Rivigo has become one of the hottest names in the Indian logistics sector, catching the industry’s attention for its unique way of running trucks. One of the country’s largest and fastest-growing technology-enabled logistics firm, it has changed the way the trade has worked, with remarkable levels of efficiency and a totally new approach towards the driver community.
We bring you excerpts from our interaction with Mr. Deepak Garg, CEO & Founder, Rivigo Services Pvt. Ltd.
BS-IV implications
Overall it’s a very good regulation and a positive step for the logistics sector. As we understand, most of the OEMs have BS-IV readiness while there will be some short term impact due to BS-III inventory. We do not have BS-IV trucks in our fleet and will add the above as and when they come into the market. We have a long term well-structured procurement program and in the last quarter of FY 17, procured 700 trucks. The trucks have been delivered, even during the last week March but as per the delivery committed; and it has nothing to do with the BS-III and BS-IV transition and discounts thereof.
We need to adopt modern technology on a continuous basis to move ahead and switch in the time ahead as per plan to BS-VI. We have to reach the international standards of road safety, driver comfort and environmental protection as the same are very important for the nation and to sector’s sustainable growth; and it’s imperative everyone participates in these progressive developments.
GST impact
It is undoubtedly one of the biggest reforms post-independence and larger than even the financial reforms the country undertook in 1991. I am hopeful the same will usher in new opportunities for the country and much more for the logistics sector. I have couple of reasons for an upbeat view of the developments. Firstly the GST is bound to lead to a higher economic output and the same will lead to higher logistics sector spend, the typical correlation being 1.3 to 1.5 times that of GDP growth. Secondly the professionally run companies and the organised sector industries will grow significantly as compared to the unorganised sector; and this will mean companies in the organised sector of logistics who are preferred by the bigger firms, can expect faster growth in the years to come. Indian logistics segment is highly fragmented compared to the global setups. Yes, there is the possibility of some consolidation and reorganisation taking place due to GST; and it can happen as well in the unorganised sector to meet the new scenario. Also the 3PL service providers are only 8% in India compared to 80% in developed countries. The same trend should start herein too with the shift of business towards organised sector players in the segment.
Another important outcome widely expected has been the seamless transport of goods across states with no hassles at border check posts. Herein it should be noted that time spent at the check posts is not a big factor as it is made out to be in our experience. Roughly about 10% of the transit time is spent at check posts and the national average is about 70 min at each border check post. It can vary up to 200 to
300 min in the east while it can be much lower than the national average in the west and south. If the check posts are eliminated, agreed the time cumulatively adding up will result in the reduction of transit time. But the more important time and money drainers at the check posts have been the miscellaneous issues typically encountered like harassments of various types regarding documentation and monetary issues due to corruption. Though there is no clarity on the check posts matter at this juncture, assuming that they cease to exist, goods can be transported without hassles thro’ the porous state borders and the spin-off benefits will become one of the major derivatives of the GST regime.
As regards the structural changes, with the shift to faster and efficient transport, hub and spoke model will become the norm and hence the same needs to be scaled up to meet the demands. Hub transport will see more of tractor trailers coming in displacing rigid trucks and distribution trucks taking over the spokes section for delivery up the consumption point. Currently we have about 2000 trucks in our fleet, 75% in the M&HCV class and the rest ICVs; and this composition will definitely change due to above cited but I expect the transition to take place over a period of time.
AC Cabin & Scrapping reforms
Trucking industry is besieged with driver shortage problems; and against this ground reality, A.C cabin that provides driver comfort, if it comes thro’ as envisaged, will usher in an important change. It is indeed taxing to drive the trucks in 45°C plus temperatures and dusty environments; and against such arduous driving conditions, A.C cabin will be welcome introduction. Providing driver friendly features should help in attracting more people to this profession and reducing the turnover. However, the above regulation has not been well defined and if not made mandatory like the seat belt of a car, it will not get accepted in the sector. As the body building including cabin building are majorly done by the unorganised sectors, the efficiency, safety and reliability aspects of the A.C systems can never be assured. Currently the above aspects are in the grey area and need to be clearly spelt out along with the body building code to really benefit the driver community at large.
Scrapping will go a long way in improving the road safety aspects apart from the environmental issues. It’s a very common sight to see diesel guzzling old trucks dangling on one side and billowing black smoke on our highways. Such trucks will never go out of operations if the scrapping policy is not implemented. Yes, the freight rates will go up in the short run but the overall benefits will far outstrip the minor short term hiccups. We do raise the voice for the betterment of the sector; and for making the trucking terrain better, the changes as cited above are very much needed.