. “This year, we will certainly hit the break-even point and profitability stage,” Garg said. He shrugged off the company’s unicorn tag. “We as a country celebrate valuation too much. We should celebrate innovation,” he said.
Ramasubramanian also dismissed criticism about startups quickly using up raised funds. “At BlackBuck, we have ensured there’s no burn once efficiencies improve. Outsiders only see money coming in. For us, the burn is not on the gross margin, the burn is in terms of building technology and bringing in futuristic things. Operationally, we have been positive right from day one,” he said, adding the company’s earnings seemed under pressure mainly because it had a large tech team and was building new products.
BlackBuck’s long-term vision is to make all trucks in the industry technology-enabled and plug leakages.
“As a pioneer of e-commerce in the country, with a vision to get next 200 million customers, we at Flipkart continue to invest and improve our supply chain. To achieve that, we work closely with several tech-enabled logistics companies such as Black-Buck,” said Amitesh Jha of Flipkart’s logistics arm eKart.