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.