Well it is a post coming after a very long time because I felt that there was not much to write about so far. Now that the GST bill has gone through and some form of consolidation and cooling off taking place in the e-commerce space, I feel that we do have a few points to look at vis a vis surface transport in India.
As it has happened with the cab transportation and travel business in India, we are very soon going to witness a megatrend of aggregator led surface transport bookings pretty soon. There are a lot of startups working on various models right now but maturity and boom phases are at least a good 18 to 24 months away from now.
There are multiple factors that come into play when it comes to digitized surface transport solutions in India.
1. Complex taxation structure that has now come to be simplified in the form of GST and should be stable within a year or two.
2. Good Road connectivity: After the Golden Quadrilateral program, road projects were stuck in a limbo for a long time. Now, fortunately there is some progress taking place. 10km of highway per day is not a great figure to work with but it is much better than what it was pre-GST days
3. Good digital connectivity at affordable prices and Jio has brought that about in great style.
The question now is who takes what portion of the pie and what business model will emerge as winner.
Conventional Model: Freight Brokers facilitate bookings, asset owners retain majority of revenue and drivers / helpers spend long days away from home.
The new model that will dominate the market
The Aggregator will be the company with the technology and backend support to co-ordinate everything from the first mile to the last mile. The Aggregators will replace the brokers; unfortunately, the aggregator model given the scalability due to digitization, can eventually accommodate at the most 3 players [My bet stands at 2 players - Amazon and Alibaba]
The freight rate will be purely market driven along with demand and supply constraints and fleet owners will not have too much of a choice or bargaining power.
The third aspect that is going to change is the driver roster. Today, if a truck is assigned with 3 trips over 3000 kms over 2 weeks, the driver and cleaner are out for 2 weeks. In the new model, the truck will kep going where it has to go but the drivers and cleaners will be back within a day or two. This model is already being tested by a few players but hasn't gained much traction. However, 5 years down the line, this will be the business model where 60% to 70% of drivers will start early in the morning from home and return home by the same night. They will ply one truck in direction for about 6 hours to 8 hours and then return back with another truck in almost the same time.
Seems like a utopia - this will be the reality and a cost-effective way of doing business
As it has happened with the cab transportation and travel business in India, we are very soon going to witness a megatrend of aggregator led surface transport bookings pretty soon. There are a lot of startups working on various models right now but maturity and boom phases are at least a good 18 to 24 months away from now.
There are multiple factors that come into play when it comes to digitized surface transport solutions in India.
1. Complex taxation structure that has now come to be simplified in the form of GST and should be stable within a year or two.
2. Good Road connectivity: After the Golden Quadrilateral program, road projects were stuck in a limbo for a long time. Now, fortunately there is some progress taking place. 10km of highway per day is not a great figure to work with but it is much better than what it was pre-GST days
3. Good digital connectivity at affordable prices and Jio has brought that about in great style.
The question now is who takes what portion of the pie and what business model will emerge as winner.
Conventional Model: Freight Brokers facilitate bookings, asset owners retain majority of revenue and drivers / helpers spend long days away from home.
The new model that will dominate the market
The Aggregator will be the company with the technology and backend support to co-ordinate everything from the first mile to the last mile. The Aggregators will replace the brokers; unfortunately, the aggregator model given the scalability due to digitization, can eventually accommodate at the most 3 players [My bet stands at 2 players - Amazon and Alibaba]
The freight rate will be purely market driven along with demand and supply constraints and fleet owners will not have too much of a choice or bargaining power.
The third aspect that is going to change is the driver roster. Today, if a truck is assigned with 3 trips over 3000 kms over 2 weeks, the driver and cleaner are out for 2 weeks. In the new model, the truck will kep going where it has to go but the drivers and cleaners will be back within a day or two. This model is already being tested by a few players but hasn't gained much traction. However, 5 years down the line, this will be the business model where 60% to 70% of drivers will start early in the morning from home and return home by the same night. They will ply one truck in direction for about 6 hours to 8 hours and then return back with another truck in almost the same time.
Seems like a utopia - this will be the reality and a cost-effective way of doing business
