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Addressing the opportunity of part truck load in Indian logistics industry: Loadshare’s journey

By on July 04, 2019

Loadshare is an asset light logistics network powered by technology. Founded in 2017, today the network spans over 4000+ pincodes and has 130+ active partners who are an integral part of the offering. Stellaris Venture Partners and Matrix Partners are the primary investors in the business along with some marquee angels. As the logistics tech industry makes inroads in the traditional logistics landscape, Loadshare is focused on solving some of the key pain points in the industry esp when it comes to SMBs on the supply as well as demand side. To know more, we interviewed Raghuram Talluri (CEO & co-founder, Loadshare) and Pramod Nair (CTO & cofounder, Loadshare) to understand their approach towards the industry problems and the vision they are looking to realize.

Loadshare has seen over 10x growth in operations in little over a year.  So, what is the secret sauce behind Loadshare’s approach to logistics?

Raghu: There is no secret sauce, but we are innovating by building a logistics network by leveraging hundreds of regional logistics partners, and powered by technology and our deep understanding of the logistics space. This allows us to offer a strong value proposition to our customers based on three key pillars (a) reach, (b) good service quality and (c) right cost -value equation.

 The key element of this approach are the SME logistics partners, who  have a strong regional foothold but have been under-utilized because of lack of access to technology resulting in sub-scale operations and ineffective planning. Our technology enables the regional LSPs to fully utilize their operational capability and reach a wider network for demand as well as fulfilment.

 We are building a network with federated set of branches much like a franchisee model to better utilize the ecosystem assets available, improving their functioning, and introducing technology for processes. Thus creating a holistic offering for our customers with the reach in the farthest of places and using technology to deliver the required SLAs.

How is the franchisee model of Loadshare for creating the partner network different from other franchisee-based networks like Bluedart or DHL?

 Raghu: The franchisee model is not a new concept. Companies like McDonalds and PepsiCo (for backend contract manufacturing) have expanded on the basis of this model and been successful. In logistics as well players like FedEx, Bluedart etc have used it.  Though at Loadshare, our definition of franchisee is different, as we do not compel partners for an exclusive tie up. This gives the partner the belief that he isn’t an employee under an organisation but is his/her own boss. Our proposition to them is that we want to help your business get 10X bigger and better and this enables us to expand faster than the traditional and full stack logistics players.

 We treat our partners as individual entrepreneurs and proposition to them is that we want to help your business get 10X bigger and better. This enables us to expand faster than the traditional and full stack logistics players.

Pramod: The core of our business is tech-led logistics. Our powerful tech platform empowers our logistics partners to start or expand their own operations across all modes of logistics – last mile delivery, first-mile pickup, reverse logistics, hyperlocal or line haul logistics. This is in addition to the extra demand across all those legs of logistics we drive to our network partners. We pride ourselves in our ability to leverage technology to drive consistently high performance in an asset-light and non-exclusive franchise setup. But at the core of it all, we respect the partner as an individual entrepreneur, instead of putting up our signboard on his establishment.

Since the partners aren’t used to technology – how easy has it been to work with them, and what steps have you taken to acclimatize them to new technology?

 Pramod:  I had some interesting learnings in this regard from the two earlier startups I had founded targeting the similar SME segment. 

First, SMEs are quite open to new technology – as long as it adds great value to them. We don’t airdrop a complete end-to-end solution on our partners. We incrementally introduce them to the multiple tech-driven flows and have on ground help to support them through this transition. You need to have a clear understanding of how the industry operates on the ground and what aspects of their business can be simplified and supercharged through use of technology. If you build technology in a lab based on your hypothesis of how the industry should operate, there are high chances it will fail to get adoption. To keep us grounded to the actual workings of our industry, we run a last mile delivery centre from a small room in our technology office. All our technology pilots and hypotheses are first tried out through this branch servicing a few pincodes of Koramangala. Every new team member at Loadshare runs this branch for a day and goes for deliveries on the ground to build empathy for our target users.

For SMEs in the tier2/tier3 towns to adopt and love your product, the bar has gone up.If you can build delightfully simple products that match the polish and power of the other apps they use daily, it helps in faster uptake of technology.

Second – for SMEs in the tier2/tier3 towns to adopt and love your product, the bar has gone up. If you can build delightfully simple products that match the polish and power of the other apps they use daily, it helps in faster uptake of technology. Replacing a paper-based workflow that is entrenched from decades is a difficult transition, but through mobile apps that are powerful and simple, we reduce the friction to adopt the technology. Having seen the cycles of transformation over the last 2 years, we now feel confident of our approach. For example, there is a partner in Assam who used to do INR 30,000 worth of business with us and is now billing INR 6,00,000 p.m. We started from B2C operations but over time have added B2B demand as well. When the partner sees that there is money coming in and sees the benefits of technology first hand, he/she understands the value proposition.

Could you give us an example of technology which has helped you improve the service quality and efficiency on the B2B side of the business?

Pramod:  The biggest hindrance for a small to medium sized fleet owner to grow their business is the growing expectations of service levels from the clients. The traditional approaches of managing service levels through paperwork and phone calls are inefficient and error-prone. The Loadshare tech platform, code-named Atlas, leverages IOT and advanced analytics to provide real-time visibility of each vehicle in the fleet. On the other hand, the client can also monitor the status of his load and get proactive alerts on delays or mis-routes. This real-time shared visibility at a bag level helps the client do better warehouse planning at destination as well as forces the fleet owner to up his game on reliability. By having a common tech platform for each stakeholder of the transaction – client, transporter, linehaul driver, multiple hub managers in the network and coloader – we create a tech-driven way of working while improving the visibility and service levels across the board.

Another key pain point we solve through technology is the long working capital cycle of our partners. The platform ensures that the ePODs for each shipment are available for verification and submission to clients instantly. In addition, we are leveraging the transactional data on the platform to open up working capital loans to our partners through fintech players looking to lend to this segment.

What are the key opportunities you are targeting and what are your priorities?

Raghu: We started with a last-mile B2C network, and we built out a fairly large network all across India, especially so in the under-served regions like the North-East. We have a 3 phased approach thus far:

Phase 1 of our development was building a SaaS platform and getting partners on board.

Phase 2 was building the B2C network – which was driving B2C demand from large ecommerce companies to these last mile partners.

Phase 3 is where we overlaid a B2B demand (including large businesses as well as SMBs) on top of the existing B2C network.

As we go forward, the B2C network will keep growing to serve as the base demand for network expansion, and we will keep building out the regional PTL (Part Truck Load) networks as part of our B2B expansion. It’s been 8 months since we started the B2B segment, and we can already see that it would surpass the size of B2C business over the next 3-4 months.

There is an under-served PTL demand from the large SME base of our country and we will leverage the reach of our partner network to serve this efficiently at scale. This is where we believe network effects will play out in our business.

We are also clear that we don’t want to prioritize FTL (Full Truckload) segment, as most of our clients have issues on the PTL front, even large enterprises. In addition, there is an under-served PTL demand from the large SME base of our country. We want our partners to generate SME demand as they are well connected to these SMEs, and can leverage other partners in our network to serve this efficiently at scale. This is where we believe network effects will play out in our business and would be essentially the next focus area for growth for us.

Why did you choose PTL vis-a-vis multiple segments in the overall logistics space?

 Raghu: In our estimates, B2B-PTL is easily an INR 100k cr to INR 140k cr (USD 15-20 bn) opportunity. If you consider the names associated with the B2B-PTL today – GATI, Safex, TCI, Spoton – none of them have revenues  greater than INR 1500-1700 crores i.e. ~1%-1.5% penetration each. 90-95% of the market is still unorganized.

 The market is large and nobody has really focussed on solving the regional PTL issue as a core problem.

 The current pain point in logistics for the customers is not in shipping from Delhi to Patna. There is enough supply of trucks across the trunk lanes and esp in FTL . The real challenge is to transfer from city hubs to remote parts i.e. Patna to Gaya or Patna to Bhagalpur and manage the PTL. Today, this is not being done in the most efficient manner.  The market is large and nobody has really focussed on solving the regional PTL issue as a core problem.

We are today cross leveraging our strengths across the B2C and B2B segments, not just the infrastructure and partners but also the learnings and technology of the B2C world in the B2B segment, which has traditionally been a laggard in tech adoption.

We are today cross leveraging our strengths across the B2C and B2B segments, not just the infrastructure and partners but also the learnings and technology of the B2C world in the B2B segment, which has traditionally been a laggard in tech adoption.

Why do you think that the B2B-PTL issue has remained an unsolved one until now? Especially if you consider the amount of investment gone into logistics in the recent past.

Raghu:  It’s a complex problem to solve, as it requires the streamlining of multiple factors to get it right. Firstly, it requires the right technology but there aren’t many operators who have a technology-DNA. Secondly, I think unlike B2C operations, B2B logistics is lot less intuitive. Given the number and variety of stakeholders involved and thus the variables that you need to take care of – unless you’ve worked in B2B for a long time, it’s not easy to understand the nuances of the field.  Thirdly, PTL is a lot more involved than FTL. You need to have consolidation points, storage points, transit points – hence it’s a series of complicated networks – not just moving a truck from point A to point B. Plus as a transporter, you need to think of how you can get additional loads between these intermediate nodes.

PTL is a lot more involved than FTL. You need to have consolidation points, storage points, transit points – hence it’s a series of complicated networks – not just moving a truck from point A to point B. Plus as a transporter, you need to think of how you can get additional loads between these intermediate nodes.

In our case, we have a great technology DNA, which is built on the understanding of on-ground operations. We can cross leverage our assets as well as learnings across B2C and B2B segments. Also, on the infrastructure side, our regional partners who own the assets on the ground give us a unique advantage.

The early movers in the space which are today the biggest logistics tech are primarily focused on FTL (full truck load) and rightly so as it is one of the largest standalone segment. We are now looking at another large segment which has a lot of pain points that can be solved by technology and today is primarily catered by the unorganized operators which make up 95% of the market.  The way we are structured we are looking not to compete but help the smaller unorganized players become much better at their operations and make the overall sector more efficient.

 

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