Companies

Business lessons from the gruelling life of long-haul truck drivers

N Ramakrishnan Chennai | Updated on March 12, 2018

Vellayan Subbiah, Managing Director, Cholamandalam Investmentand Finance BIJOY GHOSH

Chola Investments’ MD Vellayan Subbiah travelled in a truck for three days to understand the needs of his customers





For Vellayan Subbiah, a fourth generation scion of the Chennai-headquartered Murugappa group, it was a road journey that he will remember for a long time.

It was a nearly 1,500-km road trip on one of the most important national highways, spread over three days. One that he undertook not in a luxury car, but in the cabin of a 14-tonne truck, in which he shared space with the driver and cleaner.

“It is always good to understand what our customers go through,” says 46-year-old Subbiah, on why he undertook the journey. “Everybody says a day in the life of a customer. I decided to do three days,” he laughs. He had three reasons for going on the trip: he wanted to understand the social context of a driver; he wanted to get a better grip on the business economics of the truck industry; and, he wanted to get a first hand impression of the financial context of truck owners and drivers.

After all, Cholamandalam Investment and Finance Co Ltd, the Murugappa group’s non-banking finance company of which he is the Managing Director, is a large lender to the truck industry — loans of ₹20,000 crore which is nearly 67 per cent of its total loan book.

Subbiah says he even managed to do his “yoga in the bumpy truck,” on the plank in the cabin behind the driver’s seat. That is where you sleep at night. “I slept there. Two of us. The cleaner and me. You basically sleep head to toe — your head on his toes and his head on your toes,” he says and laughs.

How was it doing yoga in a moving truck? “That was fun. You keep getting whipped around a lot. The yoga was the smaller part of it. The bigger things are what you learn from these experiences,” he adds. Subbiah ate his food with the driver and cleaner, cleaned himself up in whichever place they stopped to do so.

Subbiah, a BTech in civil engineering from IIT Madras and an MBA from the University of Michigan, USA, says there is enormous business potential for his company and others in the industry, and there is much more the country needs to do to improve the lot of the drivers.

Subbiah left Delhi just before midnight on February 29 and reached Vasai, near Mumbai, early on March 3. The truck was carrying empty bottles for the pharmaceutical industry.

His first reaction is one of sympathy for the truck drivers. Their life, he says, is extremely difficult, their needs basic, and they are on the road 26-28 days in a month, going home for just a couple of days a month, basically to hand over the money to their family.

Safety issues

There may be at least 20-25 million drivers and cleaners in the country. In most cases, the cleaners also double up as drivers, as the truck operators cannot afford to have two drivers on a trip. “If you do not improve the lot of these guys, then they are disenfranchised in some way. It is economically quite a tough situation for them.” The drivers, adds Subbiah, are doing an honest day’s job, delivering goods across the country and in a sense are the backbone of the country. Just imagine if all of them struck work. Then things will come to a standstill.

One of the issues that struck him was safety on the highways, not just because of accidents. He recalls that they had stopped at some place around 3.15 in the morning for a cup of tea. The tea shop owner asked them not to proceed and wait till daybreak before moving on. He cautioned them that just 15-20 km ahead, there had been three highway dacoities in the past one month alone and in one instance, the arm of a driver or cleaner had been chopped off. If a gang of 10 dacoits stop the truck in the middle of the night, the driver and cleaner had no chance to protect themselves. They would be easy pickings for the dacoit gang.

The drivers, Subbiah points out, carry a lot of cash — sometimes as much as ₹20,000-30,000. This is to pay for their fuel, change oil whenever needed, attend to flat tyres, pay road tolls, and for their food expenses. This is quite a lot of money. There is no payment mechanism and in all the places they only accept cash.

So, wonders Subbiah, is there a business in this for companies like Chola? Some way to ensure that the drivers do not have to carry so much cash and where all the expenses for fuel are taken care of? Shouldn’t there also be better facilities for the drivers along the highways, he asks.

There is also the issue of putting the trucks to better use, making sure they clock more kilometres than the 7,500-8,000 km they do every month. Part of the problem, according to Subbiah, is the asymmetry of information. Most truck operators and drivers are happy to do just the same city pairs; for instance, Delhi-Mumbai and back. The operators usually work with only one broker. What if the operators are convinced that they can make more money if they work on a different route — say, Delhi-Mumbai-Chennai-Delhi — and with multiple brokers, who will ensure that they have loads across sectors.

Freight rate

The freight rate too is an issue that the truck operators need to be educated about. The pricing on the Delhi-Mumbai sector is ₹29,000 while on the Mumbai-Delhi sector it is ₹51,000. Which means for a round trip, the operator gets about ₹80,000. And, a truck will do three such trips a month.

If the operator chooses to run Mumbai-Delhi, Delhi-Chennai, Chennai-Mumbai, it would fetch him ₹1.80-2 lakh for one trip. Even if the truck manages two trips a month, which is what the driver told him he would be able to do, the operator will get ₹3.60-4 lakh a month, substantially more than he would by doing the Delhi-Mumbai-Delhi sector alone.

The challenge here, according to Subbiah, is not just with the operator, it involves the broker too. The broker is used to operating on a particular corridor. So, if Chola chose to work with the operators and the brokers and convince them that changing the route on which they operate would benefit all, it will result in significant increase in income, better utilisation of the trucks which in turn can be passed on to the consumer.

“We have to start influencing on how to make this ecosystem change. The opportunity for the country lies in that,” says Subbiah. It would make sense for companies like Chola to convene a meeting of about 50 of the small truck operators whom it finances and educate them on the business economics. Even if a handful of them changed their routine and found out that they are putting the trucks to better use and in the process earning significantly more, it will make a huge difference to all, he adds.

Published on June 09, 2016

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