Most of the startup stories that make it to the front page depict an entrepreneur under the Bodhi tree having a vision or brainwave that presents itself in the form of an answer to a persistent question. However, on the other side of the mountain are the entrepreneurs who gather years, even decades, of intel on an issue, through observation, trial and error, and, in order to provide a solution that is current, state-of-the-art and right on the money.
Though, in an article by The Economic Times (ET), dated Jan 21, 2017, bunch of entrepreneurs who had big dreams to revolutionize the Indian logistics sector have been assumed to be “retired hurt”.
However, the buzz that consumed techies, industry heirs and college friends to unite over a logistics startup in India is not fading. The article brags about 2016 marking a dry spell for startups, especially those related to offering tech solutions in logistics.
“Atleast six startups, namely, TheKarrier, Truckmandi, Trucksumo, Loadkhoj, Zaicus and Sastabhada, all dealing with truck aggregating for intra as well as inter-city transport have pulled the plug on their operations. The challenges are many and it majorly boils down to the fragmentation of the Indian logistics sector and the inability of technology alone to resolve the brick and mortar business,” states ET.
But, not really! The tweet here has a different version by Arun Rao, co-founder, Trucksumo.
— Arun Rao (@arunvrao1) January 21, 2017
Puneet Prakash, Founder & Director, City Link( #1 IT-driven trucking logistics platform/startup, that hails a profitable revenue-generation model and is a subsidiary of Jayem Logistics), the engineer turned logistics professional in the past 20 years shares his success story of constant improvisation, by undergoing the drill of Indian impediments.
“The industry is fuelled by trust and cash transactions. The expenses in transportation, such as toll taxes and diesel are all paid in cash. So, there often is an air of suspicion around what drivers quote. Introducing transparency and accountability in the system to make the industry respectable was a key challenge. Moreover, with almost no online penetration, the demand-and-supply dynamic were often warped, due to a lack of reference points. Idling losses, occurring when cargo is shipped and the vehicle returns empty, are also substantial. Due to this chaotic state, the Government of India recognizes transportation only as a ‘sector’ and not as an ‘industry,’ even though it constitutes about six percent of our GDP.
“The space was highly fragmented, with vehicle ownership not averaging more than 1- 1.5 vehicles, and even the largest fleet owners didn’t hold more than a few vehicles. “We saw this as a big challenge on the enterprise side. On the demand side, we saw the hegemony of the stands – fixed-rate operations devoid of any rationale, which badly needed reform akin to the new-age taxis,” expresses Puneet.
‘We are no Ola or Uber’
Here, Puneet grabbed the opportunity of building a defined marketplace for intra-city on-demand trucking. Rather than going the ‘I came, I saw and I conquered’ route, he used decades of domain expertise and was sure of himself when he decided to take the leap last September.
Jayem Logistics seconds the thought that since the advent of Ola and Uber in the Indian startup marketplace, all the aspiring entrepreneurs have found technology aggregation attractive to add to their business models and catch investors’ attention. But the number of such startups shutting shops suggests that that is not enough.
The inadequacy of technology is not the only reason for these firms to go down under. The logistics sector of India is a sprawling one that is plagued by a number of issues and the shippers’ and fleet owners’ woes are somewhat conflicting. While a shipper struggles to deal with high freight rates when benchmarked against global standards and non-transparency of transactions, bill reconciliation with clients and idling of vehicles without load are issues that haunt a fleet owner. And seldom has a startup been able to address both parties’ woes in a balanced way. Jayem adds, “The inexperienced techies who found this business lucrative could not analyze the industry / customer behavior.”
“2017 is set to be a landmark year for logistics in India. With the introduction of GST and a major push towards a digital, cashless economy, we can expect significant buzz and traction for technology enabled logistics startups. However, we do believe that while the opportunity is huge, only a handful of very resilient companies that are creating real value in the market will survive the year going into 2018,” Raghav Himatsingka, founder and CEO, Truckola pointed out.
Can we have a chalk and cheese solution?
“Our customers are mainly cargo guys, who are not at all savvy or intelligent. The solutions are like chalk and cheese, so we offered multiple booking channels – web, mobile, as well as a call centre to attend to queries. We aggregate supply and front-end execution with standard tariff plans. However, for both our offerings we complete the transaction on the platform, thereby ensuring a seamless experience for our customers,” explains Puneet.
The enterprise business is more specific to customer requirements, and is governed by long-term contracts. Having a robust web platform, mobile app and call centre operations, with features like fare estimate, pricing intelligence and vendor rating, City Link aims to create value for anybody who moves cargo using trucks within the city. Hence the portfolios are diverse – large enterprises and small and medium-sized enterprises (SMEs), traders like timber merchants, glass merchants etc. and finally individuals.
“‘Top-line is vanity; bottom-line is sanity and cash-flow is reality.’ This principal was followed by the company through and through. Vision and mission are overused expressions. What matters, in fact, are the right strategies, and the ability to execute with a clear focus on numbers. We always wanted to address the complete ‘in city’ requirements,” says Puneet.