THERE are 36 gradations in India’s archaic caste system, from the priestly to the supposedly untouchable. And then, somewhere below that, are the long-haul truck-drivers. Plying the subcontinent’s potholed highways for weeks at a time, few can settle into anything like a home life. Their marriage prospects are grim; venereal diseases and sore backs from sleeping in cramped cabs are but two occupational hazards. Despite an oversupplied national job market, the industry has struggled to attract the roughly 1m new drivers it needs each year to keep everything from Amazon packages to car parts moving. Can technology help?

To fend off shortages, most truck owners have done precisely what economists suggest, which is to increase pay. Drivers can now command nearly 40,000 rupees ($610) a month, a decent white-collar wage—and not far from double the level of trucker pay just three years ago. Rivigo, a startup based in Gurgaon, an industrial city near Delhi, is using a different road map. Since its founding in 2014, it has set up a network of 70 “pitstops” across India, each around 200-300km down the road from each other. From those, it organises a pan-India relay system, where drivers ply the four- to five-hour journey from their “home” station to the next. They then drive back to their starting point in another vehicle, and clock off in time to make it home for supper most nights. Another colleague is then responsible for driving the load to the next waypoint, and so on.

Administering this logistical ballet is no simple task. Clever software predicts precisely when trucks will arrive and leave pit-stops and which petrol stations they might refuel at most cheaply. A trip from Bangalore to Delhi takes eight different legs. But by keeping the truck on the road more or less permanently, it takes a mere 44 hours to cover the distance of 2,200km, compared with the 96 hours a conventional trucker would take once rest breaks, meals and so on are factored in.

Rivigo claims it has no trouble hiring drivers for the roughly 2,500 trucks it now owns and operates. At a pitstop two hours south of Delhi, Naresh Kumar, a “pilot”, as Rivigo dubs its drivers, says he misses little from his decade of pan-India trucking before he joined the company two years ago. “From being home once or twice a month, I’m now home most nights,” he says. Because most of Rivigo’s driving staff live near pitstops in rural areas between cities, it can pay them much less than truckers who live in cities and command an urban-dweller’s premium. Its monthly salaries are nearer the 23,000 rupee mark.

In one way Rivigo’s approach is unusual for a startup. It is busy accumulating assets—those pitstop facilities and trucks—at a time when asset-light platforms matching service users with existing asset-owners are all the rage. Deepak Garg, the founder, had originally mulled launching an “Uber for trucking”; as a former McKinsey management consultant, he might be expected to. But the plethora of small-time operators running anything from one to 20 trucks didn’t bite. “Their problem wasn’t demand, it was finding drivers,” he says.

Rivigo may yet go down an Uber-like road. Mr Garg says that within a few years he wants Rivigo to be out of the business of owning its own trucks, and focused instead on organising the relay for whichever trucking firm wishes to participate in it. The pitstop network, he says, cost a mere $30m to set up, a fraction of the $115m it has raised from investors such as Warburg Pincus and SAIF Partners, two private-equity firms. Rumours are swirling of a whopping $200m investment round led by SoftBank, a Japanese telecoms and internet group, which would turn Rivigo into a rare business-to-business “unicorn” startup valued at over $1bn.

Such a lofty valuation raises the possibility of far more competition. The concept of a relay is hardly new: the Pony Express used it to deliver mail in the American West before the advent of the telegraph. If relay is 15% cheaper than conventional trucking, as Mr Garg claims, others will cotton on. Rivigo has sped to an annual revenue of nearly $200m in just three years. DHL, a global logistics firm, has mulled a similar approach in India. Conversely, Mr Garg thinks his “relay as a service” concept might have applications in other parts of India’s logistics markets—or overseas.

First, Rivigo will have to navigate transformation in India’s domestic logistics industry, which is worth around $300bn a year. A newly-introduced goods-and-services tax has unified what were 29 disparate states into a single market for the first time. While companies tended to need a warehouse in each state, most are now looking at fewer, bigger locations instead. That will mean larger trucks, longer journeys and less time stuck at internal borders (or paying bribes to speed through).

Investors are ploughing money into the sector, and some new firms may tread on Rivigo’s toes. The opportunity is large, and growing, for spending on logistics is increasing at roughly double the pace of growth in GDP, which even in a bad year means double-digit increases. Mr Garg speaks of the efficiencies of the relay system with evangelical zeal. Will other firms pick up the baton?

Source: economist
Rivigo is helping the Indian truck-driving industry out of a jam