Loads of tech for logistics industry

He came back to India after studying and working in the US mainly to take care of the family businesses, which included a few manufacturing units. While doing so, he was also an angel investor, putting small sums of money in start-ups. This gave N Vellaiyyan an idea of what it takes for ventures to grow and mature. People usually think money is the biggest problem in early-stage companies, he says and adds money is one of the small problems. There are a lot of other pieces of the puzzle that have to fall in place for a venture to be successful.

Even while he was managing his family businesses, which included making fishing nets, the urge to become an entrepreneur was always at the back of his mind. It needed a small trigger to set him on that path.

This trigger came in 2013, when his company had sent a consignment from the factory in Puducherry to Gujarat, by truck.

The consignment was supposed to reach its destination in six days, but even after a fortnight there was no sign of the goods nor was there any information on what had happened to the truck. This was a consignment valued at about ₹25 lakh. Even when you send a small parcel for ₹250 by courier, you are able to track the consignment. But, here was a consignment that was worth a few lakh rupees and there was no idea what had happened to it, says Vellaiyyan.

He and his cousin, L Vellayan, set about studying the logistics industry to see if they could use technology to improve efficiencies across the logistics industry.

They discussed extensively with the stakeholders – load providers, booking agents, brokers, truck owners and drivers – to understand the issues. All of them are part of the ecosystem, inter-dependent on one another for survival and their pain points were different.

Vellaiyyan realised that the problem was far more complex than what he envisaged and not all of it could be addressed using technology.

A load provider was hampered by lack of transparency in freight rates and quality of service, while a booking agent was constricted by geographical limitations. A broker has to depend on his network as he is an information intermediary. As far as the truck owners are concerned, three-fourths of the estimated one crore trucks in the market were owned by individuals, who had fleets ranging from a single truck to five. The truck owners did not get paid on time, their operations were inefficient and even when they would like to operate their fleet more efficiently, they could not do so.

For almost two years, Vellaiyyan and his cousin talked to the stakeholders and in April 2015 incorporated White Data Systems India Pvt Ltd, which operates under the brand i-Loads. The two put in ₹2 crore of their own money.

According to Vellaiyyan, if the truck owner is able to increase the number of trips of each of his trucks, run each trip profitably and be able to scale, then freight rates are bound to come down, benefiting everyone in the industry and the entire economy. Providing the truck owners where their next load is going to come from, quickly loading and unloading the trucks, and ensuring timely payment will help utilisation of each truck, improving the operators’ margins.

White Data is present in seven hubs – Chennai, Kochi, Bengaluru, Coimbatore, Hyderabad, Mumbai and Delhi – and plans to be in another 15 hubs in six months. It has brought in about 1,600 trucks in its network, capturing all the details of the trucks, including their interior and exterior photographs and various documents, and digitising all these on its platform for the load providers to see. The company has also provided global positioning systems (GPS) units for each of these trucks so that it is possible to track their movement.

“The biggest issue is information asymmetry. People don’t know where specific loads are. And, people who have the loads don’t know where the trucks are,” says Vellaiyyan.

Most often, the truck owners have to wait for 45-60 days to get paid, whereas they have to pay for their operating expenses such as fuel, maintenance of the trucks and wages to the drivers and cleaners on a daily basis.

White Data Systems will certify each of the trucks on its platform, which, according to Vellaiyyan, means it will verify the market reputation of the operators, look at their financial standing and their ability to perform. “We do a 120-point physical check of the vehicle, fit a GPS and bring them on our network,” he says. The idea is to give them credibility.

The company also tells the load providers that their freight rates will come down in the long run as more trucks are registered on the i-Loads network and as the efficiency of each truck improves. It also tells the booking agent and the brokers to get on to its network and that the idea is not to threaten their livelihood but make them more efficient.

i-Loads has a database of more than 800 drivers who have plied through its network and for them, it will come up with a unique loyalty card where if they cross more than 10,000 km through the network, they will get various benefits like healthcare and some rewards. It has now ensured that payments to the truck owners are done instantly online and is working with Axis Bank to make payments to drivers electronically.

In March 2016, Cholamandalam Investment and Finance Co Ltd, a leading truck financier and part of the Murugappa group, picked up a 65 per cent stake in White Data for ₹8 crore. Vellaiyyan says this will help White Data move faster in its efforts to transform an unorganised sector into an organised one.

According to him, i-Loads gets its revenue as a percentage of the freight rate – anything from 6 per cent to 12 per cent. The biggest challenge, according to him, is to scale rapidly.

He believes the venture is quite well funded to grow and its major expenses are going to be in technology and sales. “The next round of funding that we will take will be another 8-10 months away,” he adds. He believes i-Loads will be the Google of the logistics industry in five years.

COMMENT NOW