“Before getting into the technology enabled logistics business, I had run multiple online market research projects. One thing I know for sure is that logistics in India is unlike anywhere else in the world. No management institution will teach you how to deal with truck operators and what to do when things go south. Thankfully, the tech-adoption is increasing and things are getting organized. With India going digital we have seen increased demand and interest for applications and solutions for the industry.”
What is a Logistic Aggregator Service?
As the name suggests, Logistic Aggregators act as just aggregators of service provided by the various logistic service providers or simply put courier companies. So, the business would have to maintain just one account, with the Aggregator and would be able to access the whole pin code universe offered by the various courier companies. The Aggregator would in turn have an account or some kind of agreement with each of these courier companies. Please find below a simple schematic of such an arrangement.
All the documentary requirements from the regulators for end users, like their Address and ID Proof can be maintained by the Aggregator, saving lot of hassle for the Courier companies which can then focus on what they do best i.e. shipping. For clients too, it has obvious advantages. Since the Aggregator is likely to generate huge volume for each of the courier company from its client base, it can negotiate special rates from them and hopefully pass it on to their end users.
The end result is that even a new start-up or a very small but niche player planning to sell goods online would now have access to a big universe of pin codes across the country right on day 1, by just opening an account with this Aggregator
Who are Logistic Service Providers?
They are companies that provide logistic/shipping services. Put more simply for our purpose here, they are the end courier companies which receive/pickup shipments from source and deliver at destination, at a fee. Eg. Portflip.
What are the various services provided by logistic service providers?
- Online Shipment booking
- GS Tracking
- Flexible payment options
Why are they so much in demand these days?
Undoubtedly India is witnessing an e-commerce boom these days and a plethora of niche businesses are trying to sell their products online. However, one of the basic requirements for any online business is the ability to deliver the product anywhere across the length and breadth of the country. Given the country’s size, that’s a big challenge. With the exception of India Post (which is almost as good as unusable for private businesses) none of the other Logistic Service Providers have a thorough coverage of India. This means that the business would have to deal with at least 2-3 Logistic Service Providers which is very painful, especially for the smaller players. There is also a Cost angle. Cost of shipping is significantly lower if you maintain a shipping account with Logistic Service Provider, however, that is also accompanied with minimum monthly volume commitment. So, if the business has to deal with 2 or more Logistic Service Providers for proper pin code coverage, the commitment needed would be even higher meaning most of the smaller businesses won’t be able to afford it.
Finding answers with technology
Tech-driven truck aggregators can make most of the lingering challenges in the industry. By using the tech-aggregation model, startups can allow individual fleet operators to expand without losing profitability. By offering benefits of scale they can reduce fragmentation in the industry. This is achievable as solutions built on artificial intelligence APIs, such as those offered by IBM, can assist fleet owners in route optimization for their vehicles and help them in increasing their asset utilization.
Further, real-time GPS-based vehicle tracking can bring transparency and reliability of service to India’s trucking industry which from the time immemorial has operated only on trust.
All online data can assist in predictive and diagnostic analysis like driver behaviour, machine failures, diesel consumption and preventive maintenance.
Also, technology can help in reduction of paperwork such as that involved in lorry receipt, proof of delivery, and invoicing. Cloud-based solutions are particularly useful in this area. This anyway is going to be a mandate for operators as post GST implementation swift billing will be essential for customers to claim their GST input credits.
“200 + leading Indian logistics companies are accruing significant benefits like reduction in cost by 5 -10 %, increase in on-time deliveries by 20%, increase in asset utilization by deploying smart IT solutions in the logistic sector”