BlackBuck, along with rival Rivigo, are changing India’s road transport in their own data-driven ways

India fragmented trucking industry, worth about $50 billion, has been an epitome of slow progress. Vehicles are generally older than 15 years, and work hours are so long that falling asleep at the wheel is a major cause of highway accidents.

But a couple of startups like BlackBuck and Rivigo Services are adopting a smarter, data-driven model, which is very different from traditional companies, and is yielding much faster growth.

The Uber truck model

Blackbuck, founded by Rajesh Yabaji, has raised $31 million in funding from venture capital firms such as Tiger Global, Accel, Apoletto (Yuri Milner’s Founders Fund) and Flipkart.

Yabaji has implemented a Uber-like model, wherein BlackBuck functions like a third party logistics firm and its platform brings truck drivers and business customers on one platform. That has never been done before in a B2B sector like transport.

“The truck owner has our app thorugh which he gets requests. We have our own pricing engine and algorithm. For higher demand, we need more trucks and so there can be a ‘surge’ pricing. We are basically taking the offline market online,” said Yabaji in a chat with DEALSTREETASIA.

BlackBuck, which counts UnileverGodrej and Marico among its clients, is the country’s only truck aggregator operating at its scale. The average price point for orders is between Rs 35,000 and Rs 1 lakh. The surge component varies between 10-30 per cent, which is way less than what Uber or Ola might charge in a major city, but a totally novel concept for truckers.

Yabaji said that there are more than 30,000 trucks on its platform across 200 cities in India. The company has expanded to a thousand members, from just 200 in December 2015.

“We will look for another round of funding mainly to bolster team strength,” Yabaji said. “Operationally we are cash positive, and should be EBITDA positive in the next six months, as we expand to become India’s largest freight company.” In the next couple of years, it wants to have 10 per cent of the market.

Huge opportunity in challenging industry

India’s transport sector offers a big opportunity for change. In the last three decades, road freight traffic has grown 9.2 per cent on a yearly basis while the road network has expanded only 4.2 per cent. This disparity has put a lot of pressure on existing road networks, leading to frequent congestion, delays and higher costs for companies using such services.

Third party logistics, which accounts for about half of all freight traffic in the US, accounts for just 16 per cent in India. India’s fragmented industry — more than 75 per cent of fleet owners have 5 trucks or less — is in contrast with the consolidated nature of the industry in other Asian nations such as Korea and China.

Unlike BlackBuck, which does not own vehicles, Rivigo has gone for owning all of its trucks and is building a big fleet. Rivigo, previously known as TrucksFirst, is an express surface logistics firm. It has also attracted VC interest, and raised more than $39 million in funding, most recently from Trifecta Capital Partners and SAIF Partners.

Founded in 2014 by former McKinsey employees Deepak Garg and Gazal Kalra, the company has claimed to reduce transport time by as much as half. It deploys Internet-connected trucks equipped with sensors that feed data to coders. They then try to map the fastest routes, to avoid long traffic jams or queues at numerous inter-state checkpoints, that are governed by each of India’s 29 states.

The company currently has a thousand trucks and is on the way to expanding the fleet three fold by 2017. Their truck drivers are better rested than those in traditional companies, because they reach destinations faster.

Low cash-burn expansion

Rivigo and BlackBuck are now rivals in the race to capture a major share of India’s trucking market, and both are solving problems that have remained unresolved for years. BlackBuck has made it possible for trucking companies to have a clear idea of demand and position their fleet accordingly. That has come with benefits of higher pricing, and more control over the fleet. It has allowed BlackBuck to expand rapidly with an asset-light model, something it is now planning to do in overseas markets. It might raise more funds this year to fund those plans.

Rivigo on the other hand caters more to e-commerce and cold chain segments compared with BlackBuck’s standard deliveries, and is making it possible for deliveries to happen at unheard of timelines.

Through both these companies, India’s land transport industry is going through a revolution of its own. And unlike consumer facing companies, they are doing it with low cash-burn while expanding swiftly. Most of the money goes into upgrading tech and product, and investors are not averse to further funding in the tech-enable logistics space.

It still remains to be seen if they can compete consistently with established players such as VRL Logistics, which has 3,739 goods transport vehicles, and has been operating since 1976. But they do have the resources to make life difficult for other players and force them to change the way they operate.

Also read:

Logistics solutions startup OpenPort closes Series A, to push into Indonesia

India: Logistics startup BlackBuck raises $25m from Tiger Global, Apoletto, Accel & Flipkart

Rivigo’s Deepak Garg, a McKinsey alumnus, taps geeks in bid to rule trucking in India

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.