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Digitising The Indian Trucking Industry

Due to its fragmented nature, road transportation in India suffers from poor price realisation, higher costs and poor service levels

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By Ramasubramaniam B

Logistics is one of the largest industries across the world and in India it contributes almost 14 per cent to the GDP. Road transportation is a significant component, with almost 45 per cent share of the overall logistics spend in the country.

However, the road transportation sector is highly fragmented on both demand and supply sides (not just in India but across the world) and has negligible technology penetration, leading to a long chain with multiple intermediaries. This is eventually resulting in information asymmetry, poor price realisation for truckers and higher costs and poor service levels for shippers.
With low entry barriers on the supply side and on the other hand, most of the shippers following a cost-sensitive approach, this sector has been a challenging one to disrupt for long.
Poised for a transformation
However, with fast-changing consumer behaviour and modern trade + e-commerce and digitisation across businesses gaining momentum, this sector is poised to witness a paradigm shift. Especially digitisation, buoyed by the increasing smartphone penetration across all classes and  geographies and the central government mandated electronic tolling, e-way bills and other initiatives, will certainly accelerate the transformation of this sector.

Consider the case of intercity trucking  — an estimated 3.5 million-plus trucks are on the roads owned by more than 1.5 million owners mostly located in remote villages. Sitting in a remote location such as Sri Ganganagar in Rajasthan or Attur in Tamil Nadu, a trucker’s ability to manage fueling along the way / at a far-off destination, toll payments, returns loads, freight payments, etc. is limited and they, therefore, are dependent on the driver and few select intermediaries to get these things done through offline means. Creating a network of all ecosystem players — fuel stations and oil marketing companies, toll booths, brokers, shippers, banks and unifying all on to a digital platform will power the entire ecosystem leading to transparency and ease of doing business, eventually resulting in consolidation and the sector getting more and more organised.

Easier said than done
However, digitising a trucker in our country who has been conducting the business in the most traditional way possible for decades is easier said than done. The reach to the truckers covering a landscape of more than 600 districts in India, then persuasion and  education to shift them to digital means, replicating the trust (that they have built with their offline partners over decades) and taking it notches above with a far-reaching network digitally and simplifying all the steps involved, addressing the language and skill barriers to make it easier for the truckers — all these are challenging areas, also need investments but critical to make digitisation happen in this sector.

Of course, more steps are required to make the sector not just efficient but healthy as well and with many logistics players doing their bit to address these challenges and encouraging policy interventions by the government, we are possibly heralding the most defining period for the trucking sector in India!

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logistics supply chain magazine 16 Aug 2021