Control Tower Operations

Post by On02 Mar 2019

The logistics industry is grappling with cash shortage which has affected fleet operations across the nation and has crippled the Indian highways. Fleet owners have come to a bottleneck and cash shortage is threatening delivery of goods to consumers and businesses. This is understandable as, in India, road logistics is a USD 100-120 billion industry growing at 14-15%. Within road logistics, trucking amounts to USD 80-100 billion spend of the overall road logistics spend. 88% of trucking spend and 40-50% of the non-trucking logistics spend is rendered in cash.

About 85% of the fleet owners who own less than five trucks spend hard cash towards diesel purchase, which comprises 45-50% of the cost of trucking. Toll charges - which amount 9-10% of trucking cost and other overheads such as driver wages and vehicle maintenance, are also disbursed in cash. Only EMIs and replacement capex including tyre-related expenses are done to an extent through digital modes such as bank transfers and cheque payments.

Making road logistics cashless has the potential to reduce Indian economy’s cash needs by 40% and can drive demonetisation forward and revamp the entire sector, by making it faster, reliable and more efficient.

Operations in the trucking sector can be made entirely cashless through the use of E-POD to get direct payment transfers from customers, automated bank transfers with the breakthrough same day settlement for brokers, integrated payment solutions with fuel companies for dealer payments and toll payments can be achieved through NHAI initiative on FAS Tag through RFID tags and wallet solutions..

Apart from digitisation and faster turnaround of trucks, cashless trucking economy will bring significant second order benefits. It will ensure less inefficacy owing to proper accounting of cash-related wastages (fuel, toll payments), eliminating instances of kerosene mixing by drivers and poor quality roads’ usage to avoid toll cash, which also directly leads to the poor health of the fleet and poses a safety hazard. On the other hand, drivers will face less harassment from RTO and sales tax officers on highways and check posts. It will also improve road safety and adherence to regulations as it is a level playing field for non-compliant and compliant fleet owners, ending overloading and violation of safety norms.

There is short term pain to the sector due to lack of cash but in the long term, it can turn around the sector completely by making it efficient and safer and contribute significantly in making India cashless.

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