Karan Shaha, CEO and Co-Founder, Vahak.

Karan started his career trajectory as an Operations Manager at Wishup wherein he was also the first employee as well. It was here that he developed a keen interest in startups and how different businesses operate in the ecosystem. In this capacity, Karan managed a team of 6 operators. He later joined Positive Integers Pvt. Ltd as a Business Analyst wherein he was able to further his interest in this field and strategy.

 

Logistics companies act as enablers for the global economy by providing services such as multimodal transportation, freight forwarding, warehousing, and inventory management, etc. This makes them crucial for the complex manufacturing sector which sources raw materials and components from various locations. In most countries, the logistics industry contributes as much as 6% to 8% of the GDP, and the cost of logistics can be as high as 25% in import heavy developing economies. In such a scenario, the impact of the COVID-19 pandemic has been unprecedented. The entire logistics business came to a sudden halt with global supply chain chaos being observed from all parts of the world. The rate of spread of the two waves of the pandemic has been astonishing and India has endured two lengthy lockdowns already. 

Right from the early stage of the outbreak, the Indian logistics industry started feeling the heat, and things worsened during the lockdown. The manufacturing sector faced disruption due to restrictions on movement of raw materials and produced goods as well as the shortage of labour. Considering that Indian logistics sector contributes over $200 billion to the GDP and employment to over 40 million people, this disruption has been even more impactful. For instance, in the early days of the lockdown last year, there was a shortage of truck drivers during the lockdown, which left over 50,000 containers at the Tamil Nadu ports of Chennai, Kamarajar, and Kattupalli. Freight availability went down and there was a severe shortage of drivers which led to higher freight costs.

In the initial days of COVID-19, the focus was on shipping greater volumes to cater to a surge in demand. However, the sudden economic downturn resulted in decrease of demand for transportation. Now that the country is out of lockdown again, there is anticipation of growth in demand for the sector. The key to effectively meeting this demand and generating more revenues lies in adopting advanced technologies in the transportation sector. The post-pandemic operational environment requires a shift in the way transporters and shippers interacted and business was run. Digital technologies, smart trucks, changing consumer preferences, government legislations and the rising fuel prices all combine to make a strong case for digitization of Indian trucking industry.

Future of the Indian logistics industry

One of the biggest transformations coming up in the Indian logistics sector is the emergence of modern technology driven sourcing of business. Shippers and logistics service providers are increasingly going digital in their interactions and business dealings. The logistics aggregator platforms are a potent way to support the sector by ushering in a digital technology driven efficiency and streamlining of the complete operations.

At present, the cost of logistics in India is among the highest in the world and primarily driven by two factors: 

  • Multi-layered supply chain management 
  • Inefficient communication and trust deficit

Multiple layers in the Supply Chain – There are millions of truckers in India, and a large number of operators especially the smaller operators rely on numerous middle men and commission agents for load procuring. Typically, a vehicle would remain park in a transport area or on the outskirts of cities in wait while the agents strike a deal for load with prospective shippers. The whole process takes a lot of time and effort. This multiple layering of the supply chain brings down the actual revenue for the trucker, increases the cost for the shippers, and causes loss of millions of dollars every day in potential revenue. 

Inefficient communication and trust  There is immense deficit of trust and lack of efficient communication in the logistics market in India. This causes a major confusion and delays in daily operations. Lorry owners are just able to run about 15-16 days in a month due to lack of network and reach and such low lorry utilization increases the transport cost.

The Indian economy is expected to cross $3 trillion mark in 2021, and usage of digital platforms in load booking and marketing of transportation services will be essential to meet the demand growth. A marketplace platform like Vahak eliminates such operational inefficiencies and reduces the long hours of phone and manual search for loads as the shippers directly post their requirement on the portal and the registered truckers bid for the load as per their suitability. There is ample trust and safety as the service providers and shippers are registered users of the platform and there is complete tracking of the goods. Growth of such digital platforms in the Indian logistics sector will fuel growth of offline as well as online commerce.

Conclusion

India’s future economic growth and success of the manufacturing and e-commerce industry is directly dependent on the logistics evolution. The digital transformation of the logistics operations will help in generating employment, providing social benefits to the under-privileged and superior revenue to the operators. The Government of India has started taking steps to make this happen, and the digital modernization of India’s manufacturing sector will eventually make the country ‘Aatmanirbhar Bharat!”

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