India’s logistics network is overburdened. The trucking system is a fragmented industry, railway infrastructure is inadequate and it also suffers from a shortage of warehousing. India spends 14 spends of its gross domestic product (GDP) on logistics, a sum higher than global averages in advanced economies. The number stands at 9 percent for Europe and 8 percent for the United States but despite the high cost, India’s performance in the sector is poor.
To discuss how to make logistics more efficient and apply digital technologies to the highly fragmented, unorganized and inefficient trucking industry, CNBC-TV18 spoke with Rajesh Yabaji co-founder and CEO of BlackBuck.
BlackBuck is India’s largest long-haul trucking platform that uses data science and telematics to improve efficiencies in the trucking system.
The focus at BlackBuck is to build lowest cost transportation network, which can seamlessly help the economy grow. “We are still in the formative years of shaping this story. We have worked with 3 lakh truckers in the country and helped them better their earnings and helped clients reduce their costs. But it is still the beginning,” Yabaji said.
We work with close to 10 percent of the total market size, said Yabaji. In India there are about 4 million trucks, which run on intercity routes.
According to him, the approach to building this network is two-pronged. “One is building this entire online market place using data sciences and trying to enable owner do more trips, kilometers in a month given the infrastructure conditions.
"The second approach is about partnering in all possible ways in such a way that we reduce the cost of operations be it cashless fuelling, electronic tolling, getting credit online — all the services which a truck owner needs to operate a business and how he can do that at a lower cost. So it is two-pronged approach where you are controlling the inputs and also controlling the market place in such a way that the costs are at a bare minimum level,” said Yabaji.
Assuming what BlackBuck is able to deliver to its fleet owners and customers, if we are able to scale this impact, India’s logistics cost could be slashed by about 2-3 percent as on today, he said, adding that over the last four years all the large companies that work with them have been able to garner anywhere between 8-15 percent cost reductions by employing digital methods.