Coronavirus impact on trucking and logistics sector is across multiple layers: Raaho Co-Founder and CEO
Logistics industry in India, that comprises road transportation and trucking, is a $120 billion industry. Close to 70 percent of the total logistics in the country happen on the roads. There are approximately 35 lakh to 40 lakh trucks that ply on the roads.
Now, when you look at these 40 lakh trucks, 85 percent of them are owned by people who own less than 10 trucks. So, there are roughly 3.5 lakh truck owners or fleet owners, and roughly 50 to 60 lakh truck drivers in the country. So, there is a massive economy which is dependent on the roads and the trucking sector.
The coronavirus pandemic has hit the demand and business of close to 90 percent of these trucks. Essential items which are moving today are between 15 percent and 20 percent of the total industry.
Source of income and EMIs
“I know of people who own three to eight trucks. They do not know what’s going to happen tomorrow. Come April first week, they will have to pay EMIs. Where are those EMIs going to come from? Can you imagine EMIs of 35 lakh trucks getting defaulted?” asks Mohammed Imthiaz, Co-founder and CEO, Raaho (Quick Digital Technologies).
His second startup, Raaho, is a logistics company that works like a marketplace for trucks. On the one hand, the team works directly with the fleet owners (container trucks), where they aggregate them on the platform, and on the other, they work with logistics companies.
“We don’t work directly with brands. We act like a large broker in between, trying to connect the fleet owner who owns the assets with the logistics company that actually wants trucks,” explains Imthiaz.
He says that the impact of the coronavirus pandemic and the lockdown on logistics startups is much deeper than one can imagine.
Says Imithiaz, the 40 lakh to 50 lakh drivers are not getting salaries. They get paid per km. The truck drivers are the asset operators, and have extended families. Now, when their source of income gets hit, it hits the extended families. “This means that three to four crore people will have no money to eat, in the near future,” adds Imthiaz.
For the fleet owner, the first impact is on the EMI. Imthiaz says there needs to be a moratorium on the EMI payment. Otherwise, all these trucks will be at the finance companies by first week or second week of April, because they cannot pay EMIs.
Impact on ancillaries
The trucking industry functions on highway network, spread across 2.5 lakh to 3 lakh km. There are 70,000 petrol pumps operating on these highways.
“But when you want to move essential goods by trucking, you need to talk about the ancillaries. How will the trucks move if dhabas, puncture, and mechanic shops are closed? If these aren’t open, the drivers will not go out on the roads. And not to forget, the drivers are themselves scared as they too are aware of the coronavirus,” explains Imthiaz.
Also, at the border checkposts, the drivers have to exchange documents with the border police. “The drivers are scared that the policemen might be infected and can transmit the virus to them,” says Imthiaz. They also know that if 10 people test positive, the whole town will need to be quarantined.
“So, these are some of the things that we need to look at, because it is the trucking industry that transports essential items,” says Imthiaz.
Non-essentials stuck on roads
Apart from this, the other problem is of transportation of non-essential items which commenced before the lockdown. For instance, if a mobile phone had started from Chennai on March 21 or 22 to reach Delhi, it is now stranded on the road. This in turn also raises questions about the safety of the consignments.
“There are many trucks on the road where the drivers have left the keys and gone because the police authorities were not allowing the movement of their vehicles. There have been cases where we have a consignment of non-essential goods, the fleet owner is 130 km near NCR, it’s 130 km away from the destination but it’s not moving. It’s now standing at some random place. So again, this needs to be thought through,” adds Imthiaz.
Imthiaz also stresses on the need to clearly define essential and non-essential items. He says that the goods that are non-essential, but have left before the lockdown, should be allowed to reach their destinations.
(Edited by Javed Gaihlot)