LET’S HOP INTO DOCTOR WHO'S TARDIS, and travel back in time. It is 1993, a couple of years after finance minister Manmohan Singh opened up India’s economy. Coca-Cola has re-entered the country in a wave of foreign investment, cable television is breaking Doordarshan’s drab monopoly of broadcast media, and trucks have wooden bodies. Wooden trucks and televisions, transporters soon realised, are incompatible. Nails jutting out of the truck’s body often impaled televisions in transit. As demand for televisions rose, so did the number of clients returning their damaged sets. Around this time, young entrepreneur Ramesh Agarwal was making a name for himself in transporting household goods. He came up with a stop-gap solution in the trucking industry’s long tradition of jugaad, a Hindi word for getting things done.
“I made a basic change to the interiors by thickening the ply sheets on the floor and sides so that nails wouldn’t stick out. This reduced the damages significantly,” says Agarwal. Word spread that Agarwal Packers and Movers, a little-known logistics company operating out of Hyderabad, had found a way to dramatically reduce transshipment losses. That’s how Agarwal acquired the appellation of “damage doctor”.
Even now, more than two decades later, the old trucking adage, “if you bought it, a truck brought it,” encapsulates India’s transport landscape. Trucks carry 60% of India’s freight, per a Motilal Oswal report published last March. In comparison, trucks transport 30% in China, and 48% in the U.S. India spends about 13% of its gross domestic product on logistics, compared with 7% to 8% in the developed world. Agarwal Packers, too, has moved on with the times. It now offers somewhat more sophisticated solutions than reinforcing ply sheets. One, in particular, stands out. A container Agarwal calls “the trucking cube”. The container, which comes in different sizes, is not fitted to the truck, but loaded atop flatbed trucks. The cube solves several logistic problems for a variety of clients, from pharmaceutical companies, to agri producers, he claims.
Agarwal, chairman and managing director of the eponymous company, says a major bugbear for clients is the way goods are carried. Large trucks with fixed carriers often clump together an assortment of goods, without any sort of planning or logic. For instance, food products are often placed with detergents in a closed container. For hours trucks crawl along the nation’s worn highways through varying temperatures before arriving at their destination. (Only 2% of India’s highways are considered good quality.) By that time, the food has spoiled or acquired a soapy flavour.
It is a common problem for pharmaceutical companies as well. “Potency of biopharma goods goes down if they are subjected to temperature fluctuations and some clever solution to solve the supply chain issues will go a long way in a country like India which has different climate and weather conditions,” says Arumugam Muruganandam, managing director and chief scientific officer at Affigenix Biosolutions, a Bengaluru-based life science company.
Moreover, clients like to store goods with the transporter for a few days. This leads to losses for the transporter, who can’t use that truck. The cube draws a line under this issue. The customer can lock up the cube to ensure no other goods will be loaded with it. If required, the cube is stashed away at a warehouse, freeing up the truck for other deliveries. “The trucking cube brings down overall operating costs by 18% to 20% and helps save 20% annually on fuel. Anything between two and four cubes can be loaded onto a single truck. Calculations have shown that this helps reduce the transport cost to one-third,” says Agarwal.
Despite saving costs in the long run, the initial investment is high. Agarwal has pumped in about Rs 40 crore. Of that he spent Rs 11 crore to Rs 12 crore on cubes, and Rs 21 crore on trucks. He has also invested about Rs 6 crore on secondary trucks (around 80 secondary trucks). That’s why very few Indian truckers have cubes, even though the concept has been around for decades.
To be certain, containerisation has a long and storied history that cuts across the process of industrialisation and mass production in the 20th century. “In India, the hub-and-spoke model on which this concept works has started gaining momentum only now,” says Pradeep Singhal, owner, GIR Logistics and president, All India Transporter’s Welfare Association. Apart from cost, another reason is that truckers prefer open tops in which they can fill more volume by piling goods on top of each other. But Agarwal wants to change that mentality of jugaad in India’s trucking industry. He is even encouraging his rivals to adopt cubes to “plug inefficiencies in the logistics sector”. His argument is simple. The rewards far outweigh the initial investment on cubes.