freight efficiency in the next decade in indian transportation industry
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Freight Efficiency – Next 10 YearsIndian Road Transportation Industry
Raghav Himatsingka
Director, IDEAL MOVERS
Ideal Movers – a $100M annual revenues, 100% private company
Leading logistics transportation company in India owning nearly 2000 tractor trailers, Goldhofer axles, forklifts & heavy
lift cranes
Who are we?
Apollo CV Award – All India Large Fleet Operator Of The Year ’13
Specialization in road transportation, freight forwarding, material handling, heavy lifts, special cargo transportation
Specialists in steel, coal, automobile,, projects & minerals transportation
Pan-India presence and experience in dealing with varied industries, clients, partners and service providers
Seller, customer and operator of commercial vehicles
Raghav Himatsingka – Director, Ideal Movers
Masters in Management Science, Stanford University
Bachelors in Industrial Engineering (specializing in Logistics & Supply Chain), Georgia
TechNominated for Transport Youth Personality Of The Year – 2013
Set up new business division in Ideal Movers in 2010, contributing $20M annually by end of 2013
Who am I?
Expectations from this discussion …
• Commentary on Product Innovations• Fancy statistical predictions or insights• Hypothetical predictions or unrealistic
wishlists• Insights into any global trends
• Complexities of road transportation in India• Issues unique to India: including fleet management, corruption, infrastructure
challenges, manpower challenges, weak legal framework and bureaucracy
• Meaning of Freight Efficiency in the Indian context
• Achieving Freight Efficiency in India through technology, telematics and training – a fleet
operator’s perspective
Factors Affecting Freight Efficiency
Freight Efficiency
Predictable
Operations
Overall Costs
Transit Times
Transit Damage
s
Cash transactions for en-route expenses – no expense trail
Uneducated drivers - $100-$150 monthly salary, sleep and cook in vehicle 11 months a year – no
incentive to performRare use of GPS – manpower costs overweigh its
benefits.
Accidents (sometimes fatal) common – Up to 5% vehs. yearly
Weak legal recourse to theft of cargo – often times by the driver. Not uncommon for driver to
abscond with cash, abandoning the vehicle.Overloading of vehicles beyond permissible limits
common in some parts of the country and in some industries.Fragmented market - several hundred thousand
players, difficult for large players to consolidate and expand on basis of capital investment,
technology and manpower.
Increases overall Costs
Transit Losses, Unpredictabilit
yUnpredictabilit
yCosts, Damages,
UnpredictabilityOverall costs,
unpredictability, transit
timesTransit times, unpredictabilit
yAffects costs,
overall efficiency
Unique Problems In The Indian Context
Way too many stake holders and middle men - all with their own profit margins - creating a very
inefficient market.
Increases Overall Costs to consignee.
Stake Holders Of Indian Transport Operations
Vehicle Owners
Understanding Costs Of Fleet Owners
Factors Affecting Freight Efficiency
Freight Efficiency
Predictable
Operations
Overall Costs
Transit Times
Transit Damage
s
KEY IDEA 1 – Driver Empowerment
Severe shortage of new drivers
Driving was a respectable job
Poor pay, atrocious living conditions, lack of respect in society, lack
of recognition for performance, no scope for professional growth,
plenty of other opportunities via
government schemes and private jobs.
Driving a big truck was manly.
Respect in their community, society from women & elders.
Chance to travel – a rare privilege 2 decades ago.
Good pay compared to available opportunities.
Roads were poorer, but traffic was light.
Smaller fleet sizes – more respect and recognition for drivers from their
employers; more loyalty from drivers.
Lack of other opportunities.
KEY IDEA 1 – Driver Empowerment•Drivers treated like all other employees • Performance based
yearly evaluation• Health & medical
benefits• Educational benefits
for family• Personal loans from
companies•Safety training to avoid accidents•Housing quarters on major highways•Ownership stake/vehicle buy-back option
•Driving becomes aspirational – comparable to other jobs•Stable income and greater respect means integrity of drivers increase•Reduction in theft/abandoning of vehicles•Consolidation of smaller players• More investment into
training, benefits and technology.
• Economies of scale – higher utilization, less idle time.
• Entry of foreign players.
Far better utilization of assets means significant reduction in Notional Costs
Better trained drivers – reduction in transit times and transit damagesDrivers rewarded according to performance – far superior predictability
in transit times
KEY IDEA 2 – Technology & Telematics
Consolidation of large players, entry of foreign players, better products mean more investment
in technology.Using technology becomes easier and more affordable with economies of scale – trained
manpower to use the same.Use of technology enables accurate determination of fuel consumption.
Use of telematics will enable accurate measurement of driver’s performance which will
help incentivize good performance.Perfect information flow via technology and
consolidation – an OpenTable like software for unutilized fleet.
Perfect planning through technology – reduces problem of oversupply at an under-demand
location and vice versa.
Increase in overall
efficiency.Increase in overall
efficiency.Reduction in en-
route costs.
Better transit times, less damages.
Reduction in Notional Costs
and Stake Holders
Reduction in Notional Costs.
Summarizing our thoughts …
What we will achieve?Reduction in Notional CostsReduction in Transit TimesReduction in Transit DamagesReduction in UnpredictabilityBetter planned, more organized, FAR more
efficient system
What will remain the same?Some of the problems unique to India – weak
legal system, unaccounted cash expenses en-route, several stake holders in the cost model, several hundred thousand fleet operators!
Thank You.
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