Truxapp, a tech-based start-up that provides both last-mile and long-haul road-freight logistics services to its clients and has just completed close to one million trips across all industry verticals. The two-year-old firm offers a mobile app based services at the most competitive rates and connects truck owners to businesses. While interacting exclusively with BW Businessworld, Manmohan Agarwal, its founder reveals that India’s road freight market is valued at $150 billion and is growing at a CAGR of 12%.
Please tell us the genesis of the company?
The idea was mooted way back in 2015. Having a stint with e-commerce firm called Yebhi.com and discerning that there are big pieces in the country and where there is no technology intervention and problems are aplenty, the trucking industry looked quite glaring. Trucking alone is 5% of the GDP and is growing faster than any other sector growing at about 13-14% YOY. Massively unorganised, there are a lot of brokers in the process. The biggest problem is that the assets are not sweated out optimally. Some of the research tells us that out of 30 days (in a month); a truck runs with a (full) payload for only 17 days. Some of the contributors to this wastage are idling, brokerage meddling, loading points, inter-state check posts, etc. Our focus was largely to aggregate the fragmented supply of people (truckers) who own less than 5 trucks that constitutes 80% of the population of trucks. So our aim is to put them into the ecosystem, register them on our platform and expose then to whatever demand that we have now.
What kind of disruptions have you really created in the trucking community?
There are so many of them. The first thing is the sheer fact that you (truck operators) don’t have to go to a roadside broker and sit on his charpoy for 4 days to get a load. You can simply rely on our (on Smartphone) app (for this). Most importantly, the vehicle owner was dependent on the driver to tell him that his freight is ready. If he (transporter) is sitting in Delhi and the freight is going to Chennai, he has taken on the face value what the driver is reporting. Now he has the power on this app to decide which freight he wants to pick up. He can instruct his driver to go and pick up that load. On last mile delivery in the e-commerce ecosystem, all our vehicles are having an app. The amount of transparency is phenomenal. Moreover, the real-time performance of each vehicle in terms of kilometres run, the amount of load carried, successful delivery, etc, can easily be evaluated. We are trying to bring in a lot of improvements and efficiencies the logistics sector in the last two years.
Has the rollout of GST been a boon for the logistic sector of the Indian economy?
Absolutely! It was long overdue and I am very glad that it finally got implemented. With the removal of the checkpoints, the efficiencies in the entire supply chain are coming in. Not only there is a complete transparency, the whole process is digitized. Although the movement of goods was low over the last few months due to low offtake, the actual results will be visible in the long term only. I have personally written to the PM on how the GST will add to the momentum of this industry through cost reductions in the end price of road-freight, via the consolidation of multiple state and federal taxes into one single rate. While the efficiency of truck utilisation is one thing, resolving the working capital issue is another matter. What we have suggested is when the consignee receives the good, you make it mandatory for him to avail the input credit to go to the GST framework and make an acknowledgement that the goods have been received.
How many truckers are registered on your app and what kind of vehicles are they?
As we speak today, there are around 2 lakh sixty-one thousand trucks that are live on our App. This ranges from 1 tonner to 40 tonners and Trailers. An equivalent number of drivers are registered on our platform. Over the next 12-15 months, we look forward to having a network of 1 million (trucks) and an equivalent number of drivers logged on our platform.
Going forward, do you intend to own vehicles or will you remain asset-light in your business?
We don’t intend town any truck and will remain asset-light in the future too.
What is the size of the Indian logistics sector? What are its future potentialities?
The size of the Indian logistics market, which comprises Air, Sea, Rail & Road Freight and Warehousing sectors, is approximately worth US$300 billion, contributing around 13% – 14% of the country’s GDP. The road-freight portion of this logistics market is currently valued at US$150 billion per annum and is growing at a CAGR of around 12%. That translates to a new trucking demand of US$ 18 billion generated every year. If you break it down to a month it is worth US$ 1.5 billion which is about Rs. 9,000 crore (per month).
What are the key growth drivers of booming logistics industry?
The growth drivers are many. For starters, the sheer growth of the economy means more product will be bought and sold. The government’s thrust on infrastructure sectors like Road, Railway, etc., will augur well for us as there will an unprecedented movement of goods like cement, steel, etc. The booming e-commerce industry is also giving us enhanced business opportunities for us. Moreover, ‘Make-in-India’ initiative by the government will also be an enabling factor once the projects are commissioned.
How would you compare India’s trucking industry with China and other advanced countries like Germany, Japan, US, etc.?
That is a very interesting question. The trucking industry is grappled with similar challenges across the globe and that is a fragmented supply (chain) and demand. So there are start-ups and even unicorns operating in the Logistics sector in countries like China. Therefore, we are keen to expand beyond domestic shores and are evaluating a couple of geographies. What distinguishes our market from others is that the quality of the trucks used here is below-par and sub-standard. Moreover, the number of HCVs plying on the highways is insignificant largely due to (below-par) road infrastructure. A 16 tonner is considered a heavy-duty truck (in India) unlike 40T in advanced countries. But things might improve as there is an enhanced focus on infrastructure development (by the government). We will see smarter and good looking trucks with a higher carrying capacity in the next 5-10 years. That will lead to a significant drop in per unit carrying costs of the goods that are transported.
Can you reveal the names of the key clients you are working with?
We are serving nearly 200 large corporate clients, including many well-known blue-chip companies like Amazon, Flipkart, Bluedart, Delhivery etc. We are working with companies that are into (production of) Steel, Cement, FMCG, etc. In the next couple of years, we will start tapping SMEs too.
Would you like to reveal the company’s current and projected turnover?
With just $5 million invested so far in a span of only two years, we are on course to achieve operational break-even. We should be earning US$ 100 million in revenues by FY 2018-19.