Startup Mantra: Providing logistics expertise, the digital way
Logistics, which is an essential but non-core part of the manufacturing system, is still being managed by most small and medium enterprises (SME) and large companies through Excel sheets, emails and messages
Logistics, which is an essential but non-core part of the manufacturing system, is still being managed by most small and medium enterprises (SME) and large companies through Excel sheets, emails and messages. To bring this ‘behind-the-curve’ logistics segment on the digital front foot, ‘FreightFox’ (NimbleLogik Pvt Ltd) startup is offering innovative mobility solutions powered by data and Collaborative-Logistics-as-a-Service (CLaaS) through their platform to manufacturing companies. The solutions offered by FreightFox help manufacturing companies reduce their unplanned transportation cost, analyse freight spend, get real-time freight-intelligence, mitigate contract failure rates and take care of people, profit, planet and processes by reducing indirect emissions (Scope3) occurring in the value chain.
In the beginning…
FreightFox is founded by Nitish Rai, Sandeep Mukhopadhyay and Manjari Sharma. Nitish has over a decade of manufacturing experience, followed by a robust experience as the director of BlackTrunk Logistics Services that provided retail logistics services to defence personnel. Both Sandeep and Manjari have over 15 years of experience in building scalable tech platforms.
Nitish said, “Around December 2017, I wanted to experience entrepreneurship. I joined my classmate Ravi Kumar’s startup ‘udChalo’ as chief business officer. We then founded another brand ‘postingChalo’ which was into logistics for defence personnel. While doing the ground logistics and experiencing the problems that occur during the entire interaction, I realised that with my manufacturing experience and this on-ground experience there is a higher value, bigger problem that we can solve in industrial manufacturing logistics space. That’s how the idea of FreightFox was conceived for the first time.”
“Logistics requires multidimensional approach to solve problems. Right balance of understanding product, technology, business side of manufacturing, intricacies of operations is essential. We wanted a very core fundamental team which really wanted to build upon what we are aspiring for. Vikas Singh and Dhananjay Shetty, my colleagues from Thermax, also joined me in this venture as the founding members,” he said.
Problem statement
According to Nitish, manufacturing companies lose market space due to poor or inefficient logistics. Even if they attain those revenues or market opportunities, it comes at a higher cost. He said, “The way we source freight defines how it is going to be executed or manifest into the problem or into the better ways of execution in the coming time. Full truck load (FTL) and part truck load (PTL) are the two formats of mobility in today’s logistics landscape. FTL gives us speed, reliability and control but there is no flexibility of volume. In PTL, flexibility of volumes comes but at the cost of reliability. We have envisioned a methodology called collaborative truck load (CTL) which can have the reliability of FTL and volume flexibility of PTL format. CTL is long haul ‘milk run’ (transport mixed loads from various suppliers to one customer) between the industries operating out of same cluster.”
“As FreightFox, our focus is on primary transportation in the manufacturing industry ecosystem. How to source primary transportation in the best way possible using data and technology and how to operate with a mobility format which is designed for new age enterprises or the next generation manufacturing companies,” he said.
Digital adoption
FreightFox was formally incorporated in October 2020, in the midst of pandemic. However, Nitish and his team, since March 2020, had been meeting companies, understanding the problems, collecting information on ground, and understanding the potential value propositions that they can come up with.
“Pre-pandemic digital adoption was slower. The first wave came as shock. There was confusion all over and drivers also got fearful and started abandoning the trucks. That is where the required acceleration and affinity to adopt digital solutions went up. The uncertainties have not gone even today. We have seen supply chain disruptions can be limitless. Although we are coming out of the pandemic slowly but other factors like fuel price hike is triggering contract failures and inventory ballooning effect. Fighting this uncertain environment requires responsive decision making,” said Nitish.
Contract failure rates
Pre-pandemic: 22 per cent
During Pandemic: 50 per cent
Post Pandemic: 35 per cent
Sandeep Mukhopadhyay, chief technology officer and cofounder at FreightFox, said, “Contracting failure is a very interesting aspect. Due to prevailing global situations, diesel prices have been hiked and as a result, freight rates have shot up 20 per cent resulting in contract failure to a large extent. Delivery channels have hiked freight rates more than 50 per cent to last mile players. In logistics, operations need to marry technology at ground level to make it efficient. That is why you need a domain expertise and also a technology expertise.”
Ripe for innovation
Manufacturing is said to contribute to 25 per cent of the gross domestic product (GDP - value added through production of goods and services in a country) in the coming decade, but is still a decade back in terms of efficiency, effectiveness, productivity and the digital adoption.
Vikas Singh, chief operations officer at FreightFox said, “If you look at the innovation which has happened over the ten years it is extremely focussed on either e-commerce or last mile logistics. E-commerce is also actually delivering what is getting manufactured in these factories. So, movement from the factories to fulfilment centres is also an equally large problem. Consumer behaviour change is also affecting the whole chain. So, it is very important to focus on this area as well which has been left behind significantly.”
Manjari Sharma, chief product officer at FreightFox, said, “In manufacturing setups, even in this digital age, logistics is handled in a very distributed and manual manner. Processes are handled through distributed Excel sheets, phone calls, WhatsApp messages and emails. A lot of data is lying there unutilised, unanalysed and in some cases not even available. This segment is ripe for digital innovation. It is high time that companies adopt systems where their freight operations can be tracked.”
Nitish said, “Technology adoption is about intent, exploration and exploitation. The intents are higher today. A lot is happening on exploration side also. But basic problem is standardisation, nomenclature and network diversity. When it comes to exploitation, we need to ask are we exploiting data, technology to really create and deliver the value? Manufacturing domain is still away and that will be vital part of the journey.”
Trust factor
Dhananjay Shetty, operations head at FreightFox, said, “There is absence of trust between manufacturing companies and transporters. They don’t play for win-win because there is no large-scale visibility of data and due to which making real-time decisions is not possible. We present data on our platform in a way and ask them to utilise this data which helps build confidence between them. Since we don’t have any revenue sources from a transporter and we are only earning from manufacturers, the trust factor with us is higher.”
“We are able to ensure that companies work with the right transport partners, make decisions based on the freight partner’s performance and efficiency and track the external behaviour of logistics market,” he said.
Offerings
Procurement-as-a-Service (PaaS)
Collaborative Load-as-a-Service (CLaaS)
FreightIQ
Freight intelligence
Elaborating on the FreightIQ solution, Nitish said, “Freight IQ is a real-time solution which backs procurement and CLaaS offerings. FreightFox assesses 22 macro factors impacting the supply and demand of trucking at any given industrial corridor. Multiple factors like agri-commodity trade and consumption, Index of Industrial Production and IIP categorised on industry are tracked to get the instantaneous demand of trucking.”
“With multiple transporters consistently feeding data while operating on platform, FreightFox also tracks data from outside to understand the dynamic cost model around diesel, inflation and how it is impacting the trucking cost or operating cost. Crunching and analysing these numbers FreightFox comes up with trade-level freight intelligence which is basically Rs/tonne/km a company can expect in a given market for a given industry and given scenario. This curated data gives companies visibility about what is going to be the freight market behaviour so that they can benchmark their contracts and optimise freight sourcing,” Nitish said.
Nitish also claims of doing a pilot for NITI Aayog. He states, “NITI Aayog has given access to some crucial data on the Unified Logistics Interface Platform (ULIP) in terms of understanding the trucks movement density across the country. We are trying to measure and give a visually credible visibility to the industry about the imbalances using the data feed from NITI Aayog.”
Onboarding manufacturers
Create intent by reaching out to customer and raising awareness
Sales automation, marketing and knowledge dissipation in close circles
Explain capabilities, showcase data strength as USP
Critical-to-Quality attributes for logistics operations are collected
Demonstrate value of the product through a Proof of Concept (POC)
Arrange paid POC demo for 2 to 4 weeks
Final contract takes another 4 weeks
Long-term product licensing
Onboarding transporters
Know Your Transporter (KYT) done similar to KYC
Transporters submit RFI
After due diligence, validation done on the platform
Transporters digital profile is created basis legal entity status, fleet ownership, leased or attached fleets; number of operating footprints across the country
Transporters get their own login and credentials
Diversified pool of transport partners available
Data-driven approach for assigning transport partners
Nitish said, “Once companies are on platform, it triggers the intent on the transporter side automatically. The digital twin of the transportation network is onboarded on the platform. The entire geospatial network of trade lanes, volumes, kind of trucks, benchmark prices history, etc is available on the dashboard. We have the data with attributes from both manufacturers and transporters. Multi-criteria decision-making algorithm helps match the companies with right kind of freight partners. We also create value into the existing transportation operation and existing transportation procurement of the companies through the FreightIQ solution.”
Funding
₹30 lakh – October 2020
₹2 crore – Seed round – Dec 2020
₹23 crore – Looking for pre-series A round for next growth phase
Revenue streams
Platform licencing to SME and large enterprises
Tiered pricing based on freight spend
CLaaS customers – Fees for actual material movement through collaborative truck load
Pricing
Procurement-as-a-Service
Large Enterprises – ₹30 lakh to ₹40 lakh
Small and Medium Enterprises – ₹5 lakh to ₹9 lakh
Collaborative-Load-as-a-Service
Large Enterprises – 5 per cent of freight spend
Savings
5 per cent cost reduction in freight spend
18 per cent cost reduction in unplanned transportation
13 per cent reduction in carbon footprint
FreightFox
₹800 crore worth of contract-based freight procurement done so far
1000+ transport partners on platform
Signed Bridgestone in Chakan MIDC as the first customer for annual freight procurement
9 enterprise customers (paid) in last 14 months
Small and medium enterprises (SME) and large companies from auto, auto-ancillary, Alcobev, FMCG, Energy domains
Partnered with Yale University researchers to develop a responsive pricing model, predict freight indexes and increase accuracy of these predictions.
Only logistics startup company from India to qualify for 100+ accelerator programs globally powered by AB InBev, Coca Cola, Unilever and Colgate-Palmolive.
Future plans
FreightFox is looking at both horizontal and vertical growth
Add more industries to the solution and penetrate into more customers in the same industry
Looking for active collaboration with institutions, government
Planning to go for selective internationalisation based on geography, industry segment
Mitigation model: Moving away from contracted or spot capacity acquisition to a dedicated fleet
Freight and logistics service startups
India – 1,256 (DPIIT Recognised – 667)
Maharashtra – 243 (140)
Pune – 53 (28)
(Source: Start-up India Portal, Government of India)