Rivigo adds relay system to fuel age-old transport biz
An 18-month young logistics company, which owns more than 1,000 trucks, and has 200 clients, offers to deliver goods from Delhi to Mumbai in 28 hours against the usual 70. The modus operandi -- relay system -- after every four to five hours, the truck halts at a pit stop, the driver changes and the truck moves on. Between Delhi and Mumbai there are five pit stops. In the traditional truck business, one truck driver does the entire trip, stops in between, takes rest and then drives the next day.business Updated: May 02, 2016 11:20 IST
When Deepak Garg offered the owner of a courier company to take a truckload of goods from Delhi to Mumbai in 35 hours against the usual 70, the latter ruled it out as impossible.
But Garg, founder and CEO of Rivigo, not only managed to cover the journey in 35 hours, but over the last few months has reduced the travel time to 28 hours. Rivigo is an 18-month young logistics company, which owns more than 1,000 trucks, and has 200 clients.
So what is the modus operandi? “Our trucks shouldn’t stop on the highway — that’s our religion,” Garg says.
Rivigo calls it the relay system. After every four to five hours, the truck halts at a pit stop, the driver changes and the truck moves on. Between Delhi and Mumbai there are five pit stops. In the traditional truck business, one truck driver does the entire trip, stops in between, takes rest and then drives the next day.
“In this way every driver can return back home every evening, and not stay on the roads for days,” Garg explains. A total of 41 pit stops have been build throughout the country. Around 20 more are coming up.
The client list is impressive, with names like Hero MotoCorp, Nestle, Voltas and Lupin.
Summers hit south India early. Retailers ran out of their stock of Voltas air-conditioners. Rivigo delivered the ACs in two days. When Maggi had to get back on shelves after the ban, Rivigo handled the logistics. Earlier, Hero took eight days to send bikes from its Neemrana plant to Chennai. Rivigo now does it in two to three days.
Garg is eying the $100-billion surface logistics business in India. It has geo-fenced every toll-booth in the country, every truck is fitted with GPS tracking, and pit stops have sensors. The truck business in India is highly unorganised. While in the US, more than 50% of the transportation is handled by organised players, in India it is a little less than 10%. In China it is 35% and in Brazil around 80%. The largest fleet owner in the US has 100,000 trucks, in China 40,000 trucks. In India, the number is 2,000-3,000. But there’s a market waiting to be tapped — India has 60 lakh trucks plying on the roads.
In 2015, Rivigo was the single-largest buyer of truck from Ashok Leyland. This year also, it plans to add 1,500 trucks to its fleet. “This business cannot be run if you don’t own assets,” says Garg, who spent months travelling on trucks, sleeping in villages, and meeting thousands of drivers to understand the business.
But, Rivigo has competition — from about 150 truck aggregating companies, the largest being BlackBuck (with 10,000 trucks). In fact, Rivigo and BlackBuck are the two companies that have raised significant amount of capital.
But, is $40 million enough for a company that owns its fleet? “That’s a lot of money for someone who isn’t discounting. We buy trucks on bank lease of two to theree years,” quips Garg.