Overview of Support Services in Trucking Sector

The large and diverse transport sector of India caters to the needs of about 1.1 billion people. While the transport sector contributes around 11-13 per cent of the nation’s GDP, however when compared on the global markets (Transportation/Logistics account for 6-8 % of GDP in Developed countries), India still has a long way to go in strengthening its transportation network. Among all the modes of transportation Road transport contributes to more than 80% of the volume of the total freight movement. With the changing economic scenario, factors such as globalization of markets, international economic integration, sustainability, removal of barriers to business and trade and increased competition have further added to the need of efficient road transport.

In India, almost 90% of the road transportation market falls under the un-organized sector. 75% of the fleet is with those who own up to five trucks. 15% of the fleet is with those who own between six to 20 trucks. Only about 10% of the fleet is with those who own more than 20 trucks.

Traditionally, various support services have contributed in strengthening and organizing this sector.

Financing:

Though financing happens to be the key to the progress of any sector, our transport sector seems to be lacking a strong support in this area. The financing of vehicles is largely through non-banking financial services, commercial vehicle manufacturers and sometimes by the unorganized sector including money lenders. Road transport falls under the priority sector lending of banks but these loans are targeted mainly at the small fleet owners. This is in accordance with the RBI initiative where it has identified certain sectors to be the priority sectors for the purpose of granting low interest loans. The objective of this is to make financial assistance available to low income groups and weaker sections of society, and also to provide self-employment opportunities to the educated unemployed. Since loans are available at cheaper rates, the truck owners have the incentive to stay small. Recently Federal bank tied-up with 4TiGo to offer financial assistance without collateral for stakeholders in transportation industry. Banks provide financial aid to the small road operators under priority sector lending.

Insurance:

Risk exposure is a constant in the transportation industry. No amount of training will completely eliminate the risk potential inherent in transportation operations. This risk management is done through various forms of insurance. There are certain insurance requirements on transport operators required by law. There are also optional insurance policies available for greater risk coverage. While insurance for the commercial vehicle is organized, it is not so for the goods carried. As such, any accident and/or goods damage/lost situation becomes a highly complex process. Issues suc

Maintenance and Repair:

Unexpected costs and losses happen in trucking business mainly because of the improper maintenance. The nature of the trucking is such that it requires up-to-date and regular maintenance schedules. Mechanical failures are often the main cause of on route delays, accidents, and they come from maintenance deficiencies.

Federal Motor Carrier Safety Administration – FMCSA part 396 has set a standard for truck maintenance. It requires at least one Periodic Maintenance Inspection – PMI in period of 12 months.

Traditionally maintenance and repair have always been carried out in the unorganized road side shops. However increasingly, trucking companies are going in for Annual Maintenance Contracts (AMC) offered by manufacturers at least in the early years of the use of the truck. Today several OEM operators such as Tata, Ashok Leyland, Mahindra, etc have centralized helpline for on-route service.

Road Side Assistance

The total road length in India is approximately 4.7 million kilometres, making the Indian road network the second largest in the world after the United States. There has been a significant push by the government towards implementation and awareness about Road Safety and assistance services.

NHAI enforces very strict guidelines on toll takers to provide various repair services on the stretch of the toll roads. As per guidelines, the toll roads need to provide services such as Emergency Ambulance, Recovery Vehicles, Wayside amenities, Warehousing facilities and Rest Areas. Apart from these listed facilities, the enhanced safety of plying on toll roads is much higher when compared to non-toll roads. Further, all toll roads are designed for speeds of 100 – 120 kmph, along with bypasses for all villages and towns, offering hindrance-free travel. An outcome of these facilities is reduction in wear & tear of the vehicles, resulting in lower fuel and maintenance costs. However, a lot needs to be done about creating awareness about such services, due to which truck drives try to avoid paying tolls and ply on non-toll roads.

Food and Stay:

Truck drivers and the dhabas spread across the highways go hand-in-hand. These dhabas meet the food and resting needs of the truck drivers on long routes. Many truckers have favorite food joints along the route, and they deliberately stop there even if they aren’t hungry. Some of the dhabas also become nodal for other support services including maintenance and repair. Few oil retailing companies like IOC, BPCL, HPCL are also upgrading their facility and offering value added services to truck drivers like own kitchen, bathing and resting place, etc.

IT Services:

IT industry is at its peak and there is no sector which does not utilize the benefits of technology including the transport sector. IT services are helpful in the trucking industry to increase revenue, manage capacity while improving the end-to-end customer experience, maximize the availability of assets and infrastructure, improve operational efficiency, and reduce costs. Some ways in which Information Technology provides support and service to transport industry are:

GPS which enables visibility of trucks to the fleet owner/trucking company/customer

Sensors that can communicate the condition of the vehicle.

Logistics software which include end to end trace ability of consignments, Accounting ,Enterprise Resource Planning and Management Information Systems.

Latest movement is in the IT based platforms and apps, like the TruckHall, Autoload, Trucksuvidha, Freightbazaar, etc. These information exchange platforms connect the transporters, brokers and fleet owners, to bring improve fleet utilization and bring transparency in market vehicle procurement.

During the last two decades, road infrastructure has expanded rapidly on account of focused policies and investments. There has been a shift in the share of business owned by roads vis-à-vis rail, air and water transport.  This growth and mobile penetration provides opportunities in consolidating the above support services for easy access. At a broad level, the government is making a strong push by augmenting the reach of such services to large and small transportation players along with a push towards educating truck drivers and improving the road infrastructure. However, the execution at the ground level still remains a challenge. How long  before a good portion of the transportation industry becomes organized and efficient , only time will tell.

 

Varun Biyani

Varun Biyani

Varun Biyani, our Co-Founder brings 10 years experience of in IT and building systems in the Logistics space both in the domestic and international arena. Varun has a Master's Degree from Carnegie Mellon University, USA.

    

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