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The future of Indian trucking and the ‘fauji’ factor

Eliot Lobo | Updated on June 11, 2020 Published on June 11, 2020

Cream of the corps: CEO Gagan Chaturvedi with (Left to Right) Abhay Kumar, Operations Head; Shailesh Kaul,CCO; Mukesh Deogune, CTO and Maj. Sulekha Rinki, CSO

‘Faujis’ are front and centre of a Noida start-up’s outsourced fleet management vision

It is clearly not the best of times for Indian trucking. The sector has been in a pronounced downward spiral for a year-and-a-half at least, with owners of fleets as large as 1,000 trucks going bankrupt overnight. Well-funded celebrity aggregators have “disrupted” the industry, driving freight prices down but doing precious little to drive efficiency up.

Bright-eyed and bushy-tailed techies in Bengaluru and Gurugram are not going to be able to build structural integrity into a crumbling edifice, no matter how much of other people’s money they throw at it.

This is an undertaking for people with hard experience: those who have been there, done that, failed, and overcome. Over and over. People who see both the minutiae and the big picture, and are not afraid to think laterally. People like Gagan Chaturvedi, with a vision of an equitable social contract between fleet owners and drivers that bridges the systemic trust deficit by guaranteeing assurance to the former and a voice to the latter (see box).

Central to that vision, reveals the CEO of Signo Drive Logistics, is the vast, untapped reserve of fauji veterans or ex-servicemen (ESM), the finest human resource this nation produces. By the time a fauji driver retires at age 35-42 with a minimum of 17 years of Army discipline under his belt, he has been trained to a degree of expertise that exceeds the Level 4 occupational standards of both the Automotive Skills Development Council’s ASC/Q9703 qualification pack for commercial truck drivers and the ASC/Q1402 QP for service technicians.

ESM drivers are an estimated million-plus-strong force, one that is growing up to 1,000 retirees every month — an excellent foundation for the outsourced fleet management enterprise, global in scope, that Chaturvedi and his seasoned squad are raising from the ground up.

The ambition being to touch planetary scale in the near future, what they are banking on to get them there is a path-breaking driver lifecycle management software stack that a team of 50 developers have been furiously at work on, through the lockdown.

In December 2019, Signo kicked off trials of its Level 1 driver-as-a-service, placing 25 ESM drivers with New-Delhi-headquartered AVG Logistics, 25 in batches with DHL SmarTrucking, and five with Mumbai-based BLR Logistiks. The lockdown may have slammed the skids on, but the “signal-free drive” (from which term Chaturvedi coined the name Signo) has resumed from the first week of June, the company reporting 200 drivers deployed at 25 customers and growing.

This is a pure staffing model, in which the driver is on Signo’s payroll. The client signs on for at least one year, or up to three, and is guaranteed a driver and transit-time performance, plus a minimum 5 per cent fuel-efficiency gain, going up to 15 and potentially even 20 per cent, according to the service level agreed in the contract. Route expenses and tracking are the client’s responsibility; Signo charges him the equivalent of the driver’s salary plus a 10 per cent “management fee”.

Not every fleet operator can expect a driver from Signo, however — only those that treat its ESMs with the respect they are due. The company is very particular that, among other things, they are provided suitable rest and clean sanitation facilities onsite; that their feedback regarding the state of repair of the vehicles assigned to them is appreciated and actioned; and that their hours-of-work protections under the law are strictly honoured. In the interests of the safety of drivers and cargo, a truck that is required to cover more than 400 km in one work day will necessarily be manned by a team of two — this is non-negotiable — and the client billed accordingly. Signo monitors its drivers’ duty performance individually and in real time by means of a smartphone app with a SIM tracking function.

Significant savings

The trial with DHL SmarTrucking, which ran for 2.5 months from mid-December 2019 through the end of February, yielded a whopping 0.75 km/l or 18+ per cent fuel-efficiency gain on a BharatBenz 2523, discloses Chaturvedi. Extrapolated for the 310 vehicles of this type in SmarTrucking’s present fleet of 745 over a year’s kilometrage, this translates into a saving of more than 2 million litres of diesel worth well above ₹14 crore at today’s pump prices. DHL Supply Chain, the world’s No. 1 in contract logistics, has hired 10 Signo drivers on one-year contracts, and Chaturvedi expects to shortly close on a deal with DHL eCommerce (India) for up to 250 more. The company behind the SmarTrucking brand owns the trucks but outsources virtually every key aspect of their operation to a plethora of vendors. Chaturvedi sees excellent prospects of growing the DHL relationship further, as SmarTrucking progressively expands its fleet to a projected 10,000 vehicles by 2028. At the same time, he is eyeing the possibility of upselling SmarTrucking on Signo’s Level 2 offer.

Here, it additionally shoulders the responsibility for delivering the client’s vehicle from A to B, including paying all expenses en route — the driver’s allowances, fuel, tolls, payoffs, etc, — or its Level 3 module that adds on maintenance and all consumables.

While software algorithms and analytics are necessary to tie it all together at scale, what makes such an offer feasible in the first place is the ESM’s facility for documentation, steeped as he is in the standard operating procedures of the Army concerning the attestation of every aspect of his assigned vehicle, its maintenance, and the trips it is used for.

The driver’s standard salary of ₹30,000, together with his Army pension, adds up to as much as, or more than, his pay at retirement. Plus, he retains his medical benefits and canteen privileges, so you rarely find an ESM driver on the make — unlike the majority of civilian drivers.

And unlike his typically untrained civilian counterparts, an ESM is extremely skilled and resourceful when it comes to emergency repairs and keeping his vehicle going in tough conditions, chief sourcing officer Major Sulekha Rinki points out. “An ESM can be depended on to guard his vehicle with his life.”

Signo also offers a premium-priced pay-per-kilometre plan as a flexible alternative to fixed-term contracts. On July 1, a Goa-based operator of 120 trucks, which typically cover up to 10,000 km a month apiece, will replace 50 of its existing drivers with ESMs, whom it will pay the standard salary plus an incentive for every kilometre driven over and above a 7,500 km floor commitment.

Depending on how this arrangement works out, chief commercial officer Shailesh Kaul reveals, the customer plans to hand its entire driver operations (200 drivers) over. The ultimate ambition is to evolve into a driver-on-demand platform à la Uber, which will enable Signo to better satisfy the diversity of route and working-hours preferences of its driver pool by offering them the gig option, and with it the flexibility to work on their own terms.

That, however, is still going to require a minimum of 1,000 “active backup” drivers employed on its rolls to guarantee supply at each demand location, fresh-faced CTO Mukesh Deogune, a 2020 graduate from IIT-BHU, reckons.

How it came about

Fauji veterans transitioning to driving commercial trucks is not a new phenomenon — especially in Punjab and Haryana, where that enterprising lot mostly strike out on their own. The concept of an agency that connects ESM drivers to fleets is five years old, pioneered by Delhi-based Maxplus Logistics, which has 180 drivers in local operations for SpiceJet Cargo across cities.

As COO there for the better part of four years after her discharge from the Army Ordnance Corps, Major Sulekha was the first to experiment with ESMs on long hauls, working with GoBolt on its express routes for Flipkart and seeing encouraging results. The genesis of Signo goes back to a joint experiment involving 25 drivers that she undertook in 2017 with G-Trans, a trucking company Chaturvedi had set up four years earlier. At the time G-Trans, valued at ₹100 crore by an aspiring acquirer, was one of the top five vendors for Amazon, Flipkart, Alibaba, and Reliance Retail with a hired fleet of 1,800-odd vehicles.

Chaturvedi had just bought 100 trucks for a crucial Amazon contract, and his first close encounter with the faujis left a deep impression. That same year, those new vehicles were off the road for the entire month of Ramadan in May and June when their drivers, all from Mewat, went AWOL en masse, resulting in a ₹10-crore loss that forced him to shutter the business at the end of March 2018 and sell the entire fleet. Signo is Chaturvedi’s second rising, phoenix-like, in his 10-year career as an entrepreneur.

The writer is a journalist who specialises in commercial vehicles

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Published on June 11, 2020
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